Facing questions about the leadership of University of Arkansas at Fayetteville Chancellor G. David Gearhart, the UA board of trustees is expected to take up the financial woes of the university’s fundraising division today and Friday at meetings in Little Rock.
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University of Arkansas-Fayetteville Audit
According to the agenda for today, the board’s audit committee will discuss a September report from state auditors concerning how the division and the university’s top finance officials unknowingly overspent by $4.2 million over fiscal 2011 and fiscal 2012.
The university issued a statement acknowledging the overspending in December 2012, after a reporter heard about the problem and asked questions.
UA Treasurer Jean Schook produced a report about the deficit in October 2012 that blamed the overspending on lax supervision and financial controls by fundraising chief Brad Choate and budget officer Joy Sharp. The university didn’t release Schook’s report until February 2013, after the Arkansas Democrat-Gazette sued for its release under the state Freedom of Information Act.
The trustees also are scheduled to look at the university’s planned accounting improvements that were recommended by state auditors.
Asked if the trustees will take an in-depth look at other issues related to the spending deficit, board Chairman Jane Rogers of Little Rock said Wednesday: “I think we’ve been looking at it in-depth for months and months and months.”
A prosecutor looked into possible criminal activity in connection with the deficit but found none, and during a legislative hearing, a former UA employee accused Gearhart and other top officials of concealing information and public records about the overspending. Gearhart denied the allegation.
“All I can do is refer you to the agenda,” Rogers said. “I think we’re going to have a good meeting.”
Trustee C.C. “Cliff” Gibson III, the only other board member to return the Democrat-Gazette’s calls Wednesday, said he thinks the 10-person board will discuss the matter in public parts of the meeting and could consider it a personnel issue in closed session.
“What’s so important is everybody having an open mind to consider everything that’s brought forward, to hopefully make the right decision for the university and the people of Arkansas,” Gibson, a Monticello lawyer, said Wednesday. “I want to hear everything before jumping to a conclusion.”
Gearhart supporters have said it’s time for the matter to be put to rest so the university can move forward. Critics have questioned whether the chancellor of more than five years can continue to lead effectively.
Trustee Sam Hilburn, a North Little Rock attorney, expressed his confidence in Gearhart to the newspaper in a recent email: “I have reviewed the audit report, listened to the prosecutor and legislators, and I support Dr. Gearhart one hundred percent.”
Supporters, including donors and student leaders, have written letters. University donor Boyce Billingsley wrote the Democrat-Gazette on Sunday: “The chancellor, his staff and the Board of Trustees are doing a very good job.” The UA campus includes the “George and Boyce Billingsley Music Building.”
Others have been critical.
At the Jan. 7 hearing of the Legislative Joint Performance Review Committee, Senate Minority Leader Keith Ingram, D-West Memphis, asked Gearhart: “Do you think that you have the [public] confidence to continue to lead with all the things that have gone on?”
“Yes, sir, I do,” Gearhart replied.
An advertisement in Sunday’s Democrat-Gazette signed by J.M. Smith III of Houston, Texas, asked if Gearhart’s performance justified his $550,000-per-year salary. The ad identified Smith as treasurer of Friends of the University of Arkansas. He could not be reached for further comment Wednesday.
Former Trustee John Tyson, chairman of the board of Tyson Foods, wrote the Arkansas Times this week to underscore “the tough issues facing the Board of Trustees at this time.”
Tyson’s email said his abrupt resignation from the trustee board in February 2013 “had nothing to do” with the school’s bypassing Tyson’s preferred candidate for head Razorback football coach, as some had suggested.
Tyson had little to say at the time about why he did quit, other than citing time pressures and frustration at the board’s lack of progress.But in this week’s email, he said he “might comment further on these issues, but I have remained silent so my former colleagues on the Board of Trustees can handle the difficult issues they face.”
Tyson could not be reached for further comment Wednesday.
The UA division’s overspending came to light in late summer 2012, but Gearhart didn’t announce it publicly until that December, when he reported that the fundraising unit, called the Division of University Advancement, had a $3.1 million deficit.
Gearhart blamed Choate and Sharp, and said they had been reassigned. They left the university on June 30, 2013.
In addition, Gearhart said the fundraising division had overspent on hiring and other needs, but that no one had committed fraud.
As questions about the deficit continued, Gearhart called in state auditors on Feb. 5. The university released Schook’s report on the deficit on Feb. 15.
On Sept. 10, the Legislative Audit Division and the UA System’s internal audit division’s joint report questioned the practices of top finance official Don Pederson and Schook, along with Choate’s and Sharp’s handling of fundraising division finances.
On Sept. 13, former UA spokesman John Diamond told the Legislative Joint Auditing Committee that Gearhart at a meeting last January ordered Advancement Division officials to “get rid of ” public records to keep information about the deficit out of public view.
Gearhart responded that he had never ordered anyone to destroy documents and described Diamond, who was fired Aug. 23, as a “disgruntled” employee. Both men were under oath when they spoke.
On Dec. 12, the Washington County prosecutor’s office released a report on its investigation into four issues raised by auditors, saying it found no grounds to charge anyone. The Pulaski County prosecuting attorney’s office has been asked to take another look at the conflicting testimony of Diamond and Gearhart.
Earlier this month, Choate and Sharp testified to legislators. Choate defended his oversight of the division’s budget but said he was given incorrect information. He also criticized UA’s “inadequate financial management controls.”
Sharp admitted that she made accounting mistakes because of overwork.
The trustees’ committee meetings start at 1 p.m. today in the hospital lobby gallery of the University of Arkansas for Medical Sciences in Little Rock. Discussion about the audit is expected about 3 p.m. A closed session will follow.
The full board is to reconvene at 8:30 a.m. Friday at UAMS, and the audit committee report is on that session’s agenda.
Front Section, Pages 1 on 01/23/2014