The University of Arkansas board of trustees passed a resolution Friday supporting the chancellor of the Fayetteville campus and accepted two audit investigations into a multimillion-dollar deficit in UA’s fundraising division.
After going into executive session for more than three hours to deal with seven agenda items, the board emerged Friday morning, and Chairman Jane Rogers of Little Rock read a statement supporting Chancellor G. David Gearhart.
“I … appreciate that Chancellor Gearhart has taken full responsibility for the problems surrounding the deficit and for implementing the changes necessary to ensure the fiscal health of the division and to improve the accountability of the university as a whole …,” said Rogers.“I’m proud that our overall financial and academic health of the institution is outstanding and continues on an upward course under Chancellor Gearhart’s leadership.”
Trustee John Goodson of Texarkana moved that Rogers’ full statement be put into the form of a resolution, and the resolution passed unanimously.
“I would like to consider the comments you made this morning as a resolution of support for Chancellor Gearhart, and I make a motion that reflects that,” said Goodson.
Gearhart has come under fire because of the cumulative deficit in the Advancement Division, which state auditors pegged at $4.2 mil-lion as of June 30, 2012. But Rogers praised his handling of the problem.
“We’ve been working on this for months and months and months,” she said after the meeting. “All the trustees put their heads together. There was a good consensus about us moving forward.”
Rogers wouldn’t comment about what happened in executive session, which allows the board to meet without the public or news media.
“What happens in the executive session has to stay there,” she said.
The board met Thursday and Friday at the University of Arkansas for Medical Sciences campus in Little Rock.
Gearhart said he was happy with the trustees’ support and “vote of confidence.”
Auditors have said the Advancement Division’s deficit was the fault of two employees who weren’t monitoring the budget as additional employees were hired for a fundraising drive. Brad Choate, former vice chancellor of advancement, and Joy Sharp, the division’s budget officer, lost their jobs over the deficit, but they were allowed to continue working at the university until the end of fiscal 2013, almost a year after the problem was discovered.
UA officials have said the cumulative deficit was reduced to $3.2 million as of June 30, but the division continues to struggle with annual operating deficits and will be shored up with $8 million from university reserves. Before the overspending was discovered, the division’s budget was around $10 million, officials have said.
State auditors had referred some matters to a Washington County prosecutor, but he found no evidence of criminal activity in connection with the deficit. However, some UA employees’ actions are still under investigation by prosecutors in Washington and Pulaski counties.
The Washington County prosecutor’s office is looking into an accusation that UA’s chief financial administrator lied to state auditors during a routine annual audit in 2012 when he said he knew of no fraudulent activity in the Advancement Division.
Neither Donald Pederson, UA vice chancellor for finance and administration, nor Treasurer Jean Schook mentioned to state auditors during the Oct. 25, 2012, exit conference that an internal investigation had revealed the multimillion-dollar deficit in the Advancement Division, according to a letter that 14 legislators sent to the prosecutor’s office last month.
Schook had reported to Pederson in a report a week prior that there was a “likelihood” of conflict-of-interest violations, misdirection of funds and risk of fraud in the Advancement Division.
Also, Pulaski County Prosecuting Attorney Larry Jegley is deciding whether to start a formal investigation into a Sept. 13 meeting of the Joint Legislative Auditing Committee, in which Gearhart and former UA spokesman John Diamond gave conflicting testimony under oath. Diamond said Gearhart ordered public documents to be destroyed. Gearhart denied it.
Gearhart resolution
Statement read by University of Arkansas System board of trustees Chairman Jane Rogers: “As trustees we take very seriously our responsibility to ensure the financial health, stability and accountability of all the institutions in the University of Arkansas System.
I know my colleagues understand and share many of the concerns that have been raised regarding the deficit in the Advancement Division at the University of Arkansas at Fayetteville.
On behalf of the board, I want to express my thanks to all of the auditors, law enforcement officials, legislators, news media and others who have looked into the issue and provided valuable insight on what happened and how to keep something similar from happening again.
I also appreciate that Chancellor Gearhart has taken full responsibility for the problems surrounding the deficit and for implementing the changes necessary to ensure the fiscal heath of the division and to improve the accountability of the university as a whole.
As we’ve said, the board will continue to monitor the progress of implementing all of the recommendations from the audit report. And as we’ve shown in passing the new board policies, our board is committed to financial accountability and freedom of information.
I recognize that this has been a difficult episode for the university, and I pledge that the university can and will do a better job in the future.At the same time, I recognize the many wonderful accomplishments that have occurred across the campus. And I’m proud that our overall financial and academic health of the institution is outstanding and continues on an upward course under Chancellor Gearhart’s leadership.
With that in mind, as chair of the board, I would like to reiterate my full support of the chancellor and his efforts to move the university forward in a positive direction for our students, our faculty, our staff and our state.”
Front Section, Pages 1 on 01/25/2014