Arkansas State University Chancellor Tim Hudson resigned Tuesday, about a week after an internal audit on the Jonesboro school's study-abroad program run by his wife revealed it was poorly managed, and just before a follow-up audit is set to be released.
Hudson, 62, also will no longer work as a professor at the university's College of Business. He offered his resignation letter to Arkansas State University System President Chuck Welch after a meeting with him Tuesday, said Jeff Hankins, the vice president for strategic communications and economic development at the ASU System.
Hudson sent a two-sentence email to Welch just before 10 p.m. Tuesday that read: "Please accept this as my resignation from Arkansas State University. I wish the institution and everyone associated with A-State all the success in the future."
His resignation, which is effective immediately, ends his four-year tenure as head of the second-largest public university in Arkansas. He earned $360,000 annually at the campus. Welch has appointed Lynita Cooksey, the provost and vice chancellor for academic affairs and research at ASU, as acting chancellor.
[DOCUMENTS: Read Hudson's resignation letter and separation agreement with ASU]
"I appreciate Tim, Dee Dee, and their family for their many contributions to A-State, and I wish them well in their future endeavors," Welch said in a prepared statement. "I have asked Dr. Lynita Cooksey to serve in a temporary role as acting chancellor. In the coming days, I will develop plans for a long-term interim appointment."
Welch was not made available for an interview Wednesday, as Hankins said this was "a personnel matter." Welch did not return a text message left on his cellphone.
Hudson is leaving without any severance pay, only accrued vacation time in accordance with state law, Hankins said. He and his wife, Deidra, have 45 days to move out of the chancellor's home at 1503 E. Nettleton Ave., according to a settlement agreement signed Tuesday. The university also will provide staff members to help Hudson move his piano from campus storage to the chancellor's home on or before Aug. 9 in preparation for moving out and to help the family remove "personal effects attached to the walls," the agreement states.
The agreement "is a compromise of disputed claims and is not, and shall not be construed as, an admission of liability or wrongdoing on the part of either ASU or Dr. Hudson," the document states.
His departure came shortly after ASU System officials learned of audit findings regarding the study-abroad program, which was run by Deidra Hudson as its director in a part-time capacity. An initial audit on the matter was presented to Welch July 25 and was later turned over to the system's five trustees.
System officials are expected to deliver a related audit to trustees later this week, Hankins said, adding he would not release that audit publicly until it is delivered to the board, in accordance with Act 1137 of 2015.
"After an audit report is presented to the governing board of the institutions of higher education, the audit report and copies of any documents contained in the working papers related to the audit report are open to public inspection under the Freedom of Information Act of 1967," the law reads.
According to the initial audit, Jo LunBeck -- the assistant vice president for administration at ASU -- said she received a phone call March 15 about concerns involving two of the school's study-abroad trips: Nordic Trip 2016 -- to Finland, Iceland and Sweden -- and Lanjaron, Spain. It also reviewed the overall management of the program between July 1, 2013, to April 30, 2016.
LunBeck reported four concerns:
• A part-time temporary employee manages study abroad, and trips are unorganized.
• Student payments for the Arkansas State University Nordic study-abroad trip went to a PayPal account.
• The instructor for the Nordic study-abroad trip has no contract with the university and was scheduled to teach for Lanjaron, Spain, study-abroad session.
• Multisense, a third-party vendor in Lanjaron, that has facilitated programs since 2013 has no written agreement with the university.
Deidra Hudson was hired as the program's part-time director May 1, 2013, earning $28.36 an hour. As a part-time employee, she could not work more than 1,500 hours per fiscal year or more than 29 hours per week. She didn't reach the threshold during the time period investigated, reaching a high of 1,198 hours a year, which averages to about 23 hours a week, according to the audit.
She was hired into that role because she has a doctorate in educational leadership with a dissertation on study-abroad programs, Welch has told the Arkansas Democrat-Gazette.
Last fall, Tim Hudson had advocated to make the study-abroad director's post a full-time position with an annual salary of $50,000. The university posted the application on Jan. 27 for 10 business days and later extended the posting until Feb. 11, when Deidra Hudson sent in her resume, the audit states.
The next week, Len Frey, ASU vice chancellor for finance and administration, checked in with Welch on a state law -- Arkansas Code Annotated 25-16-1002 -- that forbids Hudson from hiring his wife full time because he is in charge of the agency to which she applied. She can stay in the "extra help position."
Frey met with Tim Hudson the next day to discuss the employment matter, and Deidra Hudson withdrew her application that day. Tim Hudson had then asked Cooksey to cancel the study-abroad director's job posting, even though it drew 14 other applicants, the audit states.
Internal auditors also found that a $50 student application fee for study-abroad programs, which covers an annual operating license regarding the trips, wasn't consistently collected and that of the 17 study-abroad programs, Deidra Hudson had visited Lanjaron, Spain, four times and London once during the audit period.
On June 17, 2014, she asked for a $164.26 travel reimbursement for reviewing a study-abroad trip to Spain. An associated travel reimbursement request dated June 9 to July 2, 2014, for the $1,556.90 airfare from Memphis to Lanjaron was denied, according to the audit, which added that she didn't report working hours on her time sheet.
She also received a reimbursement from March 20, to March 29, 2015, for $4,604.57 to review housing for study-abroad students, building relationships with potential study-abroad sites and meeting with the study-abroad students going to Spain and London.
After receiving the reimbursement on May 21, 2015, Hudson returned $40.10 in July of that same year for "mileage claimed to the Little Rock, Arkansas airport instead of the Memphis, Tennessee airport," the audit states. Last month, she returned $67.20 because she accidentally claimed the mileage reimbursement to Memphis when she used a rental car to get to the airport, the audit said.
When administrators asked why she was traveling to Spain, Hudson said in a Dec. 14, 2015, email, "Because this program is housed with out the support of a university and staff, I act as that support for the first week. In that most of our students and one of our professors do not speak Spanish, I feel more confident greeting them and getting them settled."
The audit also questioned the use of PayPal, an online site that accepted and transferred payments for goods and services, for the Nordic study-abroad trip.
Marko Korkeakoski helped to get that study-abroad program off the ground in May 2015, but he stopped working for the university June 30, 2015. He couldn't work for the university after Aug. 17, 2015, because his visa was expiring, the audit states, but he was reimbursed from the university for $685.41 for a round-trip flight from Helsinki, Finland, to Memphis on Feb. 4, 2016.
The study-abroad program's full-time administrative specialist, Jennifer Brightwell, told the university's procurement and travel department that Korkeakoski went to Jonesboro to hold information sessions for the Nordic study-abroad trip he facilitated and to meet with Deidra Hudson about the Spain trip he helped facilitate.
Deidra Hudson knew he was making the arrangements but she wasn't filled in on the details, including the application process and deposit information, the audit shows.
On March 14, administrators learned that 10 students had paid a total of $19,100 to Korkeakoski's PayPal account.
"The reason why I asked students to use either my PayPal, (which is very secure and it has insurance against fraud) or send the check to my bank ... was that there are around 30 different entities that I need to pay, and many of them do not accept credit card payment," he wrote to the study-abroad program. "Some things like public travel passes, etc. will be paid in cash when I pick them up."
ASU moved the funds to a university account soon after and kept records documenting the transferral of funds. No money was lost through the PayPal transfers, Welch has said.
The audit also said that the university didn't have an official agreement for the Nordic studies trip with the Helsinki Metropolia University of Applied Sciences in Finland, where Korkeakoski works. The university planned to contract directly with Korkeakoski to facilitate the program -- as what happened for his Lanjaron faculty assignment in February 2016 -- but later learned it could not without violating state law.
Arkansas Code Annotated 19-11-709 says a former employee cannot engage in selling or attempting to sell commodities or services, including technical or professional consultant services, to the state for one year after employment ended. The law allows it only if the former employee earned less than $15,000 in a fiscal year, but Korkeakoski had earned more, the audit states, adding that the ASU Office of Study Abroad was in noncompliance with the first Jan. 21 contract with him.
The audit also found that the services of Multisense, the third-party vendor in Lanjaron that didn't have a written agreement with the university, were not put through the bidding process.
Deidra Hudson had told auditors, "There is no bidding process because it is not a university."
The university has paid the Spanish vendor just over $250,700 during the past three fiscal years.
As a result of the audit, the university is now searching for a full-time study-abroad director who will help strengthen areas where the office was found noncompliant with policies or state laws.
When reached on his cellphone Wednesday afternoon, Tim Hudson said he was in a meeting and "wouldn't have anything to say" before hanging up.
Under his tenure, the school experienced several records, including the number of graduating students, which surpassed 2,000 in spring 2016, and annual fundraising totals, and the establishment of a public-private partnership with the New York Institute of Technology to bring an osteopathic medical school to the Jonesboro campus. The medical school's inaugural class is having a white-coat ceremony Friday.
The university's planned campus in Queretaro, Mexico, was his brainchild. He had reached out to Mexican officials about developing a campus there -- an idea he picked up from when he worked at Texas Tech. The plans moved with him when he got the chancellor's job at ASU. The campus is slated to open fall 2017.
Hankins, the system spokesman, said all projects will move forward as announced and planned.
Metro on 08/04/2016