HSU's board briefed on debt; president's contract on next agenda

Henderson State University President Glen Jones is shown in this 2017 file photo.
Henderson State University President Glen Jones is shown in this 2017 file photo.

ARKADELPHIA -- Trustees for Henderson State University met Friday to hear President Glen Jones outline plans for dealing with a campus financial deficit, then agreed to meet again next week for the "sole" purpose of considering Jones' employment contract.

Jones, 49, the university's president since 2012, told trustees that a high carry-forward limit for student balances and a "very poor collection process" contributed to cash-flow problems.

He outlined plans to reduce the balance limit for students -- previously at $4,800 -- to possibly $750 in the coming spring semester and $200 by fall of next year, though he said discussion about the limit amounts would continue. In the meantime, the limit has been set at $2,500 for this fall.

Jones, just over two weeks ago, began campus cost-saving measures and requested a $6 million loan from the state, describing a deficit caused in part by unpaid student accounts.

The state's top finance officer approved the no-interest loan from the state Budget Stabilization Trust Fund, which must be repaid by June 30 of next year.

Last week, Jones told the board there was an "immediate need" for the loan money, in part to pay past-due accounts, including with food-service provider Sodexo. Documents presented Friday to the board listed about $2.3 million owed for accounts more than 30 days past due, including about $637,000 more than 30 days past due to Sodexo.

Jones has said that cost-saving measures, including a hiring freeze, will remain in place throughout the 2019-20 academic year.

Trustees on Friday expressed frustration at the recent turn of events during the public portion of the meeting. After a closed session lasting about an hour and 40 minutes, the board approved a motion for a meeting next Friday "for the sole purpose of consideration" of Jones' contract, board member Bruce Moore stated in the motion.

State law 25-19-106 (c)(1)(A) permits closed sessions to consider "employment, appointment, promotion, demotion, disciplining, or resignation of any public officer or employee."

A meeting had been previously scheduled for that date. But during Friday's meeting before the closed session, Jones had spoken about using the time next week to discuss a potential public-private partnership he said could provide a multimillion-dollar payment to Henderson State.

Board chairman Johnny Hudson declined to comment after the meeting. Another board member, Brown Hardman, also declined to answer questions from the Arkansas Democrat-Gazette.

"I love Henderson State University. That's all I'm going to say," Hardman said.

Jones declined to comment about the board's action. Asked what he'll do in the days before the next meeting, Jones said: "In terms of what I will do between now and next week -- that was news to me as well. And so from my standpoint, we'll just continue to work and serve this campus."

During Friday's meeting, Jones said 56% of Henderson State students are eligible for Pell grants, federal aid reserved for low-income students. Provisional data for 2016-17, the most recent year available, published by the U.S. Department of Education, shows 18% of first-time, full-time undergraduates at Henderson State received Pell grants, but the same data source shows 57% of first-time, full-time students received Pell grants a year earlier.

Jones said a practice of allowing students to use a payment plan while continuing their studies now leaves the university trying to collect on past-due accounts.

"When they didn't make their payments, there were no consequences," Jones said.

He said there will be a focus on collecting about $3.7 million in recently incurred debt from "the last year or two," and also making students keep current on their accounts and stay within acceptable carry-forward limits.

"Moving forward, the conversation will be you need to find an external source of funding," Jones said. If students say they cannot, they'll "probably no longer be a student," Jones said.

The plan calls for establishment of a student accounts review committee that would allow students to appeal for an exception.

"Not every student that has a high balance really has extenuating circumstances. And that's where we're going to have to be firm," Jones said.

Jones said the university also is working to "identify a gap funding partner," for when students face a gap between financial aid and college costs. Students could be referred to this partner if college expenses exceed financial aid, he said. He also described other information that can be provided to students.

"We want to make certain that our students are aware there are a lot of opportunities to pay for college. For example, ROTC," Jones said, referring to Henderson State's Army program that trains military officers. Such programs pay for schooling but also require a military commitment.

To collect debt, Jones said the university usually has been waiting 12 months before turning it over to a collection agency.

He said he wants to shorten that time period so "we have a higher chance of collecting more that's owed to us."

However, other factors also have led to financial problems for the university, Jones said, including sudden maintenance needs. He also spoke about improving the university's system for cash management to better oversee finances and also a need to hire an interim chief financial officer. Brett Powell, the previous vice president of finance and administration, resigned to accept another job and his last day was May 31, according to Tina Hall, executive director for marketing and communications.

Trustees on Friday expressed frustration at the events of the past few weeks, stating they had met in May and approved a 2019-20 budget without knowing of the cash problems.

"I could not in good conscience have approved that budget had I known we would have budget deficits the size that we're running," said board member Creed Spann, a certified public accountant.

"No one of this board would have voted for it. We didn't know that," said Hudson, the board chairman.

Lecia Franklin, Henderson State's controller, a position that oversees accounting and financial statements, told trustees that several financial transactions had not yet posted to close out the 2018-19 fiscal year, which ended June 30.

Asked about the projected size of the 2018-19 deficit, "I'd say it's going to be over $4 million," Franklin told the board.

She said there have been deficits in previous years.

Moody's Investors Service on July 2 released a statement that revenue bonds issued by Henderson State had been downgraded to Baa2, considered a medium grade. Moody's stated the rating was "under review," citing the $6 million loan but also noting a "precipitous and significant decline" in monthly liquidity at the end of fiscal 2018, which ended on June 30 of that year.

In a recommendation for the $6 million loan, the state Department of Higher Education suggested the Henderson State board consider joining a university system. No discussion of such a move took place during Friday's meeting.

Metro on 07/13/2019

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