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story.lead_photo.caption The University of Arkansas for Medical Sciences' Little Rock campus is shown in this file photo. - Photo by Benjamin Krain

FORT SMITH -- The budget adopted before recent mass layoffs at the University of Arkansas for Medical Sciences included revenue projections unsupported by calculations or recent health care trends, an internal audit report made public Thursday states.

UAMS leaders also had incorrect financial information throughout the recently ended fiscal year because of what auditors believe to be a financial "misstatement" regarding the institution's Myeloma Institute, UA System Chief Audit Executive Jacob Flournoy said Wednesday at a meeting of the University of Arkansas board of trustees.

"The strategic issue with that is it's difficult to make good decisions when the numbers aren't correct," Flournoy said, adding that there's a pending audit of the Myeloma Institute as requested by UAMS Chancellor Dr. Cam Patterson. A risk assessment report showed a gap of more than $20 million between audited finances and information reported during fiscal 2018.

The completed audit report presented to trustees Wednesday focused on UAMS budget controls and management. It included eight recommendations to make UAMS budget controls more effective and referred to the unsupported revenue projections heading into fiscal 2018, which began July 1, 2017.

UAMS in January announced it was cutting hundreds of jobs as a way to trim a budget deficit that had ballooned beyond expectations. The institution -- which has a budget of more than $1.5 billion -- operates a medical school while providing care for patients at a hospital and various clinical sites around the state. It also has a campus in Northwest Arkansas. In January, UAMS reported having about 10,900 employees across the state.

The announced cuts included some unfilled positions and ultimately 258 employees lost their jobs, UAMS spokesman Leslie Taylor said Thursday. All the employee cuts took place in January, she said.

The budget for fiscal 2018, which ended June 30, was built in part on projections of revenue from what UAMS calls its Integrated Clinical Enterprise, or ICE.

But the report by auditors made public Thursday -- upon receiving approval by trustees -- states that the projection for Integrated Clinical Enterprise revenue was unsupported.

"For Fiscal Year 2018, we were informed adjustments were made to ICE revenue and expense budgets that were not supported by internal calculations and key healthcare economic assumptions," the internal audit states.

Rather than use the "historically reported" 2 to 3 percent revenue growth rate, "the Vice Chancellor for Finance and Administration stated that the prior chancellor directed ICE management to use a 6.7% increase in the revenue growth rate for the Fiscal Year 2018 budget," the report states.

The auditors recommended as one of their eight findings that UAMS begin "creating a detailed procedures manual for the budget development process." The report states that the UAMS budget office will do so by Feb. 29.

The "prior chancellor" at UAMS was Dr. Dan Rahn, who retired at the end of July last year, one month into fiscal 2018. A phone number for Rahn could not be found and efforts to reach him through UAMS for comment were not successful.

Patterson, who started in the job June 1, told the Democrat-Gazette that a lack of documentation for revenue projections did not directly result in the layoffs.

"I think looking back, whether the numbers were supported or not, the revenue and expenses were what they were," Patterson said. "I think the work action would have happened regardless."

But he said that "looking back, that probably accounts at least in part for why in the middle of the year the progress towards meeting the budget wasn't as on point as it had been predicted to be."

Patterson told trustees there also was a lack of documentation for some revenue projections used in the budget for the current fiscal year, but he told the Democrat-Gazette that "I don't think the differences are as significant as they were" the previous year.

"But that lack of documentation is something that we're just not going to tolerate going forward," he said.

Patterson said there is no concern about layoffs now, with the first four months of the fiscal year "ahead of budget" financially.

A Section on 11/16/2018

Print Headline: Audit: Budget adopted before UAMS layoffs had issues


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  • TheBatt
    November 16, 2018 at 12:41 p.m.

    Why is the location ”Fort Smith”? UAMS is in LR..

  • NoUserName
    November 16, 2018 at 8 p.m.

    And some want the state to give UAMS MORE money. I do like the vice chancellor trying to blame Rahn. Why not? The bottom line is UAMS is mismanaged at the top. Maybe Patterson fixes it. Maybe not. But so long as the underlings are still in management positions, I doubt ANYTHING will change.

  • Molly44
    November 21, 2018 at 9:14 a.m.

    UAMS talks about transparency but until they put in press releases and announcements each and every physician that get a pay raise approved each month, I won't believe it.