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story.lead_photo.caption FILE — Henderson State University is shown in this 2019 file photo. ( Emily Walkenhorst)

Henderson State University leaders are considering up to 18-day furloughs for most year-round employees, starting Wednesday, to prevent the university from running out of money as the current fiscal year comes to a close.

Henderson faces a budget shortfall of nearly $900,000, after a loss of state funds related to covid-19 revenue shortages.

The university has only about a week of "cash on hand" and needs more money to cover the loss, officials said Monday morning in a campus meeting held via videoconference.

After ending the past fiscal year with a $4.9 million deficit and expecting another deficit this year, the university cut $3.5 million from the current year budget and used a $6 million advance-turned-loan from the state to cover other losses. Then, university leaders learned the university also would lose $871,994 in budgeted state funding.

Because of covid-19 accommodations this spring, the university lost money additionally from transitioning to remote instruction and keeping residence and dining halls open for students who still needed them after students who could leave campus were asked to do so.

University leaders, before covid-19, expected to end the fiscal year with a $20,000 surplus.

"We fully expected to finish this year with a very slight positive margin," said Chuck Welch, president of the Arkansas State University System, which intends to merge Henderson into the system.

"Then came covid-19," Welch said.

Welch and Henderson State President Elaine Kneebone addressed about 300 Henderson State employees and other members of the public Monday morning and answered dozens of written questions posed by attendees.

Questions largely concerned applying for unemployment benefits, alternatives to furloughs and just how much the university was continuing to pay former President Glen Jones Jr., who resigned in July after the $4.9 million deficit appeared suddenly and unexpectedly.

Jones has been paid $19,208.23 per month -- $230,498.76 annually -- since his resignation, using private Henderson State University Foundation funds. Any furlough would still apply to his salary, Welch said.

On Monday afternoon, Jones told Welch that he would not return to campus as tenured faculty in the fall, as allowed in his separation agreement, and formally resigned his position.

[CORONAVIRUS: Click here for our complete coverage » arkansasonline.com/coronavirus]

While employees expressed numerous concerns Monday, many thanked leadership for their transparency, something many have said was nonexistent under the previous administration.

One question concerned whether administration officials had considered cutting their own pay, given the low wages that some of the university's staff members earn, some less than $30,000 annually.

"Anything can be looked at right now, I think is the answer to that question," Welch said. "We are sensitive to the impact this is having on our lowest-paid employees."

Another question asked when employees would receive their contract offers for next year. Welch sighed and said, "I honestly don't know."

Contract offers won't happen until trustees approve the next fiscal year's budget, Kneebone said. Financial uncertainty will delay that vote until next month.

In an email to campus this weekend, Kneebone said the university is looking at furloughing eligible 12-month contract employees three days each week for the final six weeks of the fiscal year, which ends June 30. That would save about $800,000, Hall said.

She and Welch offered a second scenario Monday: furloughs of two days each week and participation in the state's Shared Work Unemployment Compensation Program, which would allow supervisors to divide a set amount of work or work hours among employees to avoid layoffs. That would save $425,582, Hall said.

Which path the university takes depends on the news it receives this week on federal or state funding.

In both scenarios, furloughed employees would be able to receive some unemployment benefits. The number of people furloughed would be 205, or just more than half of the university's employees.

Years of financial mismanagement, misreported official financial statements and uncollected student accounts left the university in dire straits last summer, only weeks after trustees approved a budget anticipating a revenue increase and providing faculty with a raise.

University trustees brought in the ASU System to sort out finances and later voted to join the ASU System. Arkansas lawmakers continue to investigate what went wrong at the university.

In December, trustees allowed university administrators to seek a $3 million line of credit, if needed, to cover a gap in monthly state revenue checks and payroll. That line of credit isn't intended to cover deficits, spokeswoman Tina Hall said.

The university's request for $825,000 in extra state rainy-day funding was rejected by a committee Friday. Its own Coronavirus Aid, Relief and Economic Security Act distribution, via the U.S. Department of Education, appears to be too limited by rule to allow the university to cover budget deficits, Welch said.

While leaders continue to look for ways to receive other funding and await further federal guidance on how to use the roughly $1.8 million in federal CARES Act institutional funding, furloughs would need to start Wednesday, based on the amount of money that must be cut, Welch said.

Metro on 05/19/2020

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