Arkansas lawmakers heard a tale of two boards when Henderson State University trustees testified Friday on the second day of investigative hearings on the university's financial problems.
Trustees didn't agree on whether the financial information they had received regularly was convoluted or simple. Others described a power-hungry majority and an outspoken minority that saw different versions of the university: one that was good enough to extend the president's contract, and another that was fast losing money with no end in sight.
One consistent claim that came out Friday was that trustees, the primary overseers of the university, didn't have correct information or enough information to know that the university was nearly broke.
That perplexed many lawmakers, who noted that a few of the trustees are certified public accountants, responsible by oath for monitoring money in their day jobs, but who missed their own university's financial troubles.
The board of trustees will dissolve after this year if accreditors approve the planned merger into the Arkansas State University System, and a board of visitors to represent the university will form instead.
"I am going to be perfectly honest in that I hope that when there's a changeover and there's a board of visitors, that there's a clean sweep," said Rep. Mark Lowery, R-Maumelle. "Because I find a great deal of a lack of intellectual curiosity or financial curiosity or fiduciary curiosity, whatever, by board members."
At the same time, he said, board members seemed to be involved with the university.
Members of the Legislature's Joint Performance Review committee questioned several current and former Henderson State trustees during the seven-hour hearing Friday.
The committee is investigating financial misstatements uncovered in two state audits that painted a better financial picture than was real. Last week lawmakers questioned six business office employees and Arkansas Division of Higher Education leaders.
Some trustees on Friday noted frequent conversations with then-President Glen Jones Jr. during their tenures but little contact with Brett Powell, who served as vice president for finance and administration from May 2016 until May 2019.
Powell presented financial reports to the board, typically delivered as quarterly updates and charts showing how the university was doing compared with what leaders said it would do, trustees said. Powell is who failed to provide the correct information to the board, they said.
When asked whether it was intentional, only board Chairman Johnny Hudson said that it was. Other trustees claimed to have been misled but stopped short of affirming lawmakers' questions of whether the misdirection was "deliberate" or "intentional."
The board relied on Powell's presentations to make decisions, Hudson said.
Last week, Arkansas State University System President Chuck Welch told lawmakers that trustees received less financial information than is standard for the system's board and other boards.
Hudson said Friday that he would never again rely on a single person the way the trustees had but defended having done so.
"In my experience as a CPA, if you've got qualified people, you turn it over to them and try to make sure they do their job," he said. Hudson wondered: How many universities have a chief financial officer who is also a CPA and has a doctoral degree?
"If your best friend is there doing it, you do have a fiduciary responsibility as a board member, and we have got to get back to the fact that board members and trustees are not just for a position, not just for a title, that there's a duty that comes along with that," said Sen. Jimmy Hickey, R-Texarkana, chairman of Joint Performance Review.
In contrast, two trustees said they consistently raised concerns about the university's finances after speaking with university employees other than Jones or Powell.
Trustee Eddie Arnold said he told Jones that he was worried about where the university was headed.
"I was concerned, and a lot of other people there were concerned, that we were going to run out of money," Arnold told lawmakers. "And guess what? We ran out of money."
Arnold and Trustee Brown Hardman said they went as far as to tell Jones that the board would eventually cost him his job because it acted as a "rubber stamp" on his behalf.
Trustees testified that they were blindsided in June upon learning of last year's deficit and $10 million in student debt to the school -- both issues related to the financial picture provided to them by Powell.
But trustees' testimony Friday indicated they heard little from Powell in the three years he was there.
According to testimony Friday and last week, from business office employees, trustees spoke mostly with Jones. Jones didn't want business office employees talking with trustees.
Jones pushed for the board's only policy up until a few months ago: that board members must notify him every time they arrived on campus, for whatever reason.
That trustees took no action after faculty members voted "no confidence" in Jones in May of 2018, out of concern for the university's depleted financial reserves, also troubled lawmakers. They wondered whether trustees tried to speak with faculty members after.
That spring, the university faced a $3.2 million deficit that led to layoffs and other cuts.
Jones didn't resign until July 2019, after multimillion deficits surfaced just weeks after trustees were told of a surplus in the university's budget and approved a budget with another surplus and faculty raises.
In 2018, trustees met less than a week after the no-confidence vote. Some trustees testified that the meeting was standing-room-only but no faculty members were heard from at the meeting. The board, which had only one policy, didn't have a policy for public comment.
Nine pages of signed minutes from the meeting, obtained by the Arkansas Democrat-Gazette, don't indicate public comment or discussion of the no-confidence vote. They indicate only that then-Chairman Bruce Moore reminded the board that Jones' contract would be taken up at the next regularly scheduled meeting and acknowledged recent feedback from campus.
Action on Jones' contract was tabled until November 2018, when the full board could be present to vote on it. According to minutes from the November meeting, Moore said trustees were pleased with Jones' work.
Trustee Ross Whipple motioned to extend Jones' contract another year at the current salary, which then-Trustee James Barnes seconded. The board approved the motion, with Hardman voting against it and Arnold abstaining.
A Section on 05/30/2020