Henderson State University later this month will begin requiring employees to take one-day-per-week furloughs while campus leaders pursue a long-term strategy of program cuts in response to a cash crunch and depleted savings, according to documents presented to university staff and faculty members Thursday.
Chancellor Chuck Ambrose, who started on the job in November, in a phone interview said there's a need for immediate cost savings at the Arkadelphia campus -- including "fewer than a dozen" staff positions eliminated this fiscal year -- as well as more permanent changes.
"We failed to make our spending adjustments against the decline in enrollment. We've relied for two years on federal stimulus dollars to somewhat defer those decisions, and it's accumulated in the last part of the fiscal year, requiring us to act at a speed and a scale that's hurtful," Ambrose said.
Faculty and staff members heard Ambrose in a virtual meeting Thursday announce a plan to declare "financial exigency," a process outlined in the university's faculty handbook that could result in a hastening of program reductions.
"I fully expect that at some point faculty will lose their jobs," said James Engman, a biology professor for the past 26 years at Henderson State and president of the university's faculty senate.
The university enrolled 2,919 students last fall, down 7.7% from the previous year, according to state data. Most other universities also saw enrollment declines, but among public universities only Arkansas Tech University saw a steeper drop by percentage.
Before the most recent year-over-year enrollment decline, the university experienced previous financial woes, including an operating loss of $6.1 million in fiscal 2019. University officials have linked financial difficulties in part to unpaid student accounts.
The campus now faces a $12.5 million shortfall in its current fiscal year, which ends June 30, according to the documents shared with staff and faculty members Thursday, and also posted on the university's website. The university projects $55.8 million in annualized cash revenue rather than the budgeted amount of $68.3 million in operating revenue.
Immediate changes described in a letter by Ambrose to the campus community also include salary reductions for some academic administrators. The furloughs start Feb. 28 and are expected to continue through June "at a minimum," according to the financial presentation documents.
Federal stimulus aid referred to by Ambrose has come in the form of millions in federal coronavirus relief funds distributed to Arkansas colleges and universities. But the financial documents presented Thursday stated that the $12.5 million shortfall is projected even with $6 million in federal relief funds, which will not be available in the next fiscal year.
"As we attempt to redefine the scope and role of HSU as an institution of higher education, we are going to make changes to our management structure to ensure that our resources are allocated appropriately," Ambrose said in a letter addressed to the campus community. "Sadly, this process will ultimately involve program elimination and a reallocation of resources into the programs that best serve our students and community."
In 2019, state officials approved a $6 million loan to Henderson State University, the first such loan from the state's Budget Stabilization Trust Fund to a public higher education institution since a 2009 loan to the University of Central Arkansas, a state spokesman has said.
Henderson State has until June 30, 2028, to pay back the previous $6 million, no-interest loan from the state, and the university repaid $250,000 on June 30 of last year, according to information posted on its website.
Ambrose, in a phone interview, said the university is not currently planning on asking the state for an additional loan.
In response to the 2019 financial woes, Henderson State joined the Arkansas State University System. Henderson State officially became a part of the ASU System in 2021.
"We've known for a long time that Henderson was in a very precarious financial position, and drastic measures are going to have to be taken for this institution to survive," said Engman, the biology professor.
But he said he has concerns about using simple financial measures to decide what academic programs to cut.
"Science is expensive to do," said Engman, adding that Henderson State has propelled many students onward to graduate degree programs in medicine, pharmacy and physical therapy, among other disciplines.
"I know the administration has some really, really difficult decisions to make. But what we're hopeful for is that the faculty will be allowed to have significant and sufficient input into how those decisions are made," Engman said.
The presentation documents from Thursday noted that Henderson State's graduation rates "are among the lowest in Arkansas," while also stating that more than half of the university's first-year students are eligible for federal Pell grants, a form of financial aid reserved for students with exceptional financial need.
Among Pell grant recipients, the six-year graduation rate was 26%, while for non-Pell recipients, the six-year graduation rate was 45.7% for those students entering in 2014, the documents state.
Ambrose said in a phone interview that the cost of delivering programs will be a factor in any decisions on cuts, but so will factors like whether students in a program go on to earn their degrees and whether programs serve workforce demands in the region and state.
"The business model of higher education is all driven by our ability to help students succeed," Ambrose said.