UA Mismanages $3.1 Million
Two UA staff members have been reassigned after the Chancellor G. David Gearhart released a statement saying that $3.1 million of the Division of University Advancement’s budget had been misspent.
Officials within the department spent about $3.1 million more than they had the resources to use, said John Diamond, associate vice chancellor for University Relations.
The department is responsible for “enhancing the university’s image, involving alumni and other constituencies in proactive functions and raising private gift support,” according to their website.
The department’s vice chancellor, Brad Choate, will remain with the university until June. Joy Sharpe, a budget officer, who was responsible for managing the day-to-day budget, has been reassigned to the Human Resources Department, Diamond said.
Choate and Sharpe’s contracts will be concluded at the end of this fiscal year.
“With 32 years of proven loyalty, dedication, integrity and success, my career of service to higher education stands on its own,” Choate said via email. “Most recently I have worked hard to lead University Advancement to benefit the students, faculty and staff of the University of Arkansas.
“I am certainly saddened by, and do not agree with, the chancellor’s decision to not renew my service after June 30, 2013, but that is his decision. As long as the university employs me it will be my pleasure and privilege to work hard to benefit this fine university,” he said.
There was no evidence of inappropriate expenditures or uses of funds, according to the statement. The mismanaged money was used to hire staff for the department, but they will not be losing their jobs, Diamond said.
“The chancellor feels that it was the right thing to do to hire those people,” he said.
The chancellor has begun investigating why this occurred and is working to make sure it does not happen again, Diamond said. The chancellor notified the campus of the situation through a formal statement released through Newswire.
“The review determined flaws in the division’s budget management process at the senior level,” according to the statement. “Those with ultimate budget oversight did not follow campus policies and inadequately monitored finances. Consequently, the division lacked financial resources sufficient to support the personnel growth it experienced in recent years in preparation for an upcoming capital campaign.”
The Division of University Advancement is responsible for about $10 million. This is the first time that the budget has been unbalanced by this much, Diamond said.
“In every department,” he said, “it’s not uncommon for a budget to unbalanced by a small amount.”
Choate notified the chancellor of the discrepancy at the end of this fiscal year on June 30.
The money to balance the budget will come from a university reserve fund and a plan initiated by the chancellor, Diamond said. The plan, a cost-recovery assessment, will help replenish the mismanaged money and ensure the budget remains balanced in the future.
A portion or fee of donations given to the university will be allocated to Advancement, he said, as part of the plan.
This situation will not affect faculty or tuition, Diamond said, but the chancellor has taken steps to ensure the best outcome for the UA and its affiliates.
“Like many of you, I am deeply disappointed by what occurred.” Gearhart said in his statement. The steps we have taken and will take will ensure the sound and prudent operation of the advancement division while also maintaining its high level of productivity.”