An audit of the UA Division of Advancement’s budgets showed that during the fiscal years 2009 and 2010, the division finished with a budget surplus, but in 2011 and 2012, the division ended in a deficit. These findings along with others supported information provided by the chancellor when he announced the deficit in December.
The $4.19 million deficit from fiscal year 2012, which ended June 30, 2012, was “definitely in range of the original estimate,” UA Treasurer Jean Schook said to media Tuesday.
The 2012 total takes into account the combined deficits of the UA Division of Advancement, which was $3,806,418, and the Advancement Foundation, which was $384,066 and added up to $4,190,484.
That number, however, is about $1 million more than the initial reports of the deficit in the letter from Chancellor G. David Gearhart, which states that “the advancement division finished the 2012 fiscal year with a $3.1 million shortfall.”
Two agencies contributed to the audit – the Division of Legislative Audit and the University of Arkansas System Internal Audit Department.
“Advancement revenues remained relatively constant over the four-year period reviewed, while expenditures increased significantly from $7.94 million to $13.23 million, resulting in an overall decline in the combined Advancement and Foundation cash balance,” the 40-page audit states.
Gearhart was confident in the report, especially its findings that there was no fraud or theft to blame for the deficit.
“Our own review and now the legislative and UA system audits found that the division was, in effect, borrowing on anticipated revenues to pay current bills – that’s unacceptable and it cost two employees their jobs,” Gearhart said, referring to former Vice Chancellor for Advancement Brad Choate and Joy Sharp, who was formerly the director of human relations for the advancement division.
The advancement division balanced the budget for fiscal year 2013. Cuts, or cost containment, played a part in ending the year without a deficit.
About $700,000 in marketing expenses was cut, including a lot of advertising in Dallas to entice prospective students, Gearhart said.
They even “cut day-to-day expenditures. We looked at every single expenditure – even the coffee we drink – and broken it down to what’s necessary and what’s not necessary,” said Chris Wyrick, who replaced Choate as the vice chancellor of advancement.
Gearhart was adamant in defining the deficit as a case of “overspending” that wasn’t “misspending.”
The funds weren’t misspent because they were used to fill positions “that were necessary,” and “all expenditures were for legitimate university needs in preparation for a major capital campaign,” Gearhart said.
“There’s no lost money there. (The surplus employees) were hired under our plan to continue to try to raise more money,” he said.
But he later said that “it’s probably accurate” that the employees wouldn’t have been hired if the budget had been more closely monitored.
“They shouldn’t have been hired until we had the resources,” Gearhart said.
(Published Sept. 11, 2013 in The Arkansas Traveler.)
Kristen Coppola 