Audit Of UA After $4.2 Million Shortfall Shows No “Proper Fiscal Oversight”
A state legislative audit into a University of Arkansas division’s $4.2 million shortfall, released Tuesday, shows officials did not comply with university fiscal policies and continued to spend millions more, even after revenue stayed the same.
The audit comes after several positions in the UA division of University Advancement were shuffled around in recent months, resulting in at least one official losing his job and others being reassigned. The shortfall was initially estimated at $3.3 million, but the audit changed the figure to $4.2 million.
University Chancellor G. David Gearhart told 5NEWS last week that the problems were financial and non-intentionally. He also said he doubted the upcoming audit would reveal any wrongdoing.
The documents released Tuesday by the Arkansas Division of Legislative Audit state, “The vice chancellor for Advancement Division did not exercise proper fiscal oversight and did not comply with University policies and procedures.”
Brad Choate, the division’s vice chancellor at the time of the shortfall, was reassigned earlier this year and told he would need to find another job by the beginning of the 2014 fiscal year, which started in July. A search of his name in the UA registry shows no results. Choate was replaced by Chris Wyrick.
Joy Sharp, the budget official reassigned after the deficit became public, was docked $30,000 in pay. A search of her name also shows no results in the UA directory.
Another official within the division was fired last month, although that administrator said the termination stemmed from arguments over university transparency. John Diamond was terminated from his position as associate vice chancellor for university relations in August, with 30 days notice.
UA officials said in July that newly-announced staff changes after the money mismanagement would not result in the immediate termination of any employee, but would include several changes to key leadership positions.
“Change is never easy, but sometimes it is necessary,” Wyrick said at the time. “I think everyone, inside and outside this division, expects changes. At the same time, my prime goal was to ensure that no jobs were cut, and we did achieve that goal.”
The restructuring includes replacing the leader of the Advancement Division’s fundraising arm with Mark Power, the newly-named associate vice chancellor for university development. The previous leader, Bruce Pontious, retired in the spring, according to the UA.
Key assistant vice chancellor positions in external relations and internal operations have also changed hands, along with several other leadership and staff positions. Most changes were effective starting July 1.
Gearhart said the division had been meeting its budget by using anticipated revenue to meet current budget obligations. Miscalculations in the anticipated revenue led to a shortfall of more than $3 million for the Division of University Advancement’s $10 million budget, according to the statement.
The money was properly used for the division’s activities, but the division officials’ management of the money was “imprudent and unacceptable,” Gearhart said.
The division used money to fill staffing needs “while miscalculating the funding levels necessary to support those positions,” Gearhart said at the time.
“As I explained previously, the university’s treasurer—a former state auditor—reviewed the advancement division’s expenditures and found no misuse or misappropriation of university funds,” Gearhart said in the statement. “However, she raised concerns regarding the job performance or lack of performance by individuals who had primary responsibility for the division’s finances. The treasurer documented those issues and job performance concerns last fall. In making personnel decisions relating to this matter, I relied on the treasurer’s assessment of their performance.”
Gearhart said the performance assessments are not public record, and the university will not release them. The university shared the assessments with auditors.
“The university has been transparent and accountable about this situation,” Gearhart said. “I believe these audits will demonstrate that performance while still respecting the legal protections afforded public employees under Arkansas law.”