The Top 10 Business Stories of 2008

by Arkansas Business Staff  on Monday, Dec. 22, 2008 12:00 am  

John Glasgow, CFO of CDI Contractors, disappeared on Jan. 28. Dillard's owned a half-interest in CDI and was embroiled in a bookkeeping dispute with CDI management when Glasgow, of Little Rock, vanished.

Press reports in July concerning a secret $300,000 bonus for then-UCA President Lu Hardin started the avalanche of bad publicity, which led to revelations about operating deficits. Although Hardin returned the bonus, his attempt to boost his compensation led to his downfall and resignation (with a severance package worth nearly $1 million). The scandal's snowball effect resulted in the departures of several other high-ranking administrators.

It was a sad end to what appeared to have been Hardin's brilliant six-year career at UCA, during which enrollment grew by about 4,000 to 12,500, the quality of the school's entering freshmen (as measured by their ACT scores) improved and the university's profile soared.

The Board of Trustees promoted Tom Courtway from general counsel to interim president. He disclosed earlier this month that UCA faced a cash-flow deficit of $5.5 million.

The money troubles stemmed from a combination of factors, among them:

• About $5.5 million in debt owed by students and former students;

• A $4.5 million cut in state funding;

• Overspending on scholarships, including almost $1.6 million in taxpayer-funded scholarships awarded by Hardin with little oversight and no apparent relationship to the student's academic merit or financial need;

• A $1.5 million judgment against the school after a fatal accident involving a professor driving a UCA-owned vehicle; and

• The freezing in late September of millions of dollars of the school's money in the Common Fund, administered by Wachovia Corp., because of turmoil in the credit markets.

Adding insult to injury, Moody's Investors Service in November downgraded $83.9 million of UCA's debt to A3 from A2 – though that remains an investment-grade rating – citing the school's cash problems.

Mixed in were complaints that Hardin provided UCA-owned housing to students on a preferential basis – for example, to the son and daughter-in-law of state Sen. Gilbert Baker, R-Conway.

Courtway has announced a number of budget-trimming measures, including salary and hiring freezes and pay cuts for some administrators.



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