UPDATED and CORRECTED: UCA Moves to Correct Illegal Borrowing

by Mark Hengel and Gwen Moritz  on Friday, Oct. 10, 2008 11:04 am  

Jim Purcell, director of the state Department of Higher Education, says he informed UCA that state law required any line of credit had to have prior approval from both DHE and the state Department of Finance & Administration.

Tom Courtway, formerly UCA's general counsel, has been acting as interim president, and Harding said Courtway's dealings with the trustees and faculty have been "more transparent." During the board meeting, Courtway said that the staff and faculty senates had been advised on the university's financial situation during the previous weeks.

Harding pledged that the trustees will accept responsibility for "managing our cash-flow more dutifully." And he said, if he has his way, one of the recent drains on UCA's reserves will come to a halt.

"I want to hire a new president who, he or she, doesn't feel the need to buy every piece of property that goes on sale within a five-block radius of the campus," he said. He complained that Hardin and his predecessors had paid full market value for any property that came available near the campus, driving up the value of property around UCA.

Purcell said another contributing factor to UCA's deficit has been the generous use of scholarships to attract top-tier students to the Conway campus.

DHE had determined that UCA has been netting only $3,232 per full-time student, or about 60 percent of the advertised tuition price of $5,665.

"You really can't give away a product over an extended period of time and expect to stay in the positive," Purcell said.

Purcell said he met with the faculty senate at UCA earlier this week and discussed the school's over-reliance on scholarships.

"Scholarships can jump-start a program," he told ArkansasBusiness.com, "but at some point you have to live off your reputation. And UCA has a great reputation" and should now be able to reduce its use of scholarships.

UCA has curtailed its scholarship spending in recent years. Courtway said reining in scholarship spending takes multiple years though, as incoming classes work their way through the university. During the 2006-07 school year, UCA spent $23 million on scholarships, McLendon said. The university is spending $18 million this year.

Other Schools

The Higher Ed board will be given details of college and university financial health at the meeting Tuesday in Rogers, Purcell said. The report, he said, will show that several of the state-supported colleges and universities have reserves below the comfort level and that two more, besides UCA, have negative "expendable fund balances."

They are:

  • Henderson State University at Arkadelphia, with a negative expendable fund balance of $992,000; and
  • The University of Arkansas at Pine Bluff, with negative $243,000.
Purcell said he knew of no other college or university that has a line of credit. Hardin, however, told ArkansasBusiness.com that he believed some other state schools had private lines of credit similar to UCA's.



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