UA Works to Correct $4M Advancement ‘Miscalculation'

by Chris Bahn  on Monday, Dec. 3, 2012 12:00 am  

Brad Choate

While a final plan will probably not be adopted for several weeks, the solution preferred by the chancellor and his executive staff calls for rerouting “gift fee taxes” of between 10 and 15 percent on cash donations to the UA. Those fees, described by Diamond as a “cost recovery assessment” fee, are projected to generate up to $1.5 million during the next six months and would be a permanent part of the division’s revenue stream.

Also, a pair of one-time, $1 million transfers from the budgets of Provost Sharon Gaber and Don Pederson, vice chancellor for finance and administration, will be used to cover the current deficit. Administrators in Advancement — the division that includes fundraising, communications, marketing, special events and the World Trade Center in Rogers — are being asked to trim $800,157 from their operating budgets, including cuts to travel budgets and other expenses.

Choate, who joined the UA from the University of South Carolina in 2008, is being paid $348,175 this fiscal year, including $273,181 from the university and $74,994 in private funds. (He was No. 13 on Arkansas Business’ recent list of the highest-paid state employees who don’t work for the University of Arkansas for Medical Sciences.)

Advancement Division salaries and benefits budgeted for the fiscal year that started July 1 total $9.4 million. The division’s original revenue projection for the year was just over $10 million, including $5 million from the publicly funded “education and general” budget, a $450,000 share of interest generated by endowment accounts, and $4.5 million from the private, nonprofit UA Foundation.

No current positions are in danger of being cut, Diamond said. However, a hiring freeze has been placed on the Advancement Division and no positions can be added and no current vacancies will be filled.

“[O]ur fundraising mechanism that’s been in place has been working very well,” Diamond said. “It’s been very successful. … We’ve been using some of that revenue to help support additional positions. That continued at a pace faster than what it should have.”

Costs for positions within Advancement are often shared with the colleges they represent. For example, the cost of paying for a communications position for the Walton College of Business is split between the college and Advancement.

No shifting of full financial responsibility to the colleges was anticipated, Diamond said. He said the budget could be covered in the future without taking money from the individual colleges.

Money generated from the gift fee taxes should help cover the cost, he said. Arkansas had looked at possibly implementing the in-house “tax” on donations — common at other schools — when its next capital campaign began.

“We didn’t anticipate needing to go to this step this early in the process,” Diamond said.

Fundraising has been viewed as a bright spot for the UA under Gearhart, who served as vice chancellor for Ad-



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