Little Rock’s Arkansas Baptist College should be nearing completion of its second academic year of financial stability heading toward the start of the 2018 fall semester. That was the plan.
Instead, the historically black college is battling through a fiscal crisis that threatened to close its doors once again. Leadership at the private liberal arts school also now is contending with a lawsuit filed by the man they say is most responsible for Arkansas Baptist’s severe reversal of fortune: Joseph Jones.
During his 15 months as college president, enrollment plummeted from 832 to 529 and payroll ballooned to unsustainable levels. The double whammy of tumbling revenue and escalating expenses quickly sent the financially challenged college into an operational tailspin.
“If I wanted to shut Arkansas Baptist down, I would do exactly what he did,” said Bill Walker, the Little Rock businessman who joined the Arkansas Baptist College board of trustees in September. “His lawsuit is a last-ditch effort to throw a rock at us.”
The open-enrollment school, whose financial lifeblood is Pell grants, is now working out of an estimated $4 million hole and trying to rebuild enrollment back above its break-even level of 766 students. College officials hope to have 600 registered for the fall semester.
“It’s disheartening to see where the school is today,” said Fitz Hill, who brought Arkansas Baptist back from the brink of closure and led a $30 million campus makeover during his 2006-16 tenure as president. “We’re going to balance our budget to whatever it is.”
Hill has returned to lead recruitment efforts after stopping nearly two years ago at the direction of Jones. Hill also is working with the board of trustees to help shore up Arkansas Baptist’s finances.
“I’m back involved because it would hurt me if the school closed after I worked 10 years to turn things around,” said Hill, who stepped down as president to focus on recruiting and fundraising for Arkansas Baptist. “There are people that are owed money by the school, and I want to get them paid.”
‘Fired for Cause’
Richard Mays, chairman of the board of trustees and a Little Rock attorney, is surprised that Jones followed through with his threat to sue the college for wrongful termination.
According to Mays, Arkansas Baptist has little to lose in the dispute beyond the public embarrassment of hiring Jones and not reining in his mismanagement sooner.
“He was fired for cause,” said Mays, who said he didn’t favor hiring Jones two years ago but had no inkling of the financial upheaval that was to come.
“We tried to let him leave quietly. But he’s vindictive and thinks he’s been wronged.”
Jones declined to comment.
He started work as president of Arkansas Baptist on Sept. 1, 2016. His last day on the job was Dec. 18, 2017.
According to Walker and Mays, Jones hid from the board of trustees the true deteriorating financial situation that he had created until the college was in crisis. They say that along the way Jones misled the board about his efforts to restore financial order until members discovered how dire things had become.
“He lied to us,” Walker said. “He had budgets he never met.”
That blunt assessment signals a change in stance for the college since Jones filed his lawsuit on July 23 in Pulaski County Circuit Court. Before that, the cause for Jones’ dismissal was described more diplomatically as a “lack of transparency.”
On Jones’ watch, federal tax withholdings for employees went unpaid for nine months during 2017, and employee benefits weren’t paid for six months. It was a shocking revelation for board members who were assured by Jones that he had taken care of these problems months earlier.
“That was the final straw and biggest one,” Walker said. “Those funds belonged to other people and to lie to the board was egregious. We got with the IRS to work out a payment plan and had to bring in an outside CPA to straighten out our tax records.
“We got to digging in and discovered more payroll issues. Vendors weren’t getting paid. Utility bills weren’t being paid. It all came to a head.”
With insolvency rearing its head, the board formed an emergency management committee to step in and deal with the financial crisis.
The committee became a source of friction between Jones and the board of trustees, according to Mays and Walker.
Jones complained the board was undermining him and trying to micromanage the financial affairs of the college through the committee, Walker said. It’s an allegation repeated in Jones’ lawsuit.
Walker said that, given his lack of administrative experience and in light of his poor performance, Jones should have received greater oversight and supervision from trustees from the beginning.
“The board was way too passive to allow this situation to get as bad as it got,” Walker said. “There was no interference or intervention until near the end. He got his way until things reached a crisis.”
According to Mays, Walker and others at Arkansas Baptist, Jones tried to shift the blame for the problems that arose during his brief tenure back on his predecessor: Fitz Hill.
However, they said Jones took over a solvent operation with an enrollment that more than supported the college’s payroll. He inherited a $1.2 million cash reserve built by the Hill administration that Arkansas Baptist hoped to grow to $3 million by 2020.
Jones changed all that when he replaced staff members with higher-salaried personnel and shut down the college’s recruitment system established by Hill to attract its targeted demographic of marginal and at-risk students. By March 2017, the cash reserve was depleted to cover his deficit spending.
According to Mays and Walker, Jones failed to embrace the open enrollment mission of Arkansas Baptist to bring in high schoolers who didn’t have the academic qualifications to be admitted at most colleges or universities.
“He had an incredible opportunity with what he was given,” Walker said. “If he didn’t like the mission, he shouldn’t have accepted the position.
“It was clear to me the board made a mistake in hiring him. He was not the kind of leader to bring people together. He wanted to blame the previous administration for his mistakes.”
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Mays and Walker said Jones began waging a scorched-earth campaign against Arkansas Baptist even before his exodus in December. It began with Jones giving disparaging and inaccurate information to the Higher Learning Commission in hopes of undermining Arkansas Baptist with the accrediting agency.
“We didn’t realize he was that hostile,” Mays said.
Jones also commissioned what he portrayed as an independent audit of the college by the Wesley Peachtree Group. The report, which came as a surprise to the board of trustees, was riddled with inaccuracies as well, according to Mays and Walker.
They believe Jones controlled the narrative of the so-called independent audit and provided a copy to the Arkansas Democrat-Gazette to stir up negative publicity about Arkansas Baptist after his dismissal.
Mays and Walker believe Jones had the document created to deflect blame from him for the college’s financial problems that suddenly surfaced during his administration.
“I complained every meeting about the financial information that wasn’t forthcoming from him,” said Walker.
He and Mays said Jones was unable to come up with a realistic plan to solve the financial problems he created, and that led to Jones making a surprise move near the end of his presidency: Jones unilaterally started talks with officials at Central Baptist College in Conway about merging with Arkansas Baptist.
Trustees were stunned to learn of this development.
“To engage in that level of discussion without the board’s knowledge and consultation?” Walker said. “That didn’t go over well.”
John Rutledge, president of First Security Bank, remains optimistic Arkansas Baptist can execute a game plan to get its finances in order and continue its outreach to at-risk students.
“It sounds like it’s still a challenge,” Rutledge said. “But there’s been some leadership changes.
“Hopefully, they can get everything squared away, so they can keep helping people who might not receive help from anyone else.”
First Security and other boosters in the business community continue to back the college and its mission.