Henderson State Announces Furloughs as Financial Troubles Persist

Henderson State Announces Furloughs as Financial Troubles Persist
The Henderson State University campus in Arkadelphia (Henderson State University)

Henderson State University on Thursday announced furloughs, salary reductions and other cost-cutting measures as it seeks to address existential financial challenges.

The university faces a projected shortfall of $12.5 million in cash this fiscal year, which Chancellor Charles Ambrose said would leave it unable to service debts, pay bills and pay employees.

The long-term outlook is "even more grim" if immediate changes are not made, Chancellor Charles Ambrose said in a public letter detailing the situation. The four-year university's long-term debt has grown from $14 million to $78 million, requiring annual payments of $6.9 million. And years of deficit spending have left the school with no funds available in its reserves. 

In response, the public university in Arkadelphia is pursuing a declaration of financial exigency. Every employee, except those who aren't paid through state funds, will have to take one furlough day per week beginning Feb. 28. The university is cutting a small number of positions and reducing salaries for certain academic administrators, which follows a 3% pay cut in 2020. And some programs will be cut as the university reallocates resources.

"Unfortunately, these changes will need to be implemented immediately, and they will be painful and impactful changes for our campus and the members within our learning community," Ambrose said.

The Arkansas State University System, which Henderson State officially joined in February 2021, is looking at ways to restructure the university's annual debt payment. 

Other measures being taken include a hiring freeze, limitations on travel and supply expenses, and reduced vendor contracts. 

Ambrose said the university will also propose changes to its retiree health insurance benefits that will take in effect in July. That could add to benefit cuts implemented in 2020, when the match to retirement plans was reduced from 10% to 6%.

Despite the challenges, the university has no plans to close or become a community college. If academic programs are eliminated, students will still be able to complete their degrees.

"While I know this is not news that we all wish to hear or certainly I want to deliver, I know that our campus will utilize this process to become stronger and more focused on the students we serve," Ambrose said. "Today is the first of many steps in that process."

Ambrose was optimistic about the cash-strapped university's future after it joined the ASU System last year but still described fixing its financial situation as a "multiyear turnaround project." 

Henderson State is the only university in Arkansas with negative operating margins in the state's 2016-2017 and 2020-2021 evaluation periods, according to the Arkansas Higher Education Coordinating Board. For years, it has had a reputation for letting students slide on their debts and failing to keep adequate budget reserves.

The school had an enrollment of 3,163 in fall 2020. 

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