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Debt Deferment Brings Relief To Arkansas Baptist, Philander Smith

5 min read

Two small private colleges in Little Rock started 2019 with a welcome dose of financial relief courtesy of Uncle Sam.

Arkansas Baptist College and Philander Smith College were given grace periods to repay a combined $44 million of debt.

The colleges were among 13 historically black colleges and universities (HBCUs) granted deferments from principal and interest payments on loans through the U.S. Department of Education’s HBCU Capital Financing Program. The deferments range from three to six years.

Arkansas Baptist received a three-year deferment from semiannual payments on a $30 million bond issue through the HBCU Capital Financing Program.

“That’s a major accomplishment,” said Regina Favors, interim president of Arkansas Baptist. “Two of our congressional leaders, Rep. French Hill and Sen. John Boozman, stepped up for us.”

Hill and Boozman were among a 21-member congressional group credited with making the program change to allow deferments through enacting legislation.

Roderick Smothers, president of Philander Smith, couldn’t be reached to comment on the deferment of the college’s $14 million capital financing debt.

At Arkansas Baptist, the deferment means the college won’t have to make scheduled payments of $750,000 in February and September during 2019-21.

“That’s given us a $4.5 million reprieve to recalibrate,” said Fitz Hill, executive director of the Scott Ford Center for Entrepreneurship & Community Development at Arkansas Baptist.

The deferment is a godsend for Arkansas Baptist. The private liberal arts college is working to restore its fiscal house after the brief but cataclysmic tenure of Joseph Jones.

During his 15 months as college president, enrollment plummeted from 832 to 529 and payroll ballooned to unsustainable levels.

The deferment will give Arkansas Baptist breathing space to rebuild enrollment and pay a backlog of bills amassed under Jones, who was fired Dec. 18, 2017.

“This will allow us to get the school back on stronger financial footing,” Favors said of the deferment.

College officials hoped to have 600 students registered for the fall 2018 semester, but enrollment only reached 523. Pell grant-supported students are the financial lifeblood of Arkansas Baptist, with 766 students needed to achieve break-even status.

Favors, a member of the board of trustees, was named interim president in September. She succeeds Howard Gibson, a former administrator at Arkansas Baptist College who took on the interim position to complete the 2017-18 school year after the exodus of Jones.

The board of trustees has set no timetable to advertise and hire someone to fill the post.

“The decision was made to name someone from the board to serve until we could get things more stable,” said Favors, a retired executive with Arkansas Blue Cross & Blue Shield. “I have a lot of history with the school, and I’m an alumna.”

Both her parents were graduates of Arkansas Baptist as well.

Lawsuit & Opportunity
In July, Joseph Jones sued the college for wrongful termination, challenging the board of trustees’ contention that he was fired for cause.

“He’s not pursuing his lawsuit very aggressively, I can tell you that,” said Richard Mays, chairman of the Arkansas Baptist board of trustees.

In August, Jones went to work as an associate professor of political science and special assistant to the president for his alma mater, Philander Smith College.

Members of the board of trustees said 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.

Instead, Jones shut down the college’s recruitment system to attract its targeted demographic of marginal and at-risk students. He also unsuccessfully tried to diversify the base enrollment by attracting traditional college-bound students sporting scholarship-worthy ACT scores.

Traditional students didn’t come to the college in sufficient numbers to offset the loss of marginal and at-risk students.

His apparent efforts to transform Arkansas Baptist into more of a traditional demographic mix populated by more mainstream students produced disastrous financial consequences.

“Education rehabilitation,” said Fitz Hill, Jones’ predecessor as president of Arkansas Baptist, 2006-16. “That’s what we do.

“Rarely do we get a student from a recruitment fair. We get students because of a teacher, a pastor, a coach, a counselor or a parole officer.”

Despite its roller-coaster financial track record, Arkansas Baptist maintains loyal boosters from the local business community.

Bill Dillard III, senior vice president at Dillard’s Inc., has been a supporter of Arkansas Baptist for more than 10 years. He was drawn to its mission of providing opportunity to students whose collegiate prospects appear dim.

“We need an institution like this in our city,” Dillard said. “They represent a chance to break a cycle and change the direction of lives.”

He also views Arkansas Baptist as a stabilizing anchor of development, with a positive influence on the surrounding neighborhood.

“That part of the city is challenged and has been for a long time,” Dillard said. “The college can be a real catalyst for revitalization.”

The proceeds from its Dec. 5, 2014, bond issue allowed Arkansas Baptist to repay $27.8 million of short-term debt to nine lenders and creditors.

The long-term funding largely consolidated construction loans that backed an aggressive capital improvement campaign. The extensive campus makeover consisted of a mix of restoring old buildings and building new.

Completed in 2010, the renovation of Old Main provided a historic centerpiece to the work. Built in 1893 and listed on the National Register of Historic Places, the four-story structure is the oldest African-American educational building in Arkansas.

New construction included adding a residence hall and general education building as well as expanding the college’s cafeteria.

Fitz Hill hopes to extend Arkansas Baptist’s economic footprint in the neighborhood through more community development.

Jess Askew, partner in the Little Rock office of Kutak Rock, said the law firm took notice last summer of all the things that Hill was involved with, including Arkansas Baptist College.

“We as a group asked what we could do to help him,” Askew said. “Arkansas Baptist College itself is a real estate issue, a neighborhood safety issue, an education and opportunity issue, a second-chance issue. We have the ability to come in and help with entrepreneurships.

“It’s a real nice intersection with the things we do and the things he’s trying to spread to those who need a little more opportunity.”

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