UA Says Deficit To Be Covered With Reserve Funds

After high-profile legislative hearings and numerous media reports uncovering details of a nearly $4 million deficit in the University of Arkansas’ advancement division, school officials say they will resolve the problem with reserve funds.

On Thursday (Jan. 30), the University of Arkansas released a statement saying it will use existing reserves to fully fund the advancement division’s annual operating expenses and eliminate the division’s previously accumulated deficit during the current fiscal year.

The reallocation will come from the university’s contingency reserve funds, intended to meet necessary expenses that surface after the end of the traditional budgeting process.

“These funds will be used to fully fund the division’s annual budget for an interim period,” the statement said.

Also during the current fiscal year, the division will eliminate what remains of its accumulated deficit from 2011 and 2012, now $3.2 million, with a combination of university reserve and private funds.

For months, news of a $4 million deficit at the state’s flagship university advancement division led to public accusations of a “culture of cover up” by school officials. Fired employees from the division suggested UA leaders misled authorities about the shortfall. Chancellor David Gearhart disputed the contention and a Washington County prosecutor decided in December 2013 that no criminal charges would be filed after an investigation.

Earlier this month, the UA board of trustees passed a resolution supporting Gearhart and accepted two audit reports on the matter.

The university is in the quiet phase of a major fundraising campaign that is expected to increase its endowment.

“Growth of the endowment over the next few years will create substantial additional revenue, a portion of which will go to the advancement division to balance its annual budget and repay the contingency reserve fund,” the university reported.