Following the UCA money UPDATE | Arkansas Blog

Following the UCA money UPDATE

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The Democrat-Gazette continues to pursue the fine print of the early payment of $300,000 to UCA President Lu Hardin as a result of a secret vote by the Board of Trustees.

The article acknowledges what I told you two days ago. This is not private money. It comes, as mentioned here yesterday, from a Board of Trustees discretionary fund made up of "excess" profits from campus bookstore and food operations and some unspecified private money. Just exactly what is an excess profit? Is it money that otherwise could be used to support students? Is it money that could be returned to students in the form of lower prices on books and burgers? I bet the ancillary profits count for a good deal more in this fund than private contributions.

This whole situation needs a disinterested legal analysis.

UCA officials are throwing around the notion that this money is somehow not public money. I don't think that will stand legal analysis. Once money, of any sort, enters the accounts of a public institution, it is public money and its use is fully disclosable and governed by laws of the state. The Board of Trustees is not a private entity; it is appointed by the governor to oversee a public institution. Even if it has voted itself the power to annex some of campus money for discretionary spending, this does not exempt it from the law.

The article raises the UCA defense that, because the money is from campus-generated money and is not from state general revenue, the spending of the money does not count under the state statute that caps public employee compensation at a figure 25 percent higher than the legislatively appropriated maximum. Guess what? Nothing a college spends is wholly from general revenue. Ever heard of student tuition? I don't accept this legal analysis, but I don't have the statutes before me.

Think about the can of worms that is opened if a university board has the power to designate non-general-revenue money for unfettered discretionary spending? The mind boggles.

(You ask about UA and the enormous sums paid coaches in excess of line-item maximums? The UA has done a work-around through the private Razorback Foundation. It is not controlled by the Board of Trustees. Its money isn't directed to it by a Board of Trustees vote. Those are just two differences with the UCA Board's sequestering of what I believe is undeniably public money, if not general revenue, for its own, sometimes secretive, uses, including a payment of money to the president in one year well in excess of what otherwise would be the statutory maximum.)

No wonder UCA Trustee Rush Harding, the key facilitator in all this, wouldn't return my call about this yesterday.

I'm practicing law without a license, of course. The UCA folks are practicing it only to the extent they can cover the tracks of an embarrassing maneuver. (Even they concede a "gray" area about whether the bookstore fund is public money.) This needs a firm and thorough legal analysis, not only because of this particular expenditure but for future expenditures by all similarly situated institutions.

If the law does allow a public governing body to skirt statutory salary caps by tapping money generated by a public institution but not deriving from "general revenue," then the law needs revisiting.

Somebody should request an attorney general's opinion.

This would, inevitably, cause a few politically tinged comments. Dustin McDaniel will be running for governor in 2014 as a Democrat. Lu Hardin has talked to Republicans about such a possibility, too.

UPDATE: Trustee Rush Harding called me this morning. He said he'd just missed my call yesterday, which came about the time he departed for a business trip to Baton Rouge. He offers some interesting comments on the jump, including details of that closed meeting in May.

 

Harding, who was Board chairman when Hardin's deferred comp plan was adopted three years ago, defended the Board's good intentions by reminding me that the same discretionary fund was used as severance pay for Win Thompson, the former UCA president. He doesn't understand why faculty members who were calling for Thompson's scalp then and were happy to see the fund used for that purpose, don't understand its use now to retain a president who's overseen unprecedented growth in enrollment and quality of student body under Hardin. He also notes that UCA draws less state support per student than any other college in the state and that administrators elsewhere are more richly paid than Hardin, who's outperformed them.. He acknowledged difficult recent times in terms of faculty pay, but said:

"The best chance for the faculty to get a raise is to keep Lu Hardin at the helm."

Interjection: I think severance pay and compensation are different matters as a point of law.

Harding said the subject of writing a new six-year contract for Hardin was the primary reason for the May executive session. Some trustees had questions about aspects of what Harding described as a "tweaking" of the contract. "The discussion was spirited," he said.

Out of an abundance of caution, he said, action on the entire contract was deferred in favor of seeking a legal opinion. But, "as a show of good faith," Harding said the Board decided to accelerate the deferred comp payment. I gather the private vote on this was not unanimous though Harding wouldn't disclose it. The public vote, a general motion covering everything on the executive session agenda, was 6-0. He conceded that was merely a show vote to demonstrate a unified front.

"In retrospect, we should have said we had a discussion on Lu's contract," Harding said.  And the Board should have announced the specific decision, he said.

It's still his hope to complete a new contract for Hardin at the July Board meeting. Asked if there'd be any corrective steps for recent action, Harding said: "I still don't think we've done anything wrong."

I asked if they'd seek an attorney general's opinion. He responded that the attorney general would have to defend UCA should somebody decide to sue over the issue.

Harding confirmed that the question of including a sabbatical for Hardin had been part of the contract tweaking discussed at the May executive session.. The question of politics surfaced at least briefly in that discussion, in the context of whether the sabbatical could only be taken for specified reasons. Harding said sabbaticals are granted for use at the faculty member's discretion and this should be no different. He said there was no specific suggestion to provide a sabbatical for Hardin for political purposes.

Interjection: Sabbaticals for college presidents are somewhat unusual in that their primary job is administration. Faculty sabbaticals, at least in theory, are intended to provide time for study and growth in teaching fields.

Harding said the week's events and the press coverage, if uncomfortable, had been a "good wake-up call."

This is probably as good a point as any to throw in a political dimension of this story that I haven't discussed previously. That is the  fact that some are promoting Hardin as a potential successor to Alan Sugg as president of the University of Arkansas System when he retires. Talk about politics. The UA variety is big league. The hottest rumor there currently is that lawyer and former Farm Bureau head and UA trustee Stanley Reed is the early favorite to succeed Sugg.

PS -- I forgot to mention: Harding said that, in the future, there's no doubt use of the board's discretionary fund would be subject to public disclosure. He indicated that the board had viewed one of the benefits of the fund previously as secrecy. It was a way to provide assistance for one campus need without necessarily stirring complaints from another quarter. It was amazing to me that the board could believe that money it obtained from campus operations could be used privately and not be subject to disclosure. I think full disclosure of past discretionary fund spending should be done post haste.

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