Find out more →

Get unlimited access. Become a digital member!

Thursday, January 30, 2014

University of Arkansas to square Advancement Division deficit from reserves

Posted By on Thu, Jan 30, 2014 at 9:07 AM

The University of Arkansas today announced a general outline of dealing with $3.2 million deficits accumulated by the Advancement Division, whose travails led to high-profile firings, multiple audits and a generally long run of negative headlines. The division's budget is about $13 million a year.

Reserves, which had been used to cover the overspending on an interim basis, apparently will be the permanent solution, both for past deficits and perhaps for any short-term coming shortfalls that occur as spending is ramped up for another major fund drive. I have sent some questions for clarification, but here's the UA release:

The University of Arkansas will use existing reserves to fully fund the Advancement Division’s annual operating expenses moving forward and eliminate the division’s previously accumulated deficit – all 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 university is in the quiet phase of a major fundraising campaign that is expected to dramatically 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.

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. The private funds will come from the Advancement Division’s annual portion of distributions from the endowment.

The Advancement Division receives funding from several sources including annual distributions of a half a percent of the total endowment amount, so the division’s revenue grows as the endowment grows. For example, the division’s annual distribution grows by $1 million for every $200 million in endowment growth based on a 36-month rolling average. The endowment is currently worth more than $825 million.

The University of Arkansas is currently ranked No. 21 among public universities in private giving support, due to the generous support of its alumni and friends and the work of the Advancement Division. The university has recorded more than $100 million in private giving support the past three years and is on pace to do that again this fiscal year. This support continues to be a critical component of the university's success, as it adds to the academic opportunities available to faculty, staff and students on campus, including merit-based and need-based scholarships; technology enhancements; new and renovated facilities; undergraduate, graduate and faculty research; study abroad opportunities; and innovative programs.
The Advancement Division includes six diverse units including the Arkansas Alumni Association, Arkansas World Trade Center, and the offices of university development and university relations.

UA spokesman Mark Rushing provided some followup information to some of my questions, with more promised later:


The reallocation of $2.3 million in the existing budget as a budgeted reserve fully funds the Advancement Division this year, next year and moving forward. The division requires all of its funding including the reallocation for annual operating expenses, so if the division did not get a reallocation, it would not have sufficient funding to balance its annual budget.

The division did significantly reduce spending in fiscal year 2013 and those cost savings efforts are continuing this fiscal year.

The reallocation of $2.3 million will be from the university’s budgeted reserves. Once the university's endowment increases – increasing the portion the division receives annually – the reallocation will no longer be needed, so that private funds will replace the university budgeted reserves allowing the budgeted reserves to be restored to the previous level.

As far as the cumulative deficit is concerned, it will be eliminated with a combination of university reserves and private funds (a specific breakdown of percentages won't be available until later this fiscal year, but at least $500,000 in private funds will be used - based on available private funds not part of Advancement’s current budget - from private funds) this fiscal year. Then, private funds will be used in the future to repay any university reserve funds used to eliminate the cumulative deficit (accumulated in 2011 and 2012) this fiscal year. 

Tags: ,

Speaking of University Of Arkansas, Advancement Division

Comments (6)

Showing 1-6 of 6

Add a comment

 
Subscribe to this thread:
Showing 1-6 of 6

Add a comment

More by Max Brantley

Most Shared

  • Michelle Duggar and the Family Council try to torpedo Fayetteville non-discrimination ordinance with lies

    The Arkansas Family Council has enlisted Michelle Duggar to oppose a Fayetteville non-discrimination ordinance with a fear-mongering robocall.
  • Train derailment in Hoxie kills 2; homes evacuated

    Two people were killed with two trains collided near Hwy. 67 early this morning, and State Police are evacuating residents of the southern end of the city while the trains burn. U.S. 67 south of Hoxie and U.S. 63 are closed. The trains were carrying hazardous chemicals.
  • Minimum wage group turns in nearly 70,000 additional signatures

    Give Arkansas a Raise Now, the group seeking to qualify a ballot measure to raise the state minimum wage from $6.25 to $8.50 an hour by 2017, turned in an additional 69,070 signatures to the Arkansas Secretary of State's office today.
  • American Bridge releases report on Koch brothers' environmental impacts and layoffs

    American Bridge, the liberal PAC formed by David Brock, the former Clinton foe now dedicated to round-the-clock Hillary Clinton defender, is out today with a new report on environmental impacts and layoffs from Koch Industries. The report focuses on the business activities of the Koch brothers — more famous for hundreds of millions in political spending aimed at slashing government services, regulation and taxes — in twelve states, including Arkansas. From the report: "The Kochs' extreme, self-serving agenda is bad for working families. And that reality is starkly embodied not only by their political persuasions, but by their business endeavors."
  • And then I ... read about a tour of sculpture installations by Barbara Satterfield

    Ceramicist Barbara Satterfield, one of the Arkansas Times' "Visionaries" in 2013, has announced the creation of a touring, interactive sculpture exhibit that will be installed in public places in Helena, Heber Springs, Dardanelle and Warren before the final exhibition at the Cox Creative Center.

Most Viewed

Most Recent Comments

Blogroll

 

© 2014 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation