Arkansas Blog: Following the UCA money UPDATE

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.

Comments

Sadly, we no longer have the political class with the same cajones as we did 30 or so years ago. They're all in bed together & Lu's self & publicly financed high profile will keep him above & out of this.

Posted by: Pygface | July 4, 2008 08:07 AM

...and to that what appears to be an apathic public who doesn't push back on the establishment.

Posted by: Wellwood | July 4, 2008 09:42 AM

So just how much does all this ruin Lu's goal of becoming Governor in 2014? I didn't like him very much anyway - but I sure as heck won't vote for him now.

Posted by: EA | July 4, 2008 10:22 AM

Anyone thought to ask more about Kelley Erstine's recent resignation from UCA as head of the endowment? Seemed kind of quick? It also seemed unusual that he would go back to what he was doing previously - Exec of a Big I state organization - but in North Carolina.

Maybe no connection but it seems like odd timing after a significant raid on the endowment funds.

Posted by: The Inquisitor | July 4, 2008 10:26 AM

Aw guys, c'mon. ACP* boys will always be boys.

*ACP=Ark Corporate Party

Posted by: eLwood | July 4, 2008 12:07 PM

Isn't it the responsibility of a college to teach students what is legal AND ethical? I'm sure that someone at UCA will find a way around all the legal rights and wrongs in technical language that makes sense only to a few. But will anyone address if this so-called bonus was an ethical action by the Board of Trustees? I think "should they" should be part of "can they."

Rush Harding said that President Hardin was the least paid employee on campus. I bet the secretaries who have been there a dozen years and still make less than $20,000, volunteer to staff games and graduation, and works hard to help the "nobody" students disagree.

A UCA president should go get rich in business if he wants to, but not use the college he works for to fund his run for governor. I mean, if this is eventually repaid with private money, is there a legal cap one can contribute like there is in an election campaign? Aren't private donors buying future political favor? Or maybe they are buying favor for their sons and daughters now. I read on another blog that a board member's daughter was hired by UCA at this same secret board meeting. Really? Is this what my daughter is getting an education to learn?

Posted by: fionaglas | July 4, 2008 12:13 PM

If this money was intended as an incentive to keep Mr. Hardin as president, I'm wondering why the Board would pay it out early without the kind of "golden handcuff" provisions we all learned so much about in the case of a UA football coach who will not be named here because this thread is (thankfully) not about him.

If there is no written (and therefore subject to that pesky FOIA) agreement that would prevent Mr. Hardin from leaving for another school tomorrow, with $300k in pocket and no obligation to repay any of it, it would be interesting to hear the Board explain its thinking as to why the *early* payment was a judicious use of the public funds. I do not doubt the Board has a sound explanation; it would just be nice to read or hear it.

Or maybe golden handcuffs are irrelevant outside athletics. I'm just wondering.

Posted by: TAP | July 4, 2008 01:12 PM

How was the 6-0 public vote to cover everything in the executive session worded? Were the items, including the Hardin deferred salary deal, listed at any point? I'm asking, because this WOULD constitute a public vote on the items discussed in executive session, contrary to what we were hearing yesterday. BUT if the public vote didn't mention which items were being approved, I kind of doubt if those actions actually were approved legally. Of course the lawyers would have to say, but it would seem to me that this could give the board an out for this situation: Giving them the "need" to have another vote actually to effect the payment, thereby offering them the chance to get clean on this deal one way or another.

ARK. BLOG: It was a general motion to cover all items that occured in executive session. None was specified -- the Hardin pay or any other.

Posted by: Carrick Patterson | July 4, 2008 01:32 PM

Interesting report, Max. You and Brummett sniffed out a good story here. But it must be an awkward situation for your former colleague, Warwick.

Posted by: Arkansas Blogger | July 4, 2008 01:48 PM

Psst...I hate to say it, but it was that other paper that sniffed it out.

ARK. BLOG: I don't mind saying that

1) Brummett would have had it first, but Hardin didn't tell him the truth when he asked.

2) The fact that private money wasn't used was first reported here two days before the D-G reported and it has yet to fully deal with the question of what's the maximum pay of a president permissible under state law. Here, again, the D-G asked first, but it got an incorrect answer the first time.

Posted by: Doc | July 4, 2008 01:55 PM

From my perspective as a distant observer of UCA, here is my message to Lu Hardin:

I figure that most folks don't have a problem with an early incentive payment - if you remain at the position as expected. The source of the money is a valid issue, but I hope you get to keep it if you fulfill the expecations for your role at UCA.

Remember, your predecessor had the dubious distinction of a no-confidence vote by the faculty. The Hardin administration has done a great job in restoring academic integrity at the school, but taking this money and leaving early would be a setback for the school's reputation.

Posted by: Arkansas Blogger | July 4, 2008 01:59 PM

It is a shame UCA didnt follow the lead of the Houston Independent School District, and give
this "excess" money to help poorly compensated employees pay for the high cost of gasoline.

I am sure Mr. Hardins, Lee Iaccoca impersonationing commericials, must bring droves of brillant young minds to Conway. But he and the UCA Board of Trustees are a good example of whats wrong
with "the banana republic".

Posted by: succubus_demon | July 4, 2008 03:26 PM

I'll be real honest...aside from the fact that I attended UCA and donate a small amount of money from time-to-time, I don't have a dog in this fight. I also don't know much about Lu or UCA these days. I know I don't like the ads...even an outsider can see his ads are about him and not the school. Seldom do I see White, Kimbro, Hill or any other president spending university money to put themselves in an ad. Perhaps that is not Lu, perhaps it is poor marketing advice.

I say all that, to say I don't have anything against the UCA president, but this situation STINKS! Why give an "incentive" to STAY to someone before that stay time is up? Why give MORE money to someone who already makes so much, while voting to not give standard raises to anyone else? Why be so secretive about it?

Mr. Hardin and his board clearly view the public much like our presidential candidates do. They just say whatever they want, thinking that no one will actually question their lies.....
Well please AT keep questioning. Private money, public money, whatever...a state institution should be a good steward of the money.

Posted by: DHO | July 4, 2008 04:15 PM

It isn't the crime it's the cover up.

Heads will role.

Thank God.

Posted by: Fletch | July 4, 2008 05:49 PM

Arkansas Blog

Following the UCA money UPDATE

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