Prosecutor: No Perjury Charges Against Gearhart

The last remaining judicial investigation in connection with the financial crisis in the University of Arkansas’ Advancement Division has been closed.

  • Chancellor Gearhart, January 14, 2013: “Why do we have these documents? Get rid of them!”
  • Gearhart under oath, September 13, 2013: “I have never said to anybody that they should destroy documents.”
  • Prosecutor Larry Jegley, June 2, 2014: “there may be differing versions of the events and discussion concerning the matters at issue”.

Pulaski Prosecutor Larry Jegley announced on June 2 that he’d found no probable cause to take action against University of Arkansas officials (via Arkansas Blog). At issue was whether Chancellor Gearhart or other officials had committed perjury at a hearing of the Legislative Auditing Committee; Jegley’s office had jurisdiction because the hearing was held in Little Rock. Jegley’s letter gives no detailed reasoning for his decision. According to ArkansasOnline, Jegley could not be reached for further comment. For the University, and in particular for Chancellor Gearhart, an embarrassing  chapter has been closed for good but the damage is considerable.

On January 14, 2013, Chancellor Gearhart told staff members at a meeting, after a budget document had been handed out: “Why do we have these documents? Get rid of them!”. This version of events was confirmed by three witnesses: former Associate Vice Chancellor for Development Bruce Pontious, now retired; Associate Vice Chancellor Graham Stewart, who left to take a position at Vanderbilt University; and former university spokesman John Diamond, who was fired in 2013 and recently was appointed as spokesman for the University of Wisconsin in Madison.

2 quote Gearhart: ‘Get rid’ of papers, Lisa Hammersley, Arkansas Democrat-Gazette, December 19, 2013

At the meeting of the Legislative Audit Committee on September 13, 2013, confronted by Diamond, Gearhart stated under oath: “I have never said to anybody that they should destroy documents.”

Washington County assistant prosecuting attorney Dave Bercaw, investigating possible FOIA violations, redacted the “get rid” quote out of his final report. Now the Pulaski County prosecutor closed the remaining perjury investigation, stating: “While there may be differing versions of the events and discussions concerning the matters at issue, none rise to meet the standards [of the perjury statute].

Faculty Job Satisfaction at the UA

University of Arkansas faculty members took part in the 2009-10 edition of Harvard University’s national study, “Collaborative on Academic Careers in Higher Education” (COACHE), a survey examining job satisfaction among tenure-track faculty members. The University also conducted a survey in the fall of 2007 to determine faculty perceptions of the general climate on the UA campus. Although these surveys are now a few years old, they are the most recent available and contain interesting results.

In the COACHE study, the UA was compared to a group of six peer institutions. coache
UA faculty members were among the most satisfied in the category “way you spend your time as a faculty member” but were least satisfied in many other categories, including tenure practices, assistance in obtaining grants, leave and child care policies, fairness of evaluations, and compensation (cf. Executive Summary, p. 18-20). Often, female faculty were even lass satisfied than men. According to both surveys, female and minority faculty reported significant deficits concerning the institutional culture of the University and its (lack of) support for diversity.

A new COACHE survey was conducted in January 2014 and the results are expected at the end of May. We’ll report.

The Proliferation of Administrators in Higher Education

The Administrator’s Compensation Survey has the data

One aspect of the UA Advancement Division budget trouble that perplexed many observers is the fact that so many highly paid professional administrators failed to notice (so they said) what was going on for years. In response to public criticism, the University hired yet another administrator with the title of Associate Vice Chancellor for Budget and Financial Planning (the UA already had the positions of Vice Chancellor for Finance and Administration, Associate Vice Chancellor for Financial Affairs, and Budget Director) whose “job apparently will be to make sure no other highly paid UA administrators create the same sort of public relations nightmare”, as the Courier News’ Roy Ockert put it.

Throughout the world of higher education, the bureaucratic apparatus has expanded way out of proportion with student enrollment and faculty size (see below for a sample of items documenting and debating this trend). Critics of “administrative bloat” point out that the number of administrators per student has increased while the faculty-student ratio is generally flat or declining. There’s also a growing chasm between the salaries of regular faculty and administrators (and, following overall economic trends, growing inequality between top and bottom earners in general). Again Ockert:

“Increasingly, educational administrators claim they must compete with business and industry in offering salaries to administrators. In hiring professors, though, the strategy is to be competitive with other universities. Because of that and other factors, a chasm is developing between administration and faculty at many institutions, not only in terms of salary but also in educational theories, campus governance and academic experience. Too many educational administrators have little or no teaching experience, which may profoundly affect their understanding of the institution’s most important mission — the education of students.

Readers can look up how much individual UA administrators (or any employee) are paid at the OpenUA and BudgetUA portals. A comprehensive overview over administrator pay in Arkansas higher education is provided by the annual Administrator’s Compensation Survey, available on the web site of the Arkansas Department of Higher Education (ADHE). The survey, mandated by state law (ACA 6-63-316), covers all administrators (athletic coaches are included in that category) with salaries of $100,000 or more and includes all benefits. From 2010 to 2013, the survey expanded from 501 pages to 723 pages. The number of University of Arkansas administrators covered increased from 117 to 161 (this includes the System Office). Another tidbit: 20 individuals were listed with a job title of ((Associate) Vice) Chancellor. Note that the line item for the Chancellor house, worth $21,788, was by mistake omitted from Chancellor Gearhart’s compensation page (see below). His total compensation adds up to roughly $400k, plus $225k in deferred compensation.

Update: The Chronicle of Higher Education has a national survey of Executive Compensation at Public Colleges. Chancellor Gearhart is ranked 64th out of 256 top execs.

Chancellor Gearhart's salary and benefits

Chancellor Gearhart’s salary and benefits

The Administrator’s Compensation Survey (pdf)

Further extensive employment and salary data can be found at the federal IPEDS data center. IPEDS reports that the number of full time UA employees in the category “Executive/administrative/managerial” increased from 181 in 2001 to 290 in 2011, a 60% increase! Meanwhile, full-time instructional faculty increased only 18%, from 834 to 989.

Links discussing the proliferation of administrators in higher education:

Documents of the Advancement Division crisis

The volume of documentation in the various investigations of financial irregularities in the University of Arkansas Advancement Division is getting out of hand. This post simply lists some (!) of the key documents that will help readers understand what is at issue. We’ll try to update this page when new material emerges.

The UA’s Athletic Budget

Head scratching about the financial reporting of the UA Athletics Department

How much does the University of Arkansas spend on its athletics department? The total number for fiscal year 2013 was an astonishing 88 million dollars, up from 81 million the previous year and 68 million in 2010, an increase of almost 30% in 3 years. According to the University, these expenses are more than covered by the revenues so that no taxpayer or tuition money is spent on athletics.

It is interesting however to note that the actual revenues and expenditures reported each year are twelve million more than was budgeted (according to certified budget documents filed with the state). Every year. Why are budget makers so wide off the mark? AthleticRevenuesTable
For example, about 3 million are spent every year for game guarantees ($3.6 million in 2013). Yet these amounts never appear in the budget. Could this be related to the UA’s attitude that game guarantees constitute a trade secret? Somewhat bizarrely, the line item for ‘Facilities’ is under-budgeted every year – by seven million in 2013 and a whopping 12 million in 2012. Can you picture the financial officer preparing the budget: “Let’s see, last year we budgeted 3 million but spent 15 million on facilities, so this year we are going to budget 4 million, that should fix it”. On the revenue side, most of the unbudgeted revenue appears in the “Other Income” category (12 million in 2013, up from 9 million in 2010). The same line item, which is said to include “investment, rental, endowment income”, is budgeted as zero ($0) every year. Is this related to the UA’s habit of keeping Razorback Foundation finances in the dark? Or is it another result of the sloppiness built into the UA’s accounting practices, as recently revealed and criticized by the Legislative Audit report?

In an additional twist to the story, google turned up an Economic Impact study from 2012 which quantifies athletic department expenditures for 2010-11 as $84.7 million and revenues as $90.0 million, compared to the official figures of $74.9 million expenditures and $75.2 million revenues. Further, the study (p. 14) lists almost $20 million in private donations, a figure nowhere to be found in the official financial report (which lists $7.7 million in “private gifts”). What kind of creative accounting is going on here???

UPDATE: As a reader points out, athletic revenues and expenses also have to be reported to a federal database known as EADA. Look up an institution and click on “Revenues and Expenses” to see the most current data. They are dramatically different from the figures reported to the state (and also not the same as the economic impact study figures). AthleticFinancesTable The total revenue reported to EADA was almost $100 million in 2012 and 2013. Over the last four years, the Athletic Departent reported $55 million more in revenues and $40 million more in surplus to EADA than was reported to ADHE!

The explanation seems to be that ADHE requires to budget and report only expenditures “paid by an institutionally held fund”, and to report only “monies from foundations, clubs, and other private gifts which are received by institutionally held accounts”, which in effect allows the UA to keep multiple sets of books and thereby defeat state oversight and transparency.

The budget documents and where to find them

State law requires all Universities every year to file a Certification of Budgeted Athletic Revenues and Expenditures with the Arkansas Department of Higher Education (ADHE), and to report the actual revenues and expenditures (AR Code 6-62-106) at the end of each fiscal year (fiscal year 2014 runs from July 2013 to June 2014). The forms to be used are known as ADHE Form 21-2 (budgeted) and ADHE Form 21-1 (actual). Note that each form uses somewhat different line items. Some of the recent reports (both budgeted and actual) can be found on the UA’s Financial Affairs web site. State law requires all state entities, including state-supported universities, to publish on their web site each and every report they file with another state entity (AR Code 25-1-118). Compliance with this law is uneven, as we shall examine in a later post.

University of Arkansas Athletic department financial statements
Budgeted2010, 2011, 2012, 2013, 2014;   Actual2010, 2011, 2012, 2013
Summary 2010-2014

A more detailed breakdown of the 2014 athletic budget can be viewed at Arkansas Business. The ADHE is also required to publish the athletic finance reports, but they are not easy to find. A Summary of Intercollegiate Athletic Revenues and Expenditures, 2012-13 is contained on the last page of the Arkansas Higher Education Coordinating Board quarterly meeting agenda, October 25, 2013. The last agenda item of the board meeting taking place today is approval of the athletic financial survey.

University releases contract of football coach Bielema

The University of Arkansas has released its employment agreement (pdf) with head football coach Bret Bielema, who was hired in December 2012.

The annual salary is $3.2 million plus extensive benefits. Dismissal without cause would cost the University a buyout of up to $12.8 million. The contract term ends December 2018. The whole document is 71 pages long and includes procedures for dismissal for cause (pp. 69-91). Max Brantley at Arkansas Times Blog notes that the release of the contract is a rare gesture of transparency by an institution that only recently refused to release financial information about its football business, invoking the Freedom of Information Act’s “advantage to competitors” exemption.

Questions about Extra Compensation at UofA

UPDATE: Some readers have confused extra compensation with outside employment. This is not related to outside employment. It’s the University paying some faculty extra salaries, entirely from public money.

A handful of UofA faculty members receive substantial extra compensation awards for extra service or teaching duties. Forty-three individuals received extra compensation totaling $10,000 or more in calendar year 2012, according to data (pdf) provided by the University of Arkansas under the Freedom of Information Act. In total, about $1.6 million were awarded in extra compensation to some 350 individuals, $640,700 of which went to just 43 individuals.

Largest cumulative extra compensation awards at University of Arkansas, 2012

Largest cumulative extra compensation awards at University of Arkansas, 2012

Matthew Waller, Supply Chain Management Department Chair in the Walton College of Business, received a total $38,875.00 in extra compensation for service duties. Steve Boss, Geosciences professor, received the largest single extra compensation award of $23,302.50, also for service.

The little known practice of awarding extra compensation to some faculty members raises a number of concerns. According to University policy (pdf), “Approval should be obtained prior to the start of the activity”. A review of approval forms (pdf) for large extra comp awards shows that this was not the case. Dr. Boss was awarded three months’ worth of his regular pay for a service activity started 7/1/11 and ended 6/30/12 and the approval form was signed on 5/30/12. Dr. Waller was awarded $16,556.60 for “curriculum development” from 7/1/12 to 8/31/12, equivalent to one full monthly salary (according to, and the approval form was signed 7/23/12. He was awarded $12,375 for an activity from 4/1/12 to 5/26/12 and the approval form was signed 6/5/12. Marcia Shobe, Associate Director of the School of Social Work, was awarded $11,808 (1.4 regular monthly salaries) for editing the Journal Inquiry from 3/1/12 to 5/11/12 (2.5 months). The approval is dated 4/18/12. Eleven extra compensation forms with amounts of $10,000 or more were reviewed and all but two of them were approved after the start of the activity, in most cases even after the end of the activity. The recently released Legislative Audit report has, of course, faulted University officials for not following policies and procedures related to the approval of expenditures.

Policy also requires that extra compensation duties “are performed outside the normal work schedule”. Dr. Waller and Dr. Shobe were effectively paid 150% of their regular salary during certain periods. Are we to imagine that they worked an extra “shift” after their regular work day (of course, faculty members, as exempt employees, do not have fixed work schedules)? Service duties are part of the regular duties of all faculty members. It is unclear why some service activities are compensated while most are not (aren’t most faculty members engaged in curriculum development, for example?), why a handful of individuals receive unusually large awards, and whether these activities are really performed in addition to a full workload. Faculty members with onerous service duties usually receive reductions in their teaching load and research expectations. In that case, extra compensation seems like double-dipping.

The issue of transparency is also raised. The nominal salaries of faculty members are published in the University annual budget (now available online) and reported to the National Center for Education Statistics. Extra compensation is not included in these figures. A policy that allows the award of large amounts of money to a small number of individuals out of public view looks like an invitation to favoritism and good ol’ boyism.

University officials, when asked about the issue, defended the practice. Barbara Abercrombie, Human Resources Director, wrote on behalf of Don Pederson, Vice Chancellor for Finance and Administration: “The policy does not prohibit later review and approval of payments made for bona fide activities that fall within the scope of the policy. The activities indicated on the forms were appropriate to pay under the extra compensation policy.” “‘Should’ is not the same as an absolute requirement”, wrote Pederson in an internal email (pdf). True, but it’s not the same as “whatever” either. The policy may be intended to allow for limited exceptions to the pre-approval rule, but University officials have made the exception become the rule. If that’s acceptable, why have a policy at all?

Let’s be clear that this is not an “academic” debate about semantics. This is a policy put in place to safeguard the financial and ethical integrity of the University. When large monetary awards are approved ex post, oversight becomes dubious, as evidenced by an internal email (pdf) by Provost Sharon Gaber recounting that she was asked to approve extra compensation forms for classes already taught. “Why are we just now approving these? There is no way that I can say no? They have already taught the classes.” She suggested that “we should require up-front approval”, apparently unaware that it was already required under the policy.

The University of Arkansas is currently under heightened public scrutiny (to understate a bit) due to financial irregularities and sloppy budgeting. The academic community and the public have the right to expect extraordinary financial diligence and scrupulous compliance with all rules and policies from the administrators of the state’s public University. The cavalier way in which disbursements of large amounts of public money as “extra compensation” were handled and then justified by questionable reinterpretation of the applicable policy is everything but reassuring.