by Rachel McAdams
The university received an advance from the Department of Higher Education for $3.6 million for the third year in row, despite reporting a recovering and improving financial situation.
The advance are funds the university would have received later in the year, but chose to receive earlier to improve cash flow, Diane Newton, vice president of finance and administration, said Thursday.
The advance has been controversial considering the continued reports of improving finances at the university. In a Sept. 29 article in the Arkansas Democrat-Gazette, Stanley Williams, deputy director of the Arkansas Department of Higher Education, said UCA was the only public university that requested an advance.
The approved advance will go toward improving cash flow at the university, Newton said. She also said the article misrepresented the situation in an e-mail to faculty and staff on Sept. 29.
“The headline and first few paragraphs were misleading … The administration believes Moody’s, a worldwide leader providing credit ratings and risk analyses, is in a much better position to evaluate the financial performance of UCA,” the email stated.
$7.2 in lottery funds have yet to be received from the Arkansas Lottery Commission. Also, the state currently funds UCA at 70 percent of a formula-determined need, which is, on average, 13 percentage points lower than other state universities’ need according to the formula, a presentation from Newton stated.
“The state is using a funding formula to decide how much state funds a school receives … We had our enrollment growth during a time when we didn’t have additional money flowing, so we didn’t get funding while other schools did,” Newton said.
She said the university is, financially, in much better shape that it has been in the past, and continues to improve, with upgraded credit ratings twice since January 2010.
The e-mail to the campus community stated: “The university has made great strides in cash position; however, as noted in all presentations about cash, it is not all expendable money. This statement was made as recently as yesterday at the meeting of the Budget Advisory Committee. As of June 30, 2010, the unrestricted/unallocated portion of the $24 million in cash was $4.5 million, most of which was prudently invested.”
Newton said in the e-mail that UCA will continue to “maintain a conservative financial posture.”
Jeff Pitchford, vice president of university and government relations, said it was normal for a university to receive these funds, and that, since given the opportunity, the university decided it was in its best interest to receive the advance, for contingency purposes.
“It’s kind of like an interest-free loan. We were looking at ways of managing our budget and it was a way to get that money up front,” Pitchford said.
The advance has been requested by other universities, although, according to the Democrat-Gazette’s research, has not been requested consecutively by other Arkansas universities in recent years.
“We don’t know how long it’s going to be before we get [Lottery funds] … No one in the state has received any funds, but still, we have no indication of when we’ll be getting that. It felt like, back in July, we had the opportunity to do it, so why not?” Pitchford said.
There has been some contention with the advance, with it being the third consecutive year the university has received it.
President Allen Meadors also sent out an e-mail on Aug. 17 refuting claims that the university demoted a member of the staff for saying a reporter’s name on a public street.
by Rachel McAdams