Meadors: Lu Hardin ‘was betting on the economy’

University of Central Arkansas President Dr. Allen Meadors said that he sees the far shore and thinks he’s got UCA’s finances back on an even keel.

“Internally, in terms of numbers, in two years we’re going to be in good shape,” Meadors said Thursday. “Right now, we’re on target to come out this year in solid shape; we hope to even be able to give our employees a raise this year, and we’re feeling really good about it.”

When Meadors accepted the job, there were several aspects of university finance he didn’t feel good about.

Alan Russell, interim vice-president for financial service, explained that the university, over several years and for various capital projects that needed additional funds or one-time capital purchases, had paid for these things out of either the education-and-general fund or auxiliary funds, transferring the money into UCA’s unexpended plant fund, which he said for the purposes of this explanation could be called the “building fund.” The money used for capital purchases or uses wasn’t listed as an expenditure out of the E-and-G or auxiliary funds, but rather as a “receivable from (the building fund)”, Russell said, as these transfers were made “under the assumption or the hope that there would be money coming in” to make the E-and-G or auxiliary funds whole.

These assumed and hoped-for funds, however, failed to materialize from either an allocation of state money from the Legislature or a bond issue. 

Russell emphasized that this wasn’t an unheard-of financial practice, and it was one that was discussed and broadly agreed-up at an administrative level. He said he wasn’t aware of a state statute prohibiting it.

“In this case it was done in such a way that was designed to avoid being in the press.”

At a point, he said, there was “a change in judgment” among the administration “about whether or not the plant fund was ever going to have the means to pay back the other two funds.

“The judgement was, ‘Well, we decided it’s not and take our medicine right now all at once.’”

This was also the finding of a 2008 Legislative Audit, but Russell said that this finding can’t fairly be be interpreted as auditors “catching” UCA at anything untoward. 

This change in judgement, Russell said, was “why $21 million had to be written off.”

“The cash was spent,” he continued, a good deal of it on projects-in-progress that had to be completed. He likened these to replacing a home’s roof.

“It’s not like $21 million of the university ‘s money somehow evaporated,” he said.

This, according to Meadors, was compounded by “a tremendous amount of decentralization in decisions over how things were done” over the last half-decade.

“‘A’ didn’t talk to ‘B,’ and ‘B’ didn’t talk to ‘C,’ and it just caused a lot of disjointedness — not illegal stuff at all, but disjointedness,” Meadors said. “We duplicate things because — and good people are going to get the job done — but we had two people doing the same things in a lot of cases, and it was just inefficient.

“We’re working through that, but it’s going to take a while,” he continued. “You can’t just turn that over in six months.”

Beyond inefficiency, Meadors said he questioned some strategic planning decisions of his predecessor, Lu Hardin.

“I certainly can’t speak for Lu, but it seems to me that he was betting on the economy — that he was going to inflate the numbers until the people at the Legislature wrote a big check, thinking, ‘Then I can pay back all this money that I (was) using out of other accounts,” Meadors said. “But he never got those checks ... and he could never go back. 

“I guess you could call it another form of gambling.”

Speaker of the House Robbie Wills, D-Conway, said that his experience in the Legislature in 2008 would seem to support Meadors’ statements.

“I think what happened, and I think it was spring or summer of 2008 (when) it was fairly early in the process, the governor cut the (budget) forecast (and) a lot of that was higher education money and about $5 million of it would come to UCA,” Wills said. “But there was a cut in the forecast in that period of time. 

“It was way before any of the bad publicity came out ... and Lu was extremely concerned, more concerned than anyone else that I had dealt with in higher education. The rest of them were in the mind-set that ‘We’re going to do our part to get us through these tough times.’ Lu was extremely concerned about the $5 million.

“That $5 million would probably have kept things afloat a little longer had it come through,” Wills continued. “That seemed to be the crack in the dam. As far as Dr. Meadors saying that they made a gamble on that, I would say that’s pretty fair.”

Meadors also said that the previous administration seemed to have failed to explore measures to cut the price of the capital projects and land purchases.

“The bottom line is for a number of years we were overly generous,” he said. “Let me give you an example: We might have had a bond to build a building for $4 million. When you normally have money to build a building of course the architect comes back and says it’s $4.9 million. What I’d do here or at every other place I’ve been is you tell them to go back and get it down to $4 million. What was happening here is we’d just take that $900,000 out of somewhere else, and there goes a faculty position; there goes travel money.

“For another example, you might walk in and want to sell your house. You’d say ‘Mr. president I’ve got a house over here two blocks from campus, and I want $7 million for it.’ What was happening is we’d just say ‘Well, write Joe a check.’ If you just do that occasionally it’s no big deal. If you do it over six years, it comes to $21 million, and we probably have dozens fewer faculty positions.”

Though Meadors said that in his experience of sorting through the financial records kept during Hardin’s administration, nothing seemed to rise to the level of illegality, the FBI has been a presence on campus for the past several weeks. A source close to the issue speaking last week on condition of anonymity said that one matter agents were looking into was UCA’s relationship with Combs and Co., at the time the university’s advertising and marketing vendor.

This company is mentioned in a 2008 legislative audit finding that UCA and Combs and Co. apparently colluded to convert public funds into private funds.

Meadors said that his office has “no way of knowing” what the agents may be doing, and that “all I hear on campus are the same rumors people are hearing everywhere.”

“They come in and tell us that they’re looking at a couple former employees ... all I can say is that of the people they’re looking at, neither one works at the university,” he said.

If the FBI is looking into the relationship with Combs and Co., he said, it wouldn’t be a surprise.

“If there’s an issue with Combs, it’s that the documentation was not full,” he said. “You’ve got bills, but it didn’t itemize what the bills were for, and that’s not a good way of doing business.

“They didn’t do any RFPs (requests for proposals) with Combs ... that was all between President Hardin and (Ben) Combs,” he said. “All we got at the university was a bill ... (and) Lu would say ‘pay it.’ All the billboards, all those TV commercials; he (Combs) was doing work, but there was no list. You just get a bill saying we owed ‘X’ amount for the month of April.

“Something definitely got done, but was it $20,000 or $100,000 worth of work?,” Meadors continued. “Certainly he may have done $1 million for us and just charged $800,000, but of course we had no way of knowing.”

The university severed its relationship with Combs and Co. during the interim presidency of UCA legal counsel Tom Courtway following Hardin’s resignation. The last Combs and Co. bill came in shortly after Meadors took the job, he said, and he spent much of the 90-day period in which the bill was to be paid asking for a more exact description of what the university was paying for.

“They didn’t get as detailed as I’d want, but we needed to move on,” he said.

Meadors said the university also decided to move on in the matter of Combs and Co.’s “Center of Learning” UCA advertising slogan. He said the university could have continued to use the slogan, and could have probably defended its continued use after severing ties with the advertiser in court, since there never was a contract of any kind between the university and Combs.

The university decided to drop the slogan “rather than take the risk” of legal complications, he said.

In the meantime, Meadors has interviewed two applicants to permanently fill for the vice president for financial services position.

“I’ve told them in interviews that they’re just going to have to start from scratch,” he said.

(Rachel Parker Dickerson contributed to this report. Staff writer Joe Lamb can be reached at 505-1238 or by E-mail at joe.lamb@thecabin.net. Send us your news at www.thecabin.net/submit.)