Hardin: Request for AG opinion necessary

The request for an opinion from Attorney General Dustin McDaniel regarding the legalities of a $300,000 deferred-compensation paid to University of Central Arkansas President Lu Hardin was something the president said should have already been done.

"While the AG opinion perhaps should've been asked for in advance, it is certainly the appropriate request to make at this point," Hardin said in an interview Friday.

Hardin said he is not pleased with the way he and the Board of Trustees handled the deferred-compensation issue, and the main concern he would like the attorney general to address is the definition of the fund from which the dollars were transferred.

"The intent from day one was to reimburse it with private funds; however, we had a private legal opinion that they were not pure public funds since they came from private origin," Hardin said.

The fund in question is known as the Board of Trustees Endowment Fund and is made up of excess revenue generated by the campus book store, run by Barnes and Noble, and the school's food service, which is through Aramark, two privately-owned companies.

The request to the attorney general from Randy Sims, chairman of the board, asks if those cash funds would be considered public or private funds of the university and if they would be subject to appropriation acts of the general assembly.

In past interviews, it has been said the excess funds from the university's department of housing have also been deposited into this fund; however, Paul McLendon, vice-president for financial services, said this was not so.

"We've been saying auxiliaries and the bookstore and food service are auxiliaries and housing is an auxiliary, too, but when we went back and looked at it, it was just the bookstore and food service," McLendon said Friday.

No money from housing has been deposited into the auxiliary fund since McLendon joined the university in 2001 and he said he doubts any was added before then.

Gabe Holmstrom, a spokesperson for the attorney general's office, said Thursday the opinion requested by Sims will likely be ready in less than 30 days.

"The board is committed to doing what is legal and they have been from day one," Hardin said. "If the attorney general should say these are in fact public funds, then within days the fund will be reimbursed. I'm very unhappy with the way we handled this but these are the right steps to take to put us into compliance."

The $300,000 deferred-compensation payment began as an incentive package for Hardin, initially approved in 2005 by the board. It was accelerated during a May 2 meeting and the board approved paying the president the full total two years earlier than planned, but no mention was made of the decision outside of the executive session.

Hardin also received a $100,000 bonus added to his $253,000 annual salary in July 2007 for his work on the school's centennial campaign. The board approved $20,000 per year he had been president of the university.

Questions arose this week about this bonus as well. It was announced when the $100,000 expenditure of UCA funds was approved publicly in a July 2007 board meeting that the funds would be quickly replenished by private UCA Foundation money. It was discovered this week that the money had not been reimbursed.

"I assumed this was taken care of, but was informed this week that it had never been reimbursed," UCA Executive Vice President Barbara Anderson wrote in an e-mail message sent Friday to the board of trustees. "A reimbursement was made today by Mr. Rush Harding as part of Mr. Harding's generous pledge made several years ago. This is not a major problem, as it was paid today. However, since it really should have been paid by June 30, 2008 (the end of the fiscal year), we will need to get an audit exception."

The message concludes with an apology from Anderson and McLendon, saying that policy changes will result in proper handling of such procedures in the future.

Hardin said that if the money was reimbursed before the end of the fiscal year, it would be fine, but added that an audit exception should clear up the matter.

"Our legal opinion is that we are fine though we missed the fiscal year," Hardin said.

With the 2007 bonus and the deferred-compensation payment the president recently received, this totals about $900,000 Hardin has received from UCA over the past two years.

As far as where the university president will go from here, he said Friday the way the situation was handled was definitely a learning experience.

"Even with the years of experience I've had, I am not beyond learning," Hardin said. "We failed in handling this matter. I failed in appropriately handling this matter."

Once the attorney general's opinion is made, Hardin said, with the exception of being careful not to repeat the mistake, he will go back to his position as usual. He said although he will never say never to opportunities, the media speculation of him seeking the gubernatorial seat is not true.

"If the question is whether I keep my options open, the answer is yes in six or seven years, who knows what the situation could be, but if the question is if this is a goal for me, absolutely not," Hardin said. "Those close to me know this is not even on my radar screen."

(Staff writer Jessica Bauer can be reached by e-mail at jessica.bauer@thecabin.net or by phone at 505-1236. To comment on this and other stories in the Log Cabin, log on to www.thecabin.net. Staff writer Joe Lamb contributed to this story Send us your news at www.thecabin.net/submit)