Hardin to refund $300,000 bonus

University of Central Arkansas President Lu Hardin said Wednesday that he will return a $300,000 bonus awarded to him in secret by the UCA Board of Trustees in May.

The money had already been earmarked for Hardin's salary, but as per the terms of the deferred-compensation agreement, would be accrued through five yearly $60,000 installments of private money and only be given to the president if he stayed at UCA until 2010.

"Three years ago, I actually had a serious contact from a key individual at a university to interview, but not in the state of Arkansas," Hardin said, explaining the board's decision to grant the bonus in 2005.

The board's May decision amended the terms of the bonus, awarding the full $300,000 two years early.

Facing a barrage of public criticism for both the timing of the bonus and the lack of public disclosure as well as a UCA Faculty Senate request that the money be repaid, Hardin has decided to reimburse the university's Board of Trustees Endowment Fund, from which the money used to expedite the deferred compensation plan was taken.

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"I will be reimbursing the money (today)," Hardin said Wednesday. "And my understanding is it will be deposited in the University of Central Arkansas Trustee Endowment Fund, the fund that was the original source of the money, for two reasons: first, I felt the timing was right on this repayment. I've had a great relationship with the faculty senate for the last five years, and I was asked in a request from the faculty senate to repay the funds.

"Secondly, so much energy and focus has been placed on the def compensation payment that we were unable to focus on a fall record enrollment of 13,200, a record ACT of entering freshmen of 23.5, a new $18 million college of business building and a successful move to Division I."

Hardin would still receive the $300,000 bonus, but only under two conditions he proposed and described as critical to good faith in this matter: the bonus would be awarded only if "the faculty and staff receive a raise and that this (bonus) be repaid unequivocally with private funds," he said.

The full $300,000 bonus could still be paid before 2010.

Whether the board's endowment fund represents public or private money, and therefore whether or not the board acted within its authority in using it for Hardin's pay, is being decided by Arkansas Attorney General Dustin McDaniel. AG spokesman Gabe Holmstrom said Wednesday that McDaniel has not yet released an opinion on the issue.

If McDaniel determines that the fund represents public funds, "it would simply be an audit exemption, which is not a rare occurrence at a university or at a state agency. The state agency would simply say we could not withdraw from that fund for that purpose."

The fund is comprised of revenue generated through the university's agreement with bookseller Barnes and Noble Inc. and food service provider ARAMARK, both privately owned businesses.

Hardin said when the board made the decision, it acted on the assumption that it was allocating private monies exempt from Federal Freedom of Information Act scrutiny. Acting on that assumption and omitting any mention from public record was a mistake, Hardin has said repeatedly in recent days.

"That's where I am very disgusted with my own personal interpretation, in questioning of these funds," he said. "Clearly, clearly under the spirit of FOI there should be full disclosure, and through my experience as a newspaper attorney ... before I became a professor and began my career in higher education, I was well-versed in FOI, and my code had always been to err on the side of disclosure.

"I have been in public life for 26 years and have a very strong FOI record and record with the press, so I was very disgusted with my interpretation and hesitation ... it's ironic to make a mistake on your strengths"

Dr. Kurt Boniecki, president of the UCA Faculty Senate, said he and the faculty are pleased with Hardin's decision to reimburse the money, but said a degree of damage has been done to the university's reputation and to the faculty's relationship with Hardin.

"It absolutely has done some damage," Boniecki said, "but that's not something that is insurmountable. I think his decision (Wednesday) puts us back on track to reaffirming a good and open relationship with president Hardin."

Boniecki said that the question of whether or not Hardin deserved the bonus "isn't one I've gotten into, personally," but did say that he thinks Hardin has "done a wonderful job at the university; a fantastic job in promoting the goals of UCA."

The timing of both the board's decision to accelerate Hardin's deferred payment and the fact that the decision was not made public, he said, were the main reasons for requesting that the money be reimbursed.

"The faculty was being told that there may be no raises last year," he said, "and that if they come it may be in the middle of the year. The board voted in June to cut retiree benefits and in May they voted to increase tuition. Faculty, students and staff were upset, primarily about the timing but also about how the board handled the vote.

"We've got some rebuilding to do, but we will get back to working on more important issues than this. I continue to have a positive relationship with the president, and we will rebuild that trust with the president, and I think (Hardin) is committed to doing that as well."

In Hardin's office hang two awards for his contribution to FOI law. He's quick to point them out to visiting journalists, saying they're among the most prestigious awards he's received. In light of recent events that call his adherence to administrative transparency in question, he said, he holds their meaning in higher esteem.

"Ironically, I have a deeper appreciation for the letter and spirit of the freedom of information act than I did before this problem," he said. "There just isn't any room for error in judgement or interpretation. You have to err on the side of disclosure, period. That's something I've practiced for 26 years and that's why you have to deal with every case in an open and transparent manner."

(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.)