AG says Hardin's bonus may have violated salary caps

Whether it is classified as a bonus, a plan of deferred compensation or salary, the $300,000 payment given as an incentive to University of Central Arkansas President Lu Hardin may have violated a state-mandated salary cap, according to an opinion issued Tuesday by Attorney General Dustin McDaniel.

"'Cash funds' of a public university may not be used to supplement an employee's salary or form the basis of a 'bonus' in excess of the amounts established by the General Assembly," McDaniel said in a letter prepared by Deputy Attorney General Elana C. Wills.

McDaniel said the bonus would likely violate the cap that allows state universities to exceed maximum salary levels only by 25 percent.

In the letter, issued to UCA Board of Trustees chair Randy Sims, McDaniel also said, in his opinion, "it is beyond dispute" that public money was used when the $300,000 was taken from the Board of Trustees Endowment Fund, which is made up of excess revenue generated by food and book sales from two privately owned companies.

Sims requested the attorney general's opinion after debate arose over the acceleration of an incentive bonus that was originally approved in 2005 to give Hardin an additional $60,000 a year for five years to keep him at the university.

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The board decided to speed up the total payment of the bonus to Hardin during a May 2 meeting; however, the meeting's minutes did not reflect this decision.

Hardin announced he would refund the bonus Wednesday, July 16, after a request to do so from the Faculty Senate and public criticism for the lack of public disclosure and the timing of the payment.

Although the bonus is still a possibility, Hardin said in a previous interview it would only be awarded if "the faculty and staff receive a raise and that this (bonus) be repaid unequivocally with private funds."

(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. Send us your news at www.thecabin.net/submit)