The University of Arkansas’ vice chancellor for University Advancement, Brad Choate, and the division’s budget officer were reassigned to other duties after “a significant imbalance” was discovered, UA Chancellor G. David Gearhart said in a message issued Monday.
A review determined flaws in the division’s budget management process which led to a $3.1 million shortfall for the fiscal year ending June 30, 2012.
Gearhart said the funds were properly used, but that the division ultimately lacked the financial resources sufficient to support a growth in staff it experienced in recent years in preparation for an upcoming capital campaign.
The division, which receives roughly half of its $10 million annual budget from investment revenues, had been using anticipated investment revenues to meet current budget obligations. Under that practice, Gearhart said the combination of over-commitments and the use of future revenues to close the division’s end-of-year budget gap compounded quickly.
The university used reserve funds to balance the deficit, but Gearhart said the division will ultimately be responsible for restoring those reserve funds over time.
Besides personally taking over management of the division, Gearhart said several other steps were taken “to ensure that the advancement division has the resources to sustain its important work and that it operates within its means.”
Gearhart said Choate promptly notified him at the end of the 2012 fiscal year when he became aware of the shortfall in the division.
According to Gearhart, Choate will concentrate on completing plans for the upcoming capital campaign, and that work in his new role should be completed within the next few months.
“Like many of you, I am deeply disappointed by what occurred,” said Gearhart. “The steps we have taken and will take will ensure the sound and prudent operation of the advancement division while also maintaining its high level of productivity.”