UA top fundraiser reassigned; spent $3.1 million over

Brad Choate (shown), vice chancellor for advancement, was not fired, Gearhart said in a telephone interview Monday, but the university will not renew his letter of appointment when it ends at the end of the current fiscal year on June 30, 2013.
Brad Choate (shown), vice chancellor for advancement, was not fired, Gearhart said in a telephone interview Monday, but the university will not renew his letter of appointment when it ends at the end of the current fiscal year on June 30, 2013.

— The University of Arkansas at Fayetteville has reassigned its chief fundraiser and his budget officer after a review found the Division of Advancement had overspent its $10 million budget by $3.1 million at the close of the previous fiscal year June 30, Chancellor G. David Gearhart said Monday.

Brad Choate, vice chancellor for advancement, was not fired, Gearhart said in a telephone interview Monday, but the university will not renew his letter of appointment when it ends at the end of the current fiscal year on June 30, 2013.

Choate’s budget officer, Joy Sharp, was moved to a nonbudgetary job in another office until her letter of appointment ends June 30,and her annual salary was reduced by nearly $23,000. “There was no private benefit, there was no fraud, there was no theft,” Gearhart said in explaining why the two were allowed to remain through the current fiscal year. “Nobody took any money for their own benefit.”

“They just spent more than we had,” he said. “That’s just not an acceptable practice.”

Gearhart, who occupied the same role as Choate before he became chancellor in 2008, will reassume the job’s day-to-day managerial duties until a new person can be hired, he said.

“I have assumed direct management of the Advancement Division for the foreseeable future,” Gearhart wrote Monday morning in a message to faculty, students, alumni and staff in the university’s e-mail feed, Arkansas Newswire.

Choate will assist Gearhart by continuing the work he had been doing in planning for UA’s next major fundraising campaign, which will begin in two to three years, Gearhart said in a telephone interview.

The Division of Advancement runs university operations that include its development activities, alumni office and media relations office. Its two primary revenue streams are from the campus’s public funds, consisting primarily of state appropriations and students’ tuition and fees, and a private supplement from the University of Arkansas Foundation.

The chancellor said Monday that when he was the advancement chief, the division would exhaust public funds first before turning to foundation funds for spending, all under a balanced budget.

That is similar to how UA’s chief spokesman, John Diamond, described the typical manner in which most offices and departments handle budgets. Diamond worked for Choate in his job heading the University Relations office, but now says he reports directly to Gearhart.

Once the foundation funds are needed, a unit asks for them to be transferred to the budget, UA officials said.

“What happened was, when they went to do that this year, the foundation froze their assets,” Gearhart said of the Advancement Division. “That’s how we found out about it.”

Not every office or department forecasts its spending needs perfectly.

“We have some units that go over budget a little bit,” Gearhart said, and when that happens, they’re expected to notify UA leaders about it quickly.

“We actually require all of our senior managers to watch their budgets very carefully,” he said, so there are no major surprises as happened with the Advancement office.

“I think in fairness to Brad, he was relying on his budget officer, and he was getting bad information. But the question we have for him is, he was in charge of the budget. It was on his watch.”

Choate, whom Gearhart recruited to UA in July 2008 after having hired him previously when Gearhart was Penn State’s chief fundraiser, has been the chief planner for UA’s forthcoming capital campaign and is still needed in that role, Gearhart said.

“He’s still keeping office hours. He’s still in the office,” Gearhart said. “I would characterize it as helping me with the campaign, helping me with major gift prospects that he’s been assigned to.”

Contacted by telephone Monday afternoon, Choate said he would comment by releasing a brief statement, which he provided soon after.

In it, he expressed disappointment that his appointment will not be renewed.

“With 32 years of proven loyalty, dedication, integrity and success, my career of service to higher education stands on its own,” Choate wrote.

“Most recently, I have worked hard to lead University Advancement to benefit the students, faculty and staff of the University of Arkansas. For the first time in the university’s history, it has enjoyed back-to-back $100 million philanthropic years, and we are on track to extend that record this year.

“I am certainly saddened by, and do not agree with, the chancellor’s decision to not renew my service after June 30, 2013, but that is his decision. As long as the university employs me it will be my pleasure and privilege to work hard to benefit this fine university.”

THE REASSIGNMENTS

Diamond said he believed Sharp’s responsibilities were first shifted within the Advancement office in early August, when she went from handling budget matters to human resources work there.

Meantime, Choate - who learned sometime around June 30, the end of the fiscal year, that there was a shortfall - had been looking over the books with UA’s Finance and Administration office to try and determine what had occurred.

“That process, which was very complicated, basically concluded sometime in October,” Diamond said. “At that point, there was enough information ... and the chancellor began weighing his options.”

Choate and Sharp were given their new assignments “on or around” Nov. 9 - Choate’s within Advancement and Sharp’s outside that office. She was transferred to UA’s campus wide Human Resources office, he said.

Choate will retain his title, Diamond said.

UA’s vice chancellor for Finance and Administration, Don Pederson, said Monday that Choate’s $348,175 salary remains unchanged.

The amount excludes benefits and is composed of $273,181 in public money and a $74,994 private supplement from the UA Foundation, which is common for certain upper-level positions.

Sharp, who was earning a $91,086 salary while budget officer in the Advancement office, is now earning a $68,314 salary in her new job in the Human Resources office, Pederson said.

Sharp’s position remains a non-classified one and no longer involves budget matters, Diamond said. As a human resources specialist, her duties now include coordinating UA’s “RazorTemp” program, which helps campus offices find temporary labor.

CHANCELLOR’S MESSAGE

In addressing the campus community Monday via the Newswire, Gearhart said a review found the Advancement office had a $3.1 million shortfall for the fiscal year ending June 30, 2012, but that the funds were properly used.

“The review determined flaws in the division’s budget management process at the senior level,” Gearhart wrote in his campus message. “Those with ultimate budget oversight did not follow campus policies and inadequately monitored finances.”

The division, which had beefed up staff for the upcoming capital campaign, covered the shortfall by “using anticipated investment revenues to meet current budget obligations,” Gearhart said.

UA officials were asked whether the miscalculation constituted deficit-spending.

“They were, and they didn’t know it,” Pederson responded.

Apparently, he said, “There was no one in Advancement who saw the amount of the deficit. ... I don’t know exactly who knew what.”

“It’s not clear that they were managing their revenue sources from a consistent budget perspective,” Pederson said. “They weren’t clear even to the managers in the various units - to the managers in Advancement.”

Gearhart’s message included four main actions UA has taken, including his assumption of the oversight role, direct budget oversight of the advancement office by Pederson’s office, the two reassignments, and shoring up the deficit, which Diamond said officials projected would have hit $4.3 million by June 30, 2013, if left uncorrected.

The financial rescue will come in part by tapping some general university reserves, the chancellor said.

“Be assured that we will not be reducing the campus budgets to address this situation,” Gearhart wrote.

Front Section, Pages 1 on 12/04/2012

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