Lawmakers questioned why the University of Arkansas at Fayetteville responded to a $3.1 million shortfall in its Advancement Division by reassigning the two employees responsible for the remainder of the fiscal year rather than firing them immediately.

“I think there’s more talk about this going around this legislative body than there is about football coaches,” Sen. Jimmy Jeffress, D-Crossett, told UA Chancellor G. DavidGearhart at a meeting Friday of the Arkansas Legislative Council’s higher-education subcommittee.

Gearhart announced earlier this month that he will manage the Advancement Division, the university’s fundraising arm, until a new person can be hired and that he will not renew Vice Chancellor for Advancement Brad Choate’s appointment when it ends June 30. Choate retains his title and his $348,175 salary.

Choate’s budget officer,Joy Sharp, was moved to a nonbudgetary job in human resources until her letter of appointment ends June 30, and her annual salary was reduced from $91,086 to $68,314, UA officials said.

The personnel shifts came after the university discovered the Advancement Division had overspent its $10 million budget by $3.1 million at the close of the previous fiscal year June 30.

“Out in the real world, this kind of activity would get you fired yesterday,” Jeffress said.

Gearhart told lawmakers that he reviewed his personnel decisions with the UA board of trustees in a November executive session, and that none of the trustees disagreed with his plans.

The overspent funds were all used for fundraising purposes, and the budget error was unintentional, the result of “a complex environment in terms of budgeting” within the Advancement Division, he said.

“Not a single penny was misspent,” Gearhart said. “There was no fraud, no personal gain.”

The UA Advancement Division is funded with a combination of public university funds, private gifts and interest generated by the university’s endowment, he said.

The division spends university funds in advance of receiving private gifts, reimbursing the university with those private funds, managed by the University of Arkansas Foundation, at the end of the fiscal year, Gearhart said.

The shortfall occurred when Choate and Sharp “miscalculated the amount of revenue that was coming in from the foundation account,” he said.

Sharp, a 40-year UA employee, has been voted employee of the year “numerous times,” Gearhart said.

“To throw her out on the street after 40 years as anemployee of the university and the state would have not been the right thing to do,” he said.

Choate, who has helped raise $400 million as advancement chief, remains employed because he has “direct contact with some of our largest donors,” Gearhart said.

To fire Choate before UA can transfer his contacts and fundraising relationships to other employees “would hurt the University of Arkansas greatly,” he said.

Jeffress thanked Gearhartfor his explanation. The situation has stirred questions from lawmakers, he said.

“If I go to my bank in Crossett and I go 50 cents over in my account, I pay a penalty for it,” Jeffress said.

UA officials have worked to shore up the Advancement Division’s budget, in part by tapping some budget reserves, Gearhart said.

UA officials projected the division’s budget shortfall would have hit $4.3 million by June 30, 2013, if left uncorrected.

Northwest Arkansas, Pages 9 on 12/15/2012