The University of Arkansas at Fayetteville has no plans for layoffs to help balance its Advancement Division budget and won’t implement an assessment fee against private donations during this fiscal year, its chancellor told campus deans Thursday afternoon.

Chancellor G. David Gearhart wrote the deans in an email Thursday that the idea for the fee is not off the tablebut that his provost, chief financial officer and the deans had persuaded him to wait. The fee, which top administrators have called a gift “tax” or“cost-recovery assessment,” would redirect some percentage of a donation back to the Advancement Division to support its budget and coverthe cost of fundraising.

“I have decided to hold on the adoption of a reinvestment fee for fundraising, at least until we get through the current fiscal year,” Gearhart wrote the deans and seniorlevel administrators. “We will decide at some later point whether or not to adopt such a fee.”

Gearhart and other UA officials have said the Division of Advancement overspent its roughly $10 million fiscal2012 budget by at least $3.1 million. Had the overspending gone unaddressed, the deficit was projected to reach $4.3 million to $5 million during the current 2013 fiscal year, which began July 1.

The Advancement Division’s main role is raising private funds, and it oversees departments that handle the university’s public relations, special events and alumni association.

Administrators said a failure of the advancement chief and his top budget officer to carefully monitor the flow of revenue and expenditures in a complex accounting system involving public and private funding sources led to the deficit-spending, but that they found no fraud. The division hired additional staff members in recent years to support a future fundraising campaign even though revenue wasn’t there to pay those salaries,administrators said.

The vice chancellor, Brad Choate, and the budget officer, Joy Sharp, won’t have their letters of appointment renewed when they expire June 30, and Sharp was demoted and her salary cut.

On Dec. 3, the university said the problem was discovered at the end of fiscal 2012, which ran from July 1, 2011, to June 30, 2012. Gearhart learned of the problem July 13 after some efforts had been under way to determine its extent, according to documents obtained under the Arkansas Freedom of Information Act.

Because of the deficit, UA officials have never finalized the division’s fiscal 2013 budget. In December, UA officials estimated they would have the budget reworked by this month.

The chancellor’s letter didn’t go into specifics but said his administration was able to put off the cost-recovery assessment because of budget cuts and increased fundraising revenue.

“As you know, we did implement a hiring freeze, but I do not anticipate any layoffs of current staff,” Gearhart continued. The university will continue monitoring its staffing needs as it plans the capital campaign, which he called “Campaign Arkansas,” he wrote.

On Friday, Gearhart, UA’s chief spokesman John Diamond and its finance chief, Don Pederson, all said they could not answer questions about the issue.

John Diamond, associate vice chancellor for University Relations, said in an e-mail that he was in meetings allday and could not respond. Pederson e-mailed that he was tied up in interviews on Friday.

Gearhart also sent an email saying he could not take questions because he was out of town on family business.

In his e-mail to deans, Gearhart said, “While we do not have a final handle on fiscal year-end budgets, we are making substantial progress in reducing expenditures. I am hopeful we will be close to balancing Advancement’s budget by year-end.”

Efforts to reach most of UA’s academic and administrative deans Friday were unsuccessful, as office staff members said many were out of the office or in meetings. The university’s springsemester begins Monday.

Gearhart has said the deans’ academic budgets won’t be affected by efforts to balance the Advancement Division’s fiscal 2012 budget and finalize its current budget. However, the deans are being consulted because the academic colleges share thecost of salaries for some employees, such as development staff members who focus their fundraising work on specific colleges and University Relations employees who handle colleges’ public relations efforts.

Bob McMath, dean of UA’s Honors College, said he had not been heavily involved in the discussions about the budget deficit and its aftermath. None of the documents he had seen or conversations he’d heard shed light on specific reasons the gift assessment idea was put on hold, he said.

McMath said he thought Gearhart and his executive staff decided to take more time researching the longterm implications of the assessment and whether it was best for the university.

“That’s doing what leaders do,” McMath said. “I viewed it as the big boss’s prerogative to step back and take a look at things.”

That said, he added: “In my own mind ... I had thought this is going to happen. So, yes, Iwas surprised” the decision changed.

Dean Tom Smith of UA’s College of Education and Health Professions said he was “very glad” the assessment won’t happen this fiscal year.

“Regardless of the percentage it would have been, it would have been money that we would have to contribute that we hadn’t planned on,” Smith said. “It was something that other universities probably do, but it was new for us.”

Smith said he hadn’t run across donors or potential donors concerned with the prospects of such an assessment.

“It’s always good when you have more time and you see whether there actually needs to be such a recovery fee,” Smith said, adding that it’s his sense that the deans “trust the chancellor and his executive staff to come up with the best solution.” Information for this article was contributed by Lisa Hammersly of the Arkansas Democrat-Gazette.

Northwest Arkansas, Pages 7 on 01/12/2013