Public Viewpoint: No ‘Crisis' At The University Of Arkansas

The financial picture of the University of Arkansas has never looked better. I write this despite a March 25 column by Roy Ockert suggesting a “liquidity crisis” at the UA. While there may be colleges facing a liquidity crisis, I want to assure your readers the University of Arkansas is not one of them.

Mr. Ockert’s commentary comes from a 2012 study by Sterling & Bain, which is described as a “business management consulting firm.” While this is part of what they do, higher education consultancy is one of that firm’s core areas. In other words, their work is to attract colleges and universities as clients to address strategic issues, operational efficiency, cost management and reduction, and growth strategy.

For its study, Sterling & Bain created a metric to judge an institution’s sustainability. Its methodology looked at two ratios: equity and expense. The equity ratio was calculated as a percentage of assets, while the expense ratio was calculated as a percentage of revenue.

The time period included one historically bad year for college endowments — 2009 — which may have skewed the results. Most colleges negatively impacted by any endowment losses have since rebounded – including the University of Arkansas.

According to the study, the U of A is among a vast number of American institutions classified as having a “probability of slipping into an unsustainable financial position.” Fortunately, this has not been the case. Since 2008, our financial position has improved every year, and today, we have the highest level of liquidity in our history, currently exceeding $200 million. We have also significantly increased reserves while also managing a $243 million campus building renovation and refurbishment plan that has transformed our campus, and will save money going forward because through energy efficiency.

Private support has continued to be outstanding. In the last five years, we have raised nearly $500 million in gift support. And we fully expect to exceed $100 million this year for the fourth year in a row.

We have also implemented major cost-savings and containment programs across campus. Through these efforts, we have realized a savings of nearly $62 million since 2008. Finding efficiency in our operations and services remains a key goal and measure of our success.

By their own admission, the Bain & Sterling measure isn’t supposed to represent an institution’s complete financial position – and it clearly doesn’t reflect the financial viability of the University of Arkansas. Nor does it demonstrate our steadfast and deliberate stewardship of the precious resources allocated to us.

Do we have areas in need of more financial support? Of course. Increases in faculty salaries, more need-based scholarships and fellowships for qualified students, additional capital improvements and new construction are just a few of the ongoing needs you’d expect from a campus growing in both size and national reputation. These are needs that require a healthy balance of support from private giving, but also from adequate legislative support – and yes, tuition.

The truth is, we’re in great shape, and with continued support, we will keep getting better and better.

Laura Jacobs

Fayetteville

Associate vice chancellor

University of Arkansas

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