LR college warned its accreditation is shaky

A national organization has placed Arkansas Baptist College on notice that its accreditation is in jeopardy.

The Higher Learning Commission, which accredits the 1,000-student campus, gave the private college until Aug. 18 to provide evidence — including a required forensic audit conducted by a firm selected by the commission and under its direction — that it has effectively addressed concerns that the commission identified in a three-month review.

The commission will also conduct a “focused evaluation” of the college by the end of October. In February 2015, the commission will decide whether the college can be removed from notice status.

The “forensic audit” was included as a requirement, the commission wrote, because of “recently received allegations of ethical and financial improprieties at the college.”

The commission stated in a three-page letter dated Monday to the Little Rock college and publicly released with a “disclosure notice” Tuesday that while the college currently meets the criteria for accreditation, the commission had “concerns about the College’s ability to remain in compliance.”

When contacted Tuesday, college President Fitz Hill said the notice was the “lesser of the potential consequences” and called the letter a “prognosis to improve.”

“Our accreditation has not been affected,” Hill said. “This was a warning status that says we’re going to re-evaluate. It could have been worse.”

The “disclosure notice” advised Arkansas Baptist College students interested in pursing a higher degree or transferring to another university to verify whether that institution accepts credits earned from a college currently on accreditation notice status.

Shane Broadway, director of the Arkansas Department of Higher Education, said he personally spoke with the Higher Learning Commission on Tuesday and was assured that placing the college on notice would have no effect on financial aid and that in similar situations, the commission knows of no issue with the transfer of credits.

Among issues brought to light in the three-month review — which began in December and was sparked by complaints received from unnamed sources — the commission cited concerns about whether the college can meet its financial obligations and questioned the effectiveness of its leadership to fulfill the institution’s mission.

The letter said the college has neither enough employees to maintain its financial aid system nor financial resources. The commission said the college failed to meet payroll and vendor obligations several times.

The college was found in contempt of court in Pulaski County Circuit Court last week for failing to comply with a court order to produce financial records in a lawsuit filed in July. Little Rock-based RRE Reserves, which owns several apartment complexes that Arkansas Baptist College leased for student housing, filed a suit claiming that the college owes $72,108.82 in back rent and utility payments.

David Simmons, an attorney for RRE Reserves, told the court March 5 that the college has made partial payments and now owes $24,054.74.

The report also cited the college for failing to enforce its policies on “self-dealing and lacks appropriate mechanisms to do so.” The term “self-dealing” refers to school employees or board members who benefit financially from the college through business or financial interests.

The business connections are not identified in the commission’s letter or disclosure notice.

But, according to the Arkansas secretary of state’s office, Hill is the owner of the African Bean Co. and the registered agent for Buffalo Development. In a 2011 news release from the college, it announced that Arkansas Baptist College was entering into a partnership with the African Bean Co. and would sell its leading coffee brand Roots Java in its Community Union.

There was no mention in the 2011 news release that Hill owned the company. In an interview Tuesday, Hill acknowledged owning African Bean Co. but said that he is not involved in the company’s day-to-day operations. He said that Roots Java is not being sold at the college nor is the African Bean Co. profiting in any way from Arkansas Baptist College.

“That was in 2011. That statement was not accurate,” Hill said.

When asked if Buffalo Development has benefited from the college’s $30 million in construction projects that are completed or in the works, Hill said Buffalo Development was established by the college’s board of trustees to funnel $22 million in U.S. Treasury Department new market tax credits that financed the school’s construction program.

The New Markets Tax Credit Program was developed by the Treasury Department to attract investment capital to low-income communities by giving investors a tax credit on their federal income taxes.

Hill said Buffalo Development is no longer being used.

“It was a legal entity that had to be established as just a pass through,” Hill said.

He added later: “My priorities are God, family and Arkansas Baptist College. I would never do anything to jeopardize this institution. Never. If I needed more money, I could go get a job making more money.”

Hill’s salary was $129,000 in 2006, his first year as president, according to the college’s Internal Revenue Service Form 990. Hill’s salary for 2012 was reported at $241,051, according to the IRS form.

The commission — which would not comment outside of its letter and disclosure notice — also raised questions about the capacity of the college’s current leadership to work collaboratively with the faculty. The Journal of Blacks in Higher Education reported Dec. 20 that Arkansas Baptist College faculty senate sent a letter in December to the college’s board of trustees and to the Higher Learning Commission recommending that Hill and Billy Owens, the college’s executive vice president and chief financial officer, be relieved of their duties.

The Arkansas Democrat-Gazette requested documents related to the faculty senate’s request. As a private institution, however, the college is not subject to the Arkansas Freedom of Information Act and is not required to release the documents.

When asked Tuesday, Hill denied that the faculty senate had requested he and Owens resign and said the letter does not exist.

Messages left for Arkansas Baptist College faculty senate Chairman Gordon Johnson as well as Vice Chairman Dianne Parker were not immediately returned Tuesday.

Hill said Tuesday that he will not resign unless asked to by the board of trustees.

“There are a lot of resignations going on right now, but Fitz Hill is not going to be one of them,” Hill said. “I report to the board of trustees and if the board decides they want me gone, then I will go. But as far as Fitz Hill waving the white flag, that’s not going to happen.”

Hill said the college does not have a financial problem, but a cash-flow problem. The difference, he said, is that its debt ratio is still solid on the college’s balance sheet.

The cash-flow problem, he said — and the reason for the college’s current predicament — was caused when the U.S. Department of Education placed the college on Heightened Cash Monitoring 2 status last year.

Typically colleges receive federal student-aid funds on an “advance pay” or “direct reimbursement” basis from the U.S. Department of Education. Once an educational institution has been placed on Heightened Cash Monitoring 2, the funds are released to the school after it has made the disbursement to the student or parent borrower, and the school must submit manual reports. The process significantly slows the affected college’s cash-flow process.

Hill said Tuesday that improvements have been made and employees have been hired for the college’s financial aid department.

When asked if terminations in the department had occurred because of the college’s change in funding status, Hill said it was a “personnel issue” and could not be discussed.

Broadway, the state’s higher education director, said Tuesday that he was involved in a meeting earlier this year between the school and the U.S. Department of Education concerning the college’s student-aid disbursement status.Broadway became involved in October — even though the Higher Education Department does not have regulatory power over the private college — because the state agency received numerous calls from students who had not received financial-aid checks from Arkansas Baptist College.

Broadway said he feels as if the college has made progress and is hopeful for its future.

“I think it’s important to work through the process that has been established by the U.S. Department of Education. They [college officials] need to understand the seriousness of the Higher Learning Commission letter and of reaching out to the community and students they serve,” Broadway said.

“They need to develop a plan to move forward to to communicate that process with their stakeholders and the media as they move forward.”