FAYETTEVILLE -- Rather than spread costs to academic and other units at the University of Arkansas at Fayetteville, campus administrators plan to use financial reserves to cover the university's approximately $1.5 million share of a $5 million loan supporting the UA System's new online-only eVersity.
UA System trustees in October approved having funds drawn from the institutions making up the university system to help with start-up costs for the eVersity, which is expected to enroll its first students this fall.
After the trustees' vote, UA-Fayetteville Chancellor G. David Gearhart told a meeting of UA-Fayetteville's Campus Faculty how the loan might effect various UA-Fayetteville departments. In a November slideshow presentation, he showed dollar-specific estimates for funding that he said might be pulled from individual departments and units to cover the loan.
At the November faculty meeting, Gearhart said "totally unrestricted" reserves for UA-Fayetteville totaled about $14 million. Sharon Gaber, at the time UA-Fayetteville's provost, told faculty the $14 million was needed in case of catastrophic, unplanned events. Gaber recently left UA-Fayetteville to start her new job as president of the University of Toledo.
Asked about the change in thinking to utilize campus reserve funds, Gearhart in a written statement said, "The departments are very strapped now and we felt taking it centrally would be less disruptive on the colleges and departments that have serious funding needs."
Neil Allison, who will serve as chairman of UA's Faculty Senate for the 2015-16 academic year, wrote in an email that he thought the campus administration "must have reconsidered after looking at their reserves and decided that they could cover the amount."
He added, "I think all departments are happy with this outcome."
So far, no loan funds have been disbursed. Nate Hinkel, a UA System spokesman, wrote in an email that the first disbursement for the loan is expected "within the next year."
The plan ultimately approved by the UA System board calls for disbursements each year for two years, in 2015 and 2016. The board set a 10- year term for each disbursement, and for the money to be repaid with an annual interest rate of 1.75 percent, "with interest only to be paid in the first two years of each loan."
Leaders for the eVersity anticipate operating revenue of $1.53 million for the upcoming 12-month period ending June 30, 2016, with that total made up entirely of payments from students enrolling in eVersity programs. The eVersity anticipates a yearly operating loss of about $2.8 million in its first year, according to budget documents.
The UA System board hesitated to adopt the loan plan after Gearhart in an October meeting for the UA System cited concerns about the loan's effect on the Fayetteville campus, telling trustees that "there's not a lot of money floating around." Others, including University of Arkansas at Little Rock Chancellor Joel Anderson, also expressed concerns.
But the board ultimately voted 8-0 -- with one board member, Reynie Rutledge, absent, and another trustee, Jane Rogers, abstaining from the vote after expressing concerns about drawing on funds from other campuses -- to approve the loan, calling for campuses and system entities to provide loan funds.
UA-Fayetteville's Faculty Senate in November approved a resolution seeking a delay for eVersity, in part citing existing online programs offered by UA-Fayetteville and also noting that funds paid by students would be supporting a different institution. The university's Associated Student Government also passed a resolution opposing "obstructive fiscal policy decisions" in establishing eVersity.
UA-Fayetteville spokesman Laura Jacobs said a new total for UA-Fayetteville reserves at the close of the most recent fiscal year was not available Tuesday. The university begins its new fiscal year today.
Metro on 07/01/2015