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story.lead_photo.caption FILE — Henderson State University is shown in this 2019 file photo. - Photo by Emily Walkenhorst

Friday was a "historic" day for the Arkansas State University System, according to Niel Crowson, chairman of the board of trustees.

The board during its meeting in Little Rock, quickly and without audible dissent, approved accepting fiscally challenged Henderson State University into the system.

The Arkadelphia university will become the system's newest member, pending accrediting agency approval. The merger will give the ASU System its second university and expand its presence in southwest Arkansas, all while sharing resources to make Henderson State leaner.

"It's a triple-win type situation in that I think it's a win for students, faculty and administration," Trustee Price Gardner said, referring to the economics of the merger.

"The environment on the revenue side in higher ed, it doesn't grow much," he said.

Current collaboration among system schools stimulates success, Gardner said, and Henderson State adds a "rich tradition" to the mix.

The ASU System will grow to seven institutions after numbering only four before 2015. Mergers of colleges and universities -- whether into university systems or into other universities -- are common in this era of higher education when funding is stagnant, if not decreasing, and when the number of high school graduates is flattening.

The agreement signed Friday allows System President Chuck Welch, a former Henderson State president, to lead a search committee for the school's next president. That person would eventually become a chancellor under a completed merger. The search will begin in January.

The university has an acting president, its general counsel, Elaine Kneebone. The agreement stipulates that she will immediately begin reporting directly to Welch.

Kneebone's appointment in July followed the resignation of former President Glen Jones Jr., who oversaw the university's estimated $4.9 million budget shortfall last year. Brett Powell, the vice chancellor for finance and administration, had resigned two months earlier.

System officials anticipate a merger completion in 2021.

The 16-page agreement also states that the system's board of trustees would expand from five members to seven, specifically to include two new members "who have significant familiarity with the Henderson campus." The system's board is currently the smallest board of trustees in the state, despite serving the second-most number of students. That change will require legislative approval.

Henderson State has struggled financially in recent years in part because of dropping enrollment -- although it's since risen -- as well as maintenance costs and several million dollars in uncollected student accounts. The university has just over 4,000 students. University leaders expect another budget shortfall of $1.5 million this year.

In September, after receiving a $6 million advance from the state, trustees cut more than $3 million from the current year's budget, including docking pay beginning Jan. 1 for 300 of the university's 399 employees.

Moody's Investors Service downgraded the school's bond rating this summer to Baa2, considered "negative" and a moderate credit risk. The ASU System's bond rating is A1, considered "stable" and subject to low credit risk.

Taking on Henderson State will have a "limited immediate credit impact" on the system because of the university's moderate size, Moody's concluded in a report issued Nov. 8. The system's takeover of the university is likely to "help restore balanced operations" at the campus, the report states, given the system's record of oversight and "strong fiscal stewardship" at its other campuses.

Both the Moody's report and system leaders noted the system's expanded footprint across the state. The Moody's report concluded that the merger would strengthen political support for the system across Arkansas.

"I think this really speaks volumes about why this is being done, that our external agencies see this as a positive for both entities," Welch told trustees after reading an excerpt from the report.

Welch thanked Henderson State trustees for their support of the merger. Board chairman Johnny Hudson was in attendance. Henderson State trustees approved the merger agreement last month.

"Obviously they made a difficult decision," Welch said.

"But they've been excellent to work with," he continued, adding that Henderson State administration has been working closely with system leaders, as well. "We are pleased with the progress that's being made and pleased with our expectations of how we will continue to proceed in the future."

Henderson State and Arkansas State University in Jonesboro are already in talks about offering some programs on each other's campuses, Welch said.

Like Gardner, Trustee Tim Langford also noted the "tough time" financially for higher-education institutions. Langford said Friday was an "exciting day" in the effort to provide affordable and quality college education to Arkansans.

"This is not a marketing or branding play by ASU," he said. "This is an opportunity to provide services."

A Section on 12/07/2019

Print Headline: Trustees at ASU sign on to merger

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