(ARKADELPHIA) The state’s top financial officer has signed off on approval of a $6 million loan requested by Henderson State University, according to a letter released Tuesday by the state Department of Finance and Administration.
The Arkadelphia school enrolled 3,961 students this past fall, according to the state Department of Higher Education.
President Glen Jones requested state assistance last week as the school closed its fiscal year June 30 with a budget deficit. A Henderson State spokesman said the amount of the deficit was not known.
“Finance advises that an estimate is not currently available as invoices and payments continue to be processed from the previous fiscal year,” said Tina Hall, Henderson State’s executive director of marketing and communications.
The institution’s budget, as published by the state Department of Higher Education, included an expected $65.3 million in total revenue in 2018-19, of which about $49.3 million was to come from core operating functions.
Student tuition and fees were expected to add up to about $27.2 million in revenue, greater than the approximate $21.3 million in state revenues.
Jones, in the letter dated June 25, said the request was being made to “levelize the cash flows of the university.”
Last week Jones informed faculty and staff of a hiring freeze and elimination of non-essential travel, describing the “primary cause” of the school’s financial challenges as approximately $4.5 million in unpaid student accounts incurred in the fiscal year that ended June 30.
The $6 million loan, which was approved on Monday, must be repaid by June 30 of next year. The money will be disbursed from the state’s Budget Stabilization Trust Fund.
“This loan will be repaid from time to time as cash balances are available to Henderson State University, but must be totally repaid not later than June 30, 2020,” states the letter signed by Walther, director of the state Department of Finance and Administration.
A spokesman for the state finance department said Walther made the decision based on information provided by Henderson State University and the recommendation from the state Department of Higher Education.
The injection of public dollars is the first such loan from the state’s Budget Stabilization Trust Fund to a public higher education institution since 2009, when the University of Central Arkansas received such a loan, said Scott Hardin, a state spokesman.