Joint Performance Review (JPR)

Okay thank you all of we'll call the meeting to order. Representative Gazaway do you have any comments. Okay we have no comments there of members the first item on the agenda is going to be a motion to consider the approval of the November twelfth two thousand nineteen in the March fifth. Two thousand twenty minutes I have a motion to do that. I have a motion is there any discussion in regards to that. Okay we have a second all in favor say aye. Any opposed like sign. Seeing none that motion will carry. Of the next item that we have. The. Is I'm going to bring this up that I need to I'm gonna move that we request the assistance of legislative audit regarding questions raised during the February twenty eight twenty twenty. Legislative joint auditing committee hearing. Are raised in the course of joint performance review investigation if needed so in other words I won't to regarded to be able to be here and answer those questions and we think this is the appropriate way. Okay motion and a second any discussion. All in favor say aye. Any opposed okay that motion will also carry okay as most everybody knows we're here today to discuss the financial condition. That has got us where we are with Henderson state. University and the first thing that we're going to have is legislative audit they're going to give us a discussion of their findings that they had so at this point whoever's going to go first if you would to just state your name for the record then you can continue. Thank you Mr chair I'm Patrick newt deputy legislative auditor for educational institutions I have with me J. J. salario whose was the auditor in charge FOR the Henderson state audits for that period. Add your where the legislative joint auditing auditing committee at is February twenty eighth meeting referred the eighteen and nineteen audit reports of Henderson state university to this committee for further review. The following slide summarize the audit reports. Located in Arkadelphia the university had an enrollment of thirty three hundred students in the fall of the fall of two thousand seventeen semester and nearly four thousand students in the fall two thousand eighteen semester. During the audit years the university experience significant financial difficulties. The university's unrestricted net position at June thirtieth two thousand nineteen as reported on the audited financial statements was eight at a deficit amount of fourteen point six million dollars. In addition the university's cash and cash equivalents a decrease from nine point nine point one million to less than one million dollars over a two year period. The university's president during this time Dr Glyn Johns resigned July two thousand nineteen. The next six slides up present the two thousand eighteen audit findings in management responses there were two findings in our audit report which that audit report is identified as it exhibit do you one DOT eight. One finding one the university's internal control system did not detect a prevent material misstatements in the financial statements. On the statement of net position the allowance for doubtful accounts on student accounts receivable. Was understated by two point three million dollars which resulted in the net student accounts receivable being under overstated by that same amount. Accounts payable was understated by almost one hundred eighty four thousand dollars. The deferral of debt the fees sense which is that it which is related to refunding bond issues was understated by the net amount of seventy eight thousand. In relation to the allowance for doubtful accounts on the statement of revenues expenses and changes the net positions which most people refer to as the income statement. Student tuition and fees revenue was overstated by four hundred seventy four thousand athletic auxiliary revenue or I'm sorry athletics auxiliary revenue was overstated about thirty one thousand. Housing and food service auxiliary revenue was overstated by two hundred thousand. And I restatement for prior period adjustment of more of almost one point eight million was not recorded. Continuing with that finding supplies and other services we were overstated by the net amount of almost one hundred and eighteen thousand. Bond issue its cost were understated by one hundred fifty thousand and interest and fees on long term debt were understated by net amount of over seventy two thousand. The university corrected the spot these misstatements on their financial statements when we brought it to their attention. The second finding in the two thousand eighteen audit report related to student accounts receivable. The university had an unwritten policy of allowing students with a current balance of less than forty eight hundred dollars to register for the upcoming semester. And automatically enrolling students in an installment plan each semester. during that during our testing of twenty six ACT student accounts we noted the following seventeen students were allowed to enroll with a balance that exceeded the forty eight hundred dollar policy. And seventeen students did not make payments during the fall but were allowed to re enroll for the upcoming semester. Additionally we examine twelve delinquent student accounts determine compliance with the university's policies and state rate the state regulations regarding collection of outstanding debt. The university was not diligently and actively pursuing collection of outstanding balances four eight that the student accounts and three students were allowed to enroll with a balance that exceeded the university's policy of forty eight hundred dollars. In responding to the findings university officials concurred with finding one and stated that a new VP of finance and administration had been hired an additional review procedures will be implemented. University up officials also concurred with finding to and stated that a plan to address the student account issues had been developed. Additionally the board of trustees approved state account policies for current and future students. Now we'll turn to the two thousand nineteen report. which on the next three slides or the are those findings again there were two. Findings reported which. Which is identified in exhibit D. one dot B. both of these findings related to the same issues noted in the two thousand eighteen audit. On the first finding the university's internal control system did not detect or prevent material misstatements in the financial statements. A these misstatements included the net pension liability was overstated by five hundred thirty thousand and the related to forward inflows and outflows which relate to that pension liability were understated by three hundred sixty four thousand and six hundred eight and overstated six hundred eighty five thousand dollars respectively. And finally cation accounts payable was understated by one hundred ninety six thousand due to a miss classification. Again the university could corrected these mistakes misstatements and corrected their financial statements for us. I'm sorry I got back on the got the condo my slide here. Get the wrong one. The second finding in two thousand nineteen relates to student accounts receivable as noted in the previous audit the university allows students with the current balance of less than forty eight hundred dollars to register for the upcoming semester and automatically enrolled students in an installment plan each semester. in two thousand nineteen ten to student accounts was tested of those eight students were allowed to enroll with balance it exceeded the forty eight hundred dollar policy. And five students did not make any payments during the fall the roll out to re enroll in the subsequent semester. Again we look at the link when it counts. Ten of these a and of the ten we looked at eight were example the university was not diligently and actively pursuing collection of its outstanding balances in a car in noncompliance with the policy and state regulations. In response to the two thousand nineteen findings they can university officials concurred in provider responses that were similar as you see on the screen. Due to financial issue the financial issues detected in the audits presented today we were required by auditing standards to question universities ability to continue and and exist as a going concern. As stated previously the university's unrestricted net position at June thirtieth two thousand nineteen was that a deficit amount of fourteen point six million. For purposes of evaluating going concern with the auditing standards the net pension liability and other post employment benefits liability were excluded making the deficit unrestricted net position approximately four million dollars. In July two thousand nineteen the university requested a six million dollar advance on its general revenue appropriation from the state and moody's investors service downgraded the university's bond rating. These factors created an uncertainty about the university's ability to continue as a going concern. In response the board of trustees and university management have implemented several corrective action. First the university implemented a three point five million. Dollar budget route reduction for the twenty nineteen twenty twenty school year. Including reductions in professional staff and faculty salaries retirement match contributions and supplies and services budget. The university also implemented a hiring freeze and travel restrictions. Second the board of trustees voted unanimously unanimously in November two thousand nineteen to merge with the Arkansas state university system with an estimated effective date of January of twenty twenty one. Finally the university has determined it would not be feasible to repay the six million dollar advance by the end of the twenty twenty physical year. And since our meeting there has been a language included in the in the university's twenty twenty one appropriation act addressing this six million dollars. Mister chair that includes the summary of the twenty eighteen and twenty nineteen audit reports. Okay thank thank you for all for that my guess at this point before we allow members the to ask any questions of like audit the Senator Rapert representable Max answer the chair of like all this do you have any statements at this time or. Senator Rapert you own yes thank you senator Hickey I appreciate that I just want to. Reiterate I think several the members were probably at the audit meeting and knows a lot of times transpired since then and I want appreciate you for following through on this and may have a question that I want to submit it that the proper time here when when some of the folks come up or maybe towards the end of that but It's important I think to say to state this nobody wants to see Anderson university fail we want to see the university do well but obviously we do need answers as to what happened in a specially Mr chairman and I will state this read out the bat a lot of voices of come to me over the last several weeks since that audit meeting and I think it's important that we try to find out whether any anyone benefited in some way from what you might call the spending frenzy and all of the fallout this Kurt if it's all just gross incompetence that's one thing but many questions have been raised to me about the possibility of what you might call outside business relationships that are outside of a normal employment or normal contract for employment with the university and I think it's important whether it's a board member or whether someone other executive there if they might have been receiving compensation that would somehow. Give some rationale as to why they just kept spending when they knew they were having problems so with that Mister chairman I yield back thank you thank you for those comments Senator Rapert in as most of you know this is probably the first meeting of of many so we appreciate that and we also appreciate the leg audit joining is in to help J. P. are in this situation so at this time as far as like audit is concerned is there any questions of wake audit in regards to the financial statement or anything of that nature. Okay seeing none we will go to the next item on the agenda and if you all don't mind stand around because it could possibly pop up that we may need you in just a bit thank you. Dr Martin you're going to be. Next we had you and Mister fuller here so these off Mister fuller I to see with you masco. Okay since we're going to be a. Well I'm not going to do that with you Yes I am going to do that with you I apologize as we're having you here to testify we are going to pay anybody that's going to be testifying today we're going to be doing the oath so if you don't mind if both of you could stand in will do that. Miss Markham if you don't mind would you a state your name employer imposition. Director of the Arkansas division of higher education okay if you raise your right hand do you solemnly swear or affirm that the testimony you're about to give will be the truth the whole truth and nothing but the truth so help you god thank you ma'am Mister fuller also would you state your name employer imposition. Okay if you raise your right hand do solemnly swear or affirm that the testimony you're about to give will be the truth the whole truth and nothing but the truth so help you god okay thank you of the first thing and I want to just let you comment if there's anything that you want to say in regards to this situation I know that you've been watching it now for a few months so Dr Martin certainly and we've turned over all of our correspondence that we've had with Henderson state university regarding their financial situation for the last several years I have a binder full of their financial statements and all the correspondence that went back and forth between at my financial department and I've interviewed all of my staff extensively about those communications and the bottom line is the staff level folks at Henderson state conducted all of the financial reporting in compliance with with all of our requirements at the division they were not one of the institutions that regularly needed extensions or corrections to their paperwork they knew their jobs well they had an understanding of what was required and there was nothing about the communication or the reporting that raised any flights with us everything was consistent and we didn't see any issues with the financial information that they reported that being said we've been asked you know what could we have done to have detected this problem earlier and deputy fuller and I've had several conversations really the only way we would have known that there was a inconsistency in what they're reporting if we were physically reconciling their banking and accounting accounts ourselves which I don't think that's practical for us to do the things that they were reporting to the division always appeared and seem to be legitimate. Okay. And as far as either you or your staff as is with your conversations with them. Nothing was ever indicated in conversation or anything about these troubles that we're here to talk about today not at all and we did not. Know that there was an issue into legislative audit found the issue and when they had to restate their financials for us okay thank you ma'am Mister fuller do you have anything to add at I don't it's like she's not naked Markham said it you know every report that was was sent to us. File online there are many trans to see a drastic change in dower it on the the fund balances or anything everything reported seem consistent year to year on the reports that came to us no we didn't have any other mechanism to to verify the information other than what was submitted to us sure and that's a. We kind of assume that but again we're I will leave any stone unturned is what the promise was whenever the motion was to come before JP are and the same question so as far as yourself in any of the other employees as far as just direct communications discussions you don't know of anything that was ever alluded to that these financial situations we were going on at Henderson state university no Sir we didn't have it in any indication of anything until everything was brought to light okay thank you Sir any of the members those do you have any questions. Okay the first one I have is going to be Representative Lowery have think you're in C. forty two today I believe so okay you can start when you will thank you thank you Mr chairman. Doctor marking you you really laid out very clearly that. In review of the financial documents that they and the reporting that they had presented that you didn't see any red flags my question would be because I'm sure. The the reason that we want these hearings are not so much to beat a dead horse as far as going back in the past but making sure that going into the future we don't have similar problems whether it's at Henderson state or any other campus so the question I have is that if in this case or any hypothetical case you saw red flags in some of the reporting that is presented what. A forty what power do you have as the director of higher ed to be able to either well what power do you have I'm just gonna leave it open open ended their. I'm. Well we only have the power to report to this body as to what their financial situations had been for instance with the fund balance issue going down from year to year and I there was testimony the last time this of the full group that as to that the fact that there had been a precipitous drop in fund balance over the years that is not what was reported to the department and we had in that the year prior to the negative fund balance of positive fund balance of four point six million dollars so there was no red flag for us to show that that they were in danger on their fund balance it was it was after like audit found the mis statements that they had to restate the negative fund balance so we would have reported that had those things been correctly submitted to the agency but there had been declining fund balances over a period of time correct that would have shown a trend that that there I mean I know the board was the members of their trustee board that we're here point out that yes it was reported to them that there were declining fund balances. Was that something that you were seeing in previous your reports not anything precipitous so we had they reported to us it was an eight million dollar fund balance one year seven million the next and then it went down to a four point six but we attributed that to the gas be requirements for accounting for retirement liabilities a lot of institutions saw a reduced fund balance requirement in that year so did not raise any red flags with us it wasn't until the next year which we didn't get the fund balance report until after legislative audit had can conducted their investigation so that was the really the year that we saw at pretty healthy fund balance for Henderson state go into a negative. I guess just in summary and you and you and I know you know that we've had conversations that I've been extremely concerned that because of constitutional limitations that higher ed coordinating board and even the division have limited ability to Interfere in the affairs of individual campuses and. So I I guess my question my last question would be. Do you see anything in terms of the authority that you currently have that you could use legislative statutory help in being able to give you more of forty whether it's and fiscal issues or whether it's in other administrative issues in terms of oversight over campuses. I think that it's not working about it right work and time that in a perfect world I think it's worth our conversation I don't know what that would look like because again. We only know what that campuses report to us so we are taking a lot of their financial information as though it's correct and we reconcile that information but without. Intimate knowledge of their their their bank accounts and their investment accounts and it's very difficult for us to be able to tell their actual position at any one time. Okay would you may have answered the question there that they may be having access to those things in addition to audit legislative audit may be working with them we might be able to head off disasters like this thank you very much thank you Mr chair. Yes Sir thank you. And members of where have a little bit trouble for whose in what seat but represented painting Payton or you. Okay well that was covered. Senator hammer. Representative rye. One question guys and girls during the time the eighteen year and nineteen year. Did you notice to the the that you know those two years of time. That they were not keeping proper balances checks and balances where they keep an eye out month by month and and quarter by quarter are if what could that have been part of the problem. On the reports that we received from the institutions we receive those on a on a yearly basis so we don't see their account statement on a monthly or quarterly basis on what they're expensing. So. We we will be able to see that trend throughout the year as it comes we see the the expense reporting eighty eight year and. Follow up please yes Sir is there something that we can do within the audit they can adjust that to where we could take all these things off before we got to for a long. Hi I'm not sure I Dr Martin said it's it's worth a conversation to look into seeing anything that could be done but after my head I don't know of anything currently. Representative rival jump in there I mean we we have to have some conversation the boards of these universities although I believe some of them do a great job I think that this situation bears looking at and it we just all need to understand that we've got those but do sherry responsibilities whenever we do come on to that come on to university as a board member is not merely just a title so anyway I think this is a a good time to for all of us to remember that so appreciate that question. Senator hammer. Thank you Mr chair so to that subject matter right there do you currently have the authority to ask for those or bank records of statements now you do not have that authority now we do not have that authority now the there were like Nick fuller mother pretty mentioned the reports that we get our annual so we get year and expenditure reports of none of those contain bank statements were external account reconciliations which you don't have the authority currently to ask for you can only get what the universities give you now correct correct thank you thank Mister. Thank you senator Seventy one is that you Representative. Smith. Okay thank you. Thank you Mr chair doctor Markham Mister fuller thank you for being here to answer questions I just have one. For either of you. Knowing what you know now. Regarding their financial situation after all the audit do you think there was deliver it a deliberate cover up or just gross incompetence. We didn't have any correspondence from those who have already been questions regarding the the financial information everything that was reported to us came from staff members so doctor Jones and doctor pal they were not communicating directly with with our agency regarding their finances so there was nothing in the communication that we got from the people in their business office in their financial staff that indicated anything nefarious it was very routine business as usual communication. Follow up please yes Sir. So even though based on what you've seen. No nefarious. Activity to your knowledge but your perception of what happened and knowing what we know now do you suspect that there was a deliberate. Deception to keep the books looking healthy when in fact they were unhealthy. I don't suspect deliberate deception. And why is that. I don't think that those who were making the financial reporting decisions had reason to deceive. Of. On the other hand they were getting their policy decisions from those in leadership. In rank represents me the maybe I was a little lax and what I should have said so this is probably on me. Great question great answer from you. Actually this is why this it it it kind of transpired because of the lake audit meeting that went for hours we couldn't really come to a decision and that is what. The duty of this body is or or that's what we've been tasked with so that's what that's what we'll be doing and see if we can find that out and then give that to the appropriate person or appropriate entity after that so I appreciate that and appreciate you bringing it up thank you Sir thank you. Representative Richmond. Thank you Mr chair. Over here doctor Markham Mister fuller just a quick question help me understand a little better how you guys kind of try to maintain some type of oversight when when he universities audited like Henderson state was honored to do you automatically have access to those reports or says something exceptional like what we have going on right now. We we wouldn't be able to see those reports unless we are brought in to look at something during the course of the audit or once audit committee reviews that knows this auditor made public then we would see those reports. Okay thank you. Thank. Senate center Elliott is your question been answered at well it has not okay what in your in your up next some reason the screen right turn that off and I thought I would miss my second question but I do want to yes ma'am thank you Mr chair adopt American and Mister fuller this is kind of a look and FOR type question but do you are you aware of any other universities that are having Financial situations that are maybe as dire as what was going on with Henderson and is there any way you have a finding that out this is kind of been probably some but I'm just curious about what we can learn from this crises going to look and had. So. That's kind of it's called the question because many of our two year institutions for example they have very small fund balances they don't maintain large fund balances so it's not unusual for those institutions to have very little fund balance beyond what they need for cash on hand and I would say that we have some institutions that have been truly are late with the report there's an actor sees that we have to go back in and walk them through they have lots and lots of questions about how to complete their reports those would be the institutions that we would be most suspect of having this issue but we watch that very carefully because of those those relationships Henderson state just was not one of those yes institutions I guess what I'm probing into it's been that they're not there they were not it and somebody else could be in that same position is what I think and and how would we know that's just something I'm curious about a week the situation could teach us something about going forward I'm just wondering about some kind of mechanism for because it looks good is it good and and I think that's important for us to think about when we know that in a macro consummate way that our universities not a single one probably is in great shape financially and we need to accept start except that I think as a starting point and be vigilant about thinking ahead thank you Mr chair I appreciate it yes ma'am thank you senator Elliott. Okay members are going to help me a little bit Senator rice are you own. Yes. Thank you Mr chair is Markham appreciate what you said if I miss this excuse me an understanding limitations that you pay in the past now and I'm looking forward on this well eighty H. E. accept any board member complaints concerns seriously. And do you currently have in legislation the power to move forward A is the chair said I blown Kassian board members don't we represent board member your liabilities more than you realize. Do you need legislation. Coming up that will and you can't be oversight understand for everything but if a board member takes their jobs serious and they've been complaining. And they're not getting attention and they see Sears things enough to come to the aid the AG. Do you have the current power or do you need legislation to to help you shed allowed a little sunshine at sun jun will go a long way when people are mis handling things we we do not currently have a mechanism to deal with the institutional boards so and I can say as far as Henderson stated really any board I've never had an institutional board member complain about anything while I'm not my coordinating board on the other hand you know they're purview is very different so they do hear things but we we have very little enforcement power over the institutional boards we have no enforcement power of the institutional boards so typically if if a board member at an institution is complaining they're complaining within their institution and typically does not come to eighty edgy and and they're in we need some mechanism that a board member who's trying to do the right thing can have someplace to go to may not be you we see prosecutors reluctant to do things within their own districts one I'm always looking for a mechanism that a board member can reach out to when they're concerned thank you for that answer thank you Mr. What you all think about that and see if we can come up with something appropriate certainly Mr thank you thank you senator rest. Senator Pitsch. Thank you Mr chairman I'm nonCommittee members of one point that out of here need to go to committee members for those going we're going to let everybody have a discussion of their number as well I am the chair of a legislative audit education and on we've been intimate with this case since on Wall as Mr doctor who said. My question kind of parallels senator rice but it's on the other end of the spectrum. You were getting reports of your reports from Henderson state are probably the most critical piece I think in this whole deal because you were getting the nothing to see here just keep on going down the path. My concern is a business owner I've heard your statement before from others we feel like it's the president the chancellor the CFO wasn't anybody at staff level. But at some level they are the ones that have access to those checkbooks that don't say there's four million dollars on it and yet the paperwork says four million dollars and maybe it's a case of those folks needing you to have the power that if I'm a. Clerk or on the staff member whose keying in monthly reports and this is not right but I'm being told it is they need a place to go with that and you know we founded in audit because we were able to go knee deep into the that that of the day again ten we were doing a ten thousand foot view. But the mechanism isn't I don't think needs to be just for board members because as of stated before with our board members need deep in their responsibility of beneficiary agent is sometimes suspect but the people go to work from eight to five every day seeing a checkbook that's overdrawn and yet a financial statements and everything's rosy and. And whatever I mean are you the at the person for that to go or where do we as a state maybe that's for the chairman but I don't think the the whistle blower in this is necessarily the board member who comes to a once a month meeting that most of our universities I think it's the eight to five financial Clerk can in the day at that in the accounting department and I've heard time and time again we think they were above reproach in this situation. And I don't know if it's the fear the whistle blower. But at some level at least in my businesses. And fortune I haven't had that in mind but I've got friends who've had a Clerk just robbed them blind and that's a position that probably knows before anybody else the person is actually balancing the quickbooks or the checkbook or the whatever comment on that because that's where we're going to catch our universities who are in financial distress Senator Elliot said Burdette Ketchum when the people that actually see the financial distress not somebody who's that a free lunch once a meeting month board meeting right I would agree with with that comment as well and I think that the the people who are here today from Henderson state will be the people that will have that information so you the ones who are here today from Henderson or those who worked in the business office eight and a deputy director fuller can probably speak to how those individuals were pulling information for the financial statements I mean that was pulled out of A says so I mean it's it's a garbage in garbage out situation for those who were compiling the reports what I'm not sure of is who saw the actual financial statements and who did not understand that they were not consistent with what was being reported somebody knew that but nothing from the communication that we received indicates that those people who were entering things into our system. We're doing seven correctly. Yes Sir center. I guess my point is. If I'm keeping books for company entity cut university whatever ex. And it's dire straits I'm not sure they're not of money to pay the bills are paid employees. I'm telling somebody that and if we have employees who are telling us they told people out and we're not seeing as you just referenced the financial reports being forwarded to you or the state. That's one thing I have to believe with the the transparency of our universities their financial statements are everywhere I mean try making a donation to university you're gonna find about their financial statements constantly and at something some level some isn't right there and I don't know if they tried to report. Fear of job loss it cetera but that's that's at play here somewhere and I say that having been on. Like audit education and and my gut tells me this we had we had problems at the top. But there's something there at the bottom where they were trying to report and got threatened or whether they were involved I don't know and I wanna know you're in a tough spot because you just get numbers and you put your numbers or what they're officially reporting and so that's the benchmark they better have in the check book back home and they don't have so. Yes Sir thank you Senator Pitsch. Senator Rapert are you up for okay you're next members I'm sorry the machine's going to drop in some of you own and also this reason I'm asking those questions thank you thank you Mr chairman and I appreciate you and your staff for being here today obviously and also just to reiterate I know you're answering basically in a silo but some of this information actually your staff hasn't even dealt with this come from lego and so it's tough when you get ask a question do you think there is. Anything that happened wrong when you don't actually have all the information so I did want to ask you this this is important I think it's important as we continue to discuss this and the I just want to know are you aware of or could you relate to us this body what policies are in place that either require disclosure of conflicts of interest of board members at our colleges universities or even if there is a solid policy in place that would prevent conflicts of interest for board members and I mean this in relation to a board member that may number one own a business or an entity that also has a contract with the university for they may be a partner in the business that suddenly has a contract with a college university. That's a very good question all of our institutional boards have their own board policies time if they're part of a system the system will have a policy about conflicts of interest one thing that we found when we were looking at policies from Henderson state and and to senator pitches point as well We didn't have anyone blowing the whistle before the lead audit came out after it came out you know I heard from board members and I heard from employees that said. We've been trying to tell people that things weren't right and it wasn't necessarily people in the business office sometimes it was faculty sometimes it was just people who had been there for a long time and they said we tried to say there's no way these financials are correct but that was after no one came to us before and said you really need to be looking more closely but at the Henderson state in particular when we started getting questions about what their policies were about student balances about debt about board policies what we found is they didn't have any written policies I couldn't access a policy manual for Henderson state university they had very few written policies and I believe that what some of the financial situations in the no confidence votes came came up they embark to try to create some policies but I can't say what they're conflict of interest policy was if they even have one because they were so lane on university policy and so to make sure I'm getting the right message there is no standard that applies to you're saying there is no standard that applies across the state a minimum standard of conflicts of interest disclosure or even prevent these conflicts from existing for people that may be serving on these boards it would only be on a institution by institution basis some may have a very high standard in may even say you cannot have business with the institution or the entity or you should advocate or remove yourself from decisions relating to something that might benefit so you're telling me this is simply institution by institution you're not aware of a standard that has been set up for instance that might apply to all legislative members were you have a some level of disclosure and and have to report that is that what I'm hearing correct I think we should add that Mr chairman definitely to senator rice's vein of. Of things that we should look at G. seat you mention this if you're fits okay Mister chairman I want to ask a question here about that she's brought up yes Sir it's it thank you of you brought up I thank you for bringing that that you begin to have a lot of information coming into you because we did as well. And and so of any of that information that has been brought up have you or would you mind sharing some of that information with leg audit. I'm willing to share anything that I've learned a lot of it was very nonspecific yeah but I'm I'm happy sure yes yeah and that's important because those non specific things it's important for someone with the ability to sit down with that person and ask them it so that at are you aware of any of the information that came to you would some of that information and have come to you inferred that or maybe clearly stated that there may have been someone on the board during this period of time that was receiving monies through contracts with Anderson yes yes thank you. Thank you senator. Representative Burch for you yes or no you don't have one okay. Representative Payton have but you yep okay you're a thank you Mr chair Dr Markham really appreciate you being here because you know it's important that we get to the bottom of things hindsight's twenty twenty and so looking back we can figure out exactly what happened and use that to steer. Your prevention and things it's been talked about in the future so you've basically indicated that the your perception of Henderson states reporting was that they were very proficient in being able to report and do their books. And it seems that all of the errors that were made. They have been discovered by legislative audit were in favor of making the little the books look better so somebody that's proficient in bookkeeping and reporting and then all the mistakes that are made make it look better I mean I sit here and think as a businessman. There's got to be some deception on purpose and I think this committee and and my colleagues you're very intent on trying to find out where that was and how they were able to. Get the people that were doing the reporting and the bookkeeping. And maybe they maybe whoever the bad actor was was able to manipulate them and them on aware but I at some level of this reporting. Being false should have been obvious to somebody and so when when Senator Pitsch was was talking about how you know it's usually the cashier or the person this balancing the bank statements I mean I have a lot of people in my business is that would that would see the truth and and then our last meeting they came to light that this some vendors were not being paid and that their accounts payable was severely delinquent I'd have to be thinking that those people were calling. And whoever was answering the phone was to get an earful about about these people not getting paid. So I just I really appreciate you being here. The when you were asked earlier about whether or not you thought there was any deception you seem to qualify that by. Who the people work and that you didn't see any deception in this area can you elaborate on we're. You. Are not willing the is there an area or a group of people or something or you're not sure that there was no deception in that area no words I know you can't make accusations here but we need your help in trying to define word of you know where may have been coming from. I'm not privy to the internal communication at the institution I think that that's why I'm qualifying that they're the reporting that we received it was accurate as I believe asus would have reflected that so the checks and balances that we have in place were honored so we have our state reporting system that a says an and we have the reports that come to us those always. Were consistent so we didn't have any reason to believe that anything was being manipulated I think what I'm qualifying is. It would be it have been beyond that asus accounting system where policy decisions are directives were being given about vendors and about students and and how those policies are going to be carried out so because I don't understand what the line of communication was between the people who were line level in the business office and those who are making decisions I can't really you know point a finger at any one person who might have had knowledge I think that that's going to be important for those employees Henderson who are here today to talk about that and shine a light on and also then you basically if you don't mind me here so basically when earlier when you said you didn't think there was any deception at the staff level. You're not saying there's not. All. I don't know that there was any willful deception will there may have been but I don't know that okay thank you thank you Mr yes and just clarification most everybody here's going to what asus is aces are financial but I want to make sure that everybody is a live streaming understands that's what we're talking about whenever we say that word in hello will add on that for that the state accounting system institutions have their own accounting system outside of that but they do report afterward back to this the state system so the information is there but there is a delay between their system and stays Mr chair **** follow up yes Sir. So I do have one more. Thing I'd like to ask you and that is. The level of miss reporting that we see here. And the effect it has had on their financial position. Do you believe that there's any one position. That would give somebody the power. and the access to create this deception or would it involve coordination between at least two or more people. I can't say that for sure there's definitely positions within an institution that would have the ability to orchestrate a deception. I would think that it would take someone with the intent and then other people to help carry that out whether those people understood it was deception or if they were just following institutional policy that's what I don't know okay thank you thank you Mr chair. Yes Sir represented by of Representative voting I have you up next. Thank you Mr it's the chairman of. I guess Dr Martin you testified earlier stated that. You only get reports from institutions year of a is that correct the financial reports yes but you get a report to the one doing the year. We get various reports throughout the year I have met mainly academic reports so we get term files we get financial aid reporting of but the annual expenditure reports and some of those that are found here those are annual reports so you get five financial aid expenditures report. Yes so you don't see nothing in that the one who did the quality of every six one handles the done we get the report from the institutions on a yearly basis but we do have access to that state accounts not notified the the the student a report update on. Every year audit on quality. The the financial aid report yes. With the financial report that we have in at the division level are that the statewide scholarships and financial aid that go out to eat institutions so we can see that information on a daily basis if we want to check back that's operated out of the division and then disbursed to each school we don't see that the day to day operations of the the campus financial aid offices and tilt revenues or expenses come back on those yearly reports so what in a red flag will come up in those appointed you can see daily or weekly amount within the red flag will come up in those reports. Not that I'm aware of that that would just be funding that's flowing to the institution for scholarships for the students that there on campus so I don't know other than you know increase or decrease in the number of students. But that would. Or late to enrollment a lot of times on the institution level not anything to do with their their financials on the accounting side but the is this the the show how it was expendable when I was spent. No. The financial aid reports that's that's funds to go directly to students I understand so it would just show that we submitted our that we awarded student accounts at their institutions. Okay all right Mister I have a question for you you said they're going B. series a meeting that's what I would suspect yes Sir okay says of the witnesses that we need to hear but is not on this list that yes most definitely serve this was we actually had this meeting scheduled before the culverted started yes and what we have done is just kept the original agenda but yes Sir that was a what are task was going to be and it was going to require multiple witnesses and you know this bodies already give us a the authority to do subpoena power of course with the approval of the The Speaker in the pro team however and I will bring that up in a minute we do have. Six on there today everybody here today come on their own wheels so again I'll bring that up in a minute okay thank you Mr chairman yes Sir. Representative Lowery. Yes thank you Mr chair. There's been several comments been made did just that brought up and in my mind a need to do some follow up in one of them if first thing I want to clarify I said awhile ago that what's most important is moving forward no I I mean I think we've seen that there is certainly a I need to attribute blame and responsibility and if that means that the there's a finding that we might need to refer this to a prosecutor then we certainly need to do that work but moving Ford I think we've also been able to identify some **** in the armor so to speak and and doctor marking you reference that there have been people that have come for you actually use the phrase whistle blower. are you are you aware and I I think I know the answer to this but DO Arkansas whistle blower protections that we have in statute which by the way members if you never looked at them there really woefully week of it requires that whistle blower first go to their supervisor which is probably the person that's actually committing the problem but never the less do whistle blower protection such as they are also extend to university and college personnel I would assume so yes and I will say and of the faculty and staff Henderson that did come forward I've heard of those three board members so I don't have names of individuals who have. But I've heard from board members that say I've had several staff members who have come to me since this or during this process with information but they were fearful of coming forward it beforehand thank you they came afterwards but they said that they were fearful well you know at some of them came to the board members prior Okay If we especially if we do strengthen whistle blower legislation Ste statutes of you you know I think one of the things that the higher it coordinating board could certainly be very instrumental in would be making sure that workshops are done for university personnel throughout the state to let them know that they have not only this protection but they they have a responsibility two to come forward you know if you see something say something we talk about that in so many other areas of life of. And we need that we need that kind of protection you mentioned also that in retrospect you found that interest in state did not really have. I'm sure that there you said that they did not have a policy manual per se in in answer to Senator Rapert question about conflicts I'm sure that that's not an exclusive statement that they they had no policy manuals but would that not be. If for instance campuses work to make sure that the higher ed division and the higher it coordinating board had the most recent policy manual on file that you actually literally had that on file and upon review of that policy manual you were able to you or your staff were able to spot deficiencies would that potentially be the kind of red flags that might trigger your division actually leading J. P. R. or any other maybe even audit to to look into some of some aspects of behavior at a at a campus sure that would be helpful you know regularly I have constituents students alumni. That call the division and ask what is U. Ehlers policy on this and typically that's very easy to find I can go to their website I could buy their handbook I can find their policy so it was surprising to me when I had questions that a lot of a lot not saying what is there employee evaluation process so I thought I would be able to easily find how they evaluate employees but then we ended up happened to for for those folks to do and FOR request and sometimes it didn't produce anything so yes it would be helpful at least we have the link to everybody's handbook so that we could refer to that when we had questions coming into the division that your division would be a of appropriate clearing house to have all that kinds that kind of information would be happy to yes okay I I just in closing I would remind members that this legislature I was able to. Cochair with senator English back in two thousand fifteen two thousand sixteen a task force that looked at realignment of higher education in one of the issues was looking at some of the smaller campuses and of. Possibly mandating that they become part of the system because I think that that is an insularity protection an extra level of protection on oversight now it also could be an extra level layer of The keeping information from us I I don't know but I I like to think that But anyway the point one make. Of all the independent for your campuses in two years that pushed back about any kind of mandate Henderson state was number one. In coming to me and saying oh well we don't need to be part of a system. And so we ended up not making recommendations because we felt like a lot of the the that could be done organically it has happened in a number of cases no doctor Markham and I had these conversations when we were looking at productivity funding in it has happened organically but we probably need to revisit this whole issue of realignment of higher education that it makes it easier if we don't have. Dozens of campuses it makes it easier for you if you have you can lien upon systems to be an extra let level of over side so thank you Mr chair yes Sir thank you Representative Lowery okay the next one on the members I guess almost kind of jump in right here and I want you to understand so far as I'm concerned when statement that to make sure we get to the bottom and do it. Three three times next week however we do have six employees of that we're going to the interview from Henderson so and I have five or six of you on the list right now so I'm going to continue with you on the list because I want you to get your questions in but again if you all just be cognizant of that I'd appreciate it the next one that I have is going to be. Represents bringer are you in seat sixty. I'm here Sir yes ma'am you're up thank you very much yes ma'am to the TV I'm a new Representative to the group my name is Joyce prayer and I am a graduate of Henderson state university so I would like the record to reflect that and I am very concerned about the findings of the legislative audit committee my only question at this point is how far back do the findings go regarding forty year to the findings of the committee the display the body committee call back to find is that we're that are before us here today put the how many years back well we're looking at the two thousand eighteen and nineteen fiscal years and seventeenth not in there is it. Yes is just eighteen and nineteen eighty okay thank yes ma'am question. Senator sample Europe. Four hammer I'm I won't pass my question it something we can insure hearing way thank you senator. Represented Murdock. Are you here yes Sir thank you. Quick question. Is information is indigent aces solely dependent upon. What the universities are institutions provide. Meaning is there any weight of. Verifying what the information that is put in aces yes actor it meant for the on the institution that it is you know they send to a file from their accounting recordkeeping system to asus to be loaded and so I I don't know if there's any checks within the the the back end of the technical system that verify that information but I believe it's just that a submitted file from the school to load the same data that they have in their accounting system into the state system so the so there's so you as you read you receive it or you put it that a whole may have there is no way of amend that is an accent question again because I guess I think it and center of verifying so hold on a date somebody early is the garbage in garbage out so if that if that happens that can be that can happen is that what you're telling me it is possible I mean you know on our side we don't have access to the institutions accounting system to to kind of check against to make sure what we're looking at on a daily basis in in that state a system is matching what's on that that system at the campus so we're relying on what the state system says which is reported from the school so if somehow that report was corrupted in some way or anything it's possible that state system might not reflect the accurate numbers. Okay so I need to go to school for just a second so. The primary oversight for the details so I go with local school board local school boards typically if the financial to get finance reports able to look it at all we down to check check numbers vendors so there is a very intimate and intricate a relationship between the board and any entity in how which ran from fiduciary and performance that point. In this case in these cases the home. Is to handle that earlier hurts I think it's senator rice ask a question about. The board members in that they're not just rubber stamps who in our current structure he. Is the oversight that has the if they can get in delve into this a little deeper than what we're hearing a surface level because what we're saying to some degree is that there was some red flags all through this that. Someone. Should have been able to see and and I'm not necessarily just talking about does this the within here from at the institution. I'm talking about maybe boards or eighty eighty a home ever it would be with some intimate knowledge some verifiable knowledge you understand what I'm saying what about it can be dealt. Because this don't look right you know we vendors not being paid so. That's the honest in my question first of all yes Sir okay it's my understanding that the detail never made it to the institutional board that all of the reconciliations were happening. at the staff level and that the institutional board only saw very high level financial statements and projections and then what we learned at the last meeting with many times as projections were incorrect they were incorrectly stated so the board then approve things based on incorrect information We also learned that there really wasn't a you know most of our boards you know one quarter of the year they do one thing the next quarter of the year they're looking at different things and then at every quarterly meeting they're looking at some pretty detailed financial statements that wasn't the case Henderson state. Okay. Thank you. Thank you Representative out. Senator hammer I believe you're up next thank you Mr chair each in each individual each individual university has their own accounting system is that what I hear you saying. I knew that when they submit that information to you to go into aces that's what you put in so what would be wrong with requiring all the universities to become part of a system with that allow you greater transparency to be able to look at those numbers or would that have any of benefit to it at all. I'm have having all of institutions on one accounting system you would have a benefit bill to see it but it it would have to carry a heavy price tag implement that system on on each of the campus's they all you know that the of a system is currently adding a new financial system for all of their schools that's a different product than what the state a system is they if you system is looking at doing similar for all of their campuses so they're all working on getting similar accounting systems but they're not all the same one across the board for all the institutions currently yeah I understand there's a price stay with everything but as to the question of transparency and for you to be able to detect things like this sooner than later would allow you that capability to do so. It wouldn't hurt for sure it but it would it would be beneficial you and another thing that that might help in the about this each year every institution submit this certification solvency that Legislative Council actually reviewed last week for each year for the institutions that each school certifies that they have enough funding and budget to complete the year. You know this past year Henderson wasn't able to submit that this year but last year the end of nineteen they submitted a letter saying they had a new funding budget to do but those letters for every school is basically says we have no funding budget so it might be worth looking to add some additional information that letters you know like number of days of cash on hand might be something that we can look at they report each year we see that going down on a yearly basis that something to to look at but just adding a little more detail the certifications rather than just a a blanket statement that we have the budget to make it thank you may be similar. Thank you Senator hammer and as an excellent point I don't know who's gonna try to keep up with that so it just doesn't get lost in the in there but Senator hammer argues that give you some more legislation possibly. The thank you Sir. Representative rye. Thank you Mr chairman of doctor Markham. There's no doubt that there there's just section here there's no doubt about it because it showing up every which way you look on it but I got a couple questions actually on the US you thank that the. That the reporting was purpose purpose for for personal gain. Are you thank it was does it just embarrassment of the the university. I really can't speculate as to the motive. I mean is obviously incorrect. But I can't. I can't testify that it was one of the other one the okay felt follow place. Yes Sir okay do we need legislation. They can let you guys a division of of legislative audit here. Be able to want yearly reconcile all accounts at the college university with the banking system that they're using. I think that that would be worth the conversation as well. Thank you Mr chair thank you Representative rye. Okay members we have two to more than what we're gonna try to go to the employees. Representative Burch. Thank you Mr chair yes ma'am knowing what you know now have you are do you intend to make any changes in the standard practices obey T. H. E.. Not without enabling legislation. Ballot yes ma'am and do you intend to communicate with members what enabling legislation. Would help you to do so I will yes thank you. Representative della Rosa. Thank you Mr chair I was just curious you know you said that you have looked up Henderson university's policies just to find out that they pretty much didn't have any. What about the other institutions are there any other institutions that are very lean on policies that. We might should look at because I would certainly hate to find out that we have yet another one it's doing this and we didn't even think to look we haven't done an audit I can tell you any institution that's within the university system they have a standard university over arching policy guide so those are easy to find and we would probably be a fruitful effort to look at the independent institutions just to ensure that they have. Policies and we don't have any enforcement over that but we can make recommendations for improvement. Thank you. Okay doctor Markham Mister four we appreciate you all being here today well great great conversation course were on in the on a mission here but I think that there was a some great policy questions that may have come out of this so if you all do not mind trying to follow up with that again I know that Senator hammer is going to be working on some of it but if that doesn't it doesn't get lost it'll be a benefit to us in the future we appreciate what you do thank you. Members give us just a second we're going to have the the Henderson state employees are outside we might as well just bring them all in and they can space out with just having to come for one at a time. But I'm gonna take the opportunity whether company and to say this that these employees of Henderson state which are here to testify today they're here on their own free will as you know this body has the authority and it authorized us to do subpoenas but we did not have to do that and that the. These employees are also currently furloughed either directly or indirectly with what happened so we do appreciate on for being here and I think everybody just needs to to kind of remember that also so. All right we're glad to have you all here today what we're going to this is just have you wanted a time to come for we think that's the most propria way miss Karen Spradlin director of accounting are you here with us today. Yes ma'am if you just come through and then have a seat up here at this table that would be great. Whenever you get there you can just remain standing because I'm happy I the it's our policy of what we're doing today is that put you under oath so if you would be if you'd state your name. Employer and position. The yes ma'am that's been the way that we're doing it since you're six foot apart right there you should be fine so. Let me I should I should have told you need to turn your back on if you push the push the button. Karen Spradlin Henderson state university director of accounting okay if you if you don't mind would you please raise your right hand. Okay do you solemnly swear or affirm that the testimony you're about to give will be the truth the whole truth and nothing but the truth so help you god okay thank you Mr president you can have a seat. If you wanna Knaus. We your good morning I mean Laney bone on the acting president of Henderson state university okay why don't I just go ahead and swear you in because I'm sure you'll have some questions also that's okay ma'am. Okay You've already stated your name and your employer and what to what you do and if you would please raise your right hand do you solemnly swear or affirm that the testimony you're about to give me the truth the whole truth and nothing but the truth so help you god I do alright thank you Mr Bradley we're gonna start with you we appreciate you being here today Don't want to be nervous or anything like it there's a lot of men here that are buyers but I'll try to keep on the keeping beat off of you a little bit so again we appreciate you being here. What I'm what I'm also going to do is just ask you a. A standard set of questions that I'm going to be doing with the rest of you in the audience and then we're going allowed members that actually ask you some more questions of us okay ma'am. So. which officer department do you work with right now. I work in the business office Kate and how long have you been there. box Bentley in the business office I've been there about five years okay so you were there when or when a roll everything was transpiring that we're talking about today yes Sir okay and what what exactly are your duties. I assist the controller with funding to hold on just a moment somebody. X. the only has an alarm going off. Phone okay alright continue to assist the controller with financial statements reporting I'm a monitor accounts payable and Just whatever else needs to be done okay you may have to pull that Mike a little bit closer to you also some time you have to do that and. During the end and of course what we're talking about is. Possibly of of course the years eighteen nineteen and maybe even seventeen you know even though that's not what were financials are today but who were you reporting to at that time who is who's your boss lace of Franklin okay. Right so. Let me ask you a few other questions. You understand that the students that the students at the university that they were being or were allowed to carry a balance of like forty eight hundred were you aware of that did you know anything about that at the time okay. Do you know why they were allowed to do that. Mister Scott framing could speak to that better than I could okay ever student accounts okay. Okay. Do you also know that those limits were allowed to go over fate forty eight hundred. I had heard they had they were but I didn't have any data okay with it whatever you say that you heard there was I'm not talking about as it relates to anything that's come out of here did you know that at the time before legislative audit coming in did you know that they're allowing the accounts to exceed that before legislative audit came in and did their work yes Sir just in conversation okay and that's about that is exactly you're doing great that's exactly what we're looking at it do you remember who those conversations were with up Scott Freeman and and Lisa Franklin okay. And do you know why they were allowing that. Mister Freeman didn't understand why that was those exceptions were being made okay Westmont. My perception of the conversation okay well you've got where we need to do there's will have to ask Mister Friedman that is so Do you know. In regards to the student balances that we're talking about do you know if there was a list. Of those students. And those accounts are over balance was that communicated to any anybody else you know about how much overage that may be that you remember. I don't know okay and that's cool that's a good answer. Okay. Some of those student accounts were behind a they were delinquent is way I should say that they were delinquent. Do you know or did you hear have just discussions with anybody of why they were allowed to be delinquent yes Sir okay. Right. Okay and with your job description. As you as you've heard you know that some of the financial statements have some misinformation on the. Did you hear about that before lake audit coming in that so there might be some misstatements or miss representation or some. Items on there that might not be correct. No Sir okay so none at all on that. There were mistakes that that audit pointed out to us right. But before all it got there did you know did you know of anything or any talk that there might possibly be yes Sir okay. Okay there's an understatement on the financial statements of about two point three million for these students on their allows for doubtful accounts. Did any members of the management that you know of of management did they ever communicate any of that. To any it to anybody that you know of. No Sir okay no of. About three or four more statements and I will give it over to our questions and we'll give it over to the members okay there was also some it from what lego is findings there was a possibility that some invoices were either not paid or that they were being hailed. Prior to this everybody this here that's the way I want to be asking the question prior to legislative audit coming in did you know that invoices or possibly not being paid. okay. Well being healed okay can you give me some information about what all you knew about that. To. Who said what and the names and just held at all what transpired. Well honestly we didn't have the cash to pay the invoices okay I conveyed that to our controller. And on occasion would send an email to our vice president at that time Brett pal you know just to let him know what was that we were holding this invoice or that this employees had been paid and I would let him know when when that would happen. Okay so did Mister pal tell you to hold those invoices were sent something that. You in the department were just light well we don't have any money so we can't pay the invoice or how how did all that transpired I heard what you said about sent in the email but I wanna make sure we're exact on that. And. He did not tell me specifically what to hold or. Our plan to hold them That because at the cash situation. I mean it we didn't want our accounts overdrawn At the beginning we would print checks and then if if we we didn't have the the cash in the account then we would hold the checks sure we could mail them or we would tell the invoice Sure Who made that decision on which ones to hote whose actual decision was that that okay it looks like they were going over draw our account. Twenty thousand I'm making up a number twenty thousand dollars who said well let's hold that one. at that time it was I would. Confer with Lisa Franklin controller. And we have sense involved or processes and it's a match We prioritised and flood priorities and and that sort of thing so it's a much more and. Standardized decision. Okay. And just before the other members do you have any other comments that you would. Like to like to say or that we would like you to say if you know anything I let me put it that way I know some people may be a little bit worried about talking but we're trying to get to the bottom of this because you know you're. The following all this is a transparent of it so we're trying to get to the bottom of it not only for this situation but also to try to hit all things in into the future because that's our job and responsibility you know for to provide that oversight so if you can add anything we would appreciate it. I'm just here to offer what information I can to help. To help you guys okay well we do appreciate that in members. At this time we're all out the members to ask you some questions or whatever so that's what will be coming. Okay the first one I have is Senator sample. Senator sample is going to be there to your left thank you Mr chairman I thank from your questions my question would be directed to Mister Freeman and so I would like to be kept in the queue but for him my question should be asked PM. Yes Sir. Yes Sir that'll be good whenever he comes up the matter to remind me but I'll I'll have you down for that right thank. Representative Lowery you'll be right next to. Thank you Mr chair and I just wanna thank will tell you we do appreciate you being here to answer questions. You made several references to miss Franklin and I know she's sick here to answer questions so I'll save some of those for her but what one of the things that I wanted to to ask was. you mention sending an email to the CFO where the vice president for finance the doctor pal of. Were you ever in any well first let me just say. Under the organizational chart which I'm sure you're probably familiar how many layers or levels were there between you and doctor pal. Just one just one Franklin mills Franklin okay and there was that there was not any. Repercussion or backlash of any way if you actually going around miss Franklin to send email to doctor pal. Okay which you would have been the person that I guess of a vendor was not being paid you probably would have taken the call with that have been somebody else. The calls were usually transferred to me if I didn't get them in the first place okay all right well again thank you very much for being here thank you Mr chair. Representative Bentley. Thank you chairman thank you for being here today a sum of hands accounts pay myself regular I can understand where you're at and the frustration that you probably went through from getting vendors kanji wondering when world they're gonna get paid so couple quick questions for you what was the longest time that and which was held conduct an anti would how many days later they were. Just roughly I don't need an exact I wish along so that you can think of I would say ninety days. Do you have any outstanding right now that are ninety days or more nine hundred ninety no which were was the longest you have right now that you can think of less than sixty between thirty and sixty thirty sixty The could you can't when it kind of started was it twenty seventeen twenty eighteen to you I'm gonna just roughly when this all started when I get pretty tough. I would say the during the summer of twenty seventeen. Okay thank you one last question chairman that's okay yes ma'am Thank you roughly ten with the largest dollar amount was of the vendor that was looking for passed to. That would have been one of our our contract fenders are outsource spenders subjects over and says city there there invoices are generally several hundred thousand. Okay. Up as my apologize for the situation around I'm sure was very difficult thank you. Thank you. Senator rice. two quick question Mr Ragland you said the miss Franklin was the your. Next up to go to this controller and I've got a number of names that I kind I understand but who who is the next but it was front and would answer to. That would be Mr pal he was the reptile yes Sir Yes from. Your report the did you as an employee feel like. your concerns of having to juggle accounts payable on those saying that you could go to anybody besides miss Franklin. With those concerns. That outside your boundary of comfort. I would say that he he would listen and of course I I did email him to let him know certain things but I generally just went to miss Franklin do you feel like that it was fine with miss Franklin for you to the email directly to Mr pile yes Sir so you felt like you could share anything that you had with them whether you've got handled correctly or not yes Sir but nobody else. No Sir the. do you know any of the board of trustees. I wouldn't be comfortable going directly to the board. Thank you appreciate you being here to. Representative Payton. Thank you Mr chair Mr Ragland. In our audit findings from two thousand and eighteen and two thousand and nineteen. There are two findings. In in each of those two years that are the accounts payable being understated one year by a hundred eighty three thousand then the next year by a hundred and ninety six thousand and that's specifically what we've been asking you know regarding the vendors and and accounts payable. Were there any discussions and are in the office with any other. Administrators are employees or anything that you know of that word of. Then why is this number you know before legislative audit audit discovered. Did you know that these numbers were wrong was anybody telling you to report a wrong. No Sir not at all. So how as the director of accounting could they be misstated by nearly the same amount two years in a row. Do you mind if I add some context yes please okay During the closing of FY two thousand eighteen we had to a four five accountants out of the office on medical leave so we were short staffed at that time we did not have the the manpower to do all the checks and balances that that we had we were rushed for deadlines and then in two thousand nineteen course doctor pal had just left or one of our accounts had left and we were not able to replace her and so. The Senate Franklin was trying to do doctor house job and her job and I was trying to do my job and. The system we were trying to balance those those duties so there was just a lot going on during that time by the follow up Mr. Yes Sir so I can understand how the over work lack of personnel would delay the keep punching it entering it in as an accounts payable. The but you've testified that in addition to that you had accounts payable where you actually printed the check if I understand right and then did not send the check. Yes Sir so by bringing that check the computer system is going to say this account's been paid that is correct and that would effectively be an understatement of your accounts payable. So with those hold checks of total a hundred eighty hundred ninety thousand dollars at any given time. UP I wouldn't expect into that that's been a long time so you think the understatement occurred mostly because the payables were not entered into the system instead of they were paid in the check for being held the door yes Sir. The. The process that we went through it at first the payable the invoices would come in and they would be processed you know as stable as they came in and we would As it was on a first come first serve basis We have sent to change that process and so we enter them all in so that they are they're in the system it wasn't in the system before so it was more manual work. Your may continue with another line of questioning or get back in the queue now go ahead okay so in two thousand eighteen the audit findings also keyed into a call that allowance for doubtful accounts on student accounts I assume that means bad that it's not being written off yes Sir is that what that is it's two million three hundred thousand dollars and everybody knows in business that if I don't write off my bad debts or my accounts receivable that stunned collectible that that's going to prove my bottom line and and you being the director of accounting I'm sure you understand that how did that happen did nobody review the those accounts. I really don't have anything to do with the student accounts or or their collections were or even the doubtful accounts that would be a question for Mister Freeman or missed Franklin so at the time that you serve their have they ever come in and so we need to we need to. Right off some of these bad accounts always been allowed to follow. I'd like I said I don't I don't deal with that part of it so they wouldn't have a reason to come to me in and asked for that to be written off. Okay thank you Mr chair yes Sir. Senator hammer thank you Mr chair when you began to and I appreciate if I understand right you guys are here on furlough time so you're here on your own time today correct yes Sir thank you very much for that because it speaks volumes that you're willing to do what you're doing so when you became suspicious that something wasn't right you reported directly to who again. This list of Franklin our controller and were you told by her. What would you tell by her when you reported it to her. What did she tell you to do Usually she would say I have I have spoken to Brad about it or I know I mean she agreed with me that that are cached situation was was bad. It wasn't that she was trying to keep anything from anyone. That answer your question did you do that verbally or in writing an email you mentioned awhile ago that you sent some emails to some folks did you do anything to document that you told her that. Usually office is right next to mine so usually we just speak. about it there. I'm sure their emails about it but Doctor Patel's office was across the the hall and so I would just and he a lot of times wasn't available so I would just email him. If I needed to tell him something and you mention Lago you to feel comfortable going to the board if up did I hear that correctly yes Sir Would you mind sharing which is why. Well. I had. Been told not directly but it was discouraged by administration. Administration that still on staff at the university now yes Sir. Okay so I'll stop there thank you Mr. I would use. Yes yes there were still there would you going to name the names of that that's what we're here for today. It was my understanding that That clean Johns did not want employees And I he did not tell me that himself someone else had told me that he did not want people speaking with the board members okay thank you ma'am. Sir you have a question. All. You can ask a question if you will as long as we leave it leave it to that one question. It is used later I'll be up front and ten minutes but so you're saying it was general knowledge among the staff there that Glyn Jones didn't appreciate them talking to the board members. Among the few that I've. I spoke with about that. It was I can't speak for the whole campus what was your impression that was general knowledge yes Sir thank you thank you Mr chair. Members of a take just a short break so if you all don't mind I know that may be a little out of the ordinary but that's what we're gonna do it so I want to talk with the Marty Garrity here for just a moment and my coach here so we'll be be right back within five minutes thank you. Taking your seat. Spread out on June further that break at anything to do with the With something that your testimony that was said in your testimony that was just we're looking at some procedures I appreciate that yes ma'am. Okay. by ready to go there but I got the phones off. Senator Rapert. Yes Sir thank you Mister chairman at several things being covered I reiterate we thank you for coming at without people like you that will come and speak up it's hard for us to ever get to the bottom of something and so for all within hearing I'm definitely sorry about everything is going on there and appreciate you for stepping up of. Did you ever report any issues at all that you felt were ignored by any superiors. I don't I can't speak to that I did report issues that. I did not receive a response about but I don't. There wasn't a lot of communication between. Doctor Pallin myself so. In case of. Before coming here today were you instructed by anyone on staff at the university including doctor Kneebone as to how you should testify no Sir there was no discussion at all previous to coming here. And we had a meeting about what to expect but it no one asked me to say anything specifically or. Or not to okay is there anything that you have not been asked today or that is not been discussed today that you would feel would be relevant to us trying to figure out exactly what occurred and just anything at all that you want to add that you think would help be helpful to us. No Sir. I think you've covered it. Thank you. Thank you senator. Representative Lowery. Yes thank you Mr chair just have one quick question you mentioned awhile ago that that you would see it talk to your supervisor but you'd also sent emails to doctor pal saying that you know we have these invoices but we don't have enough money and and this may be a question that you would you know per pop probably say well that's above my pay grade but were you only aware of what would be in the checking account and not what the university was reporting as a fund balance. Did you ever did you ever hear that the reports they were given to the trustees for instance we're showing that they had four million dollars in fund balance at a time when you were not being able to pay invoices. The fund balance doesn't. Exactly it. I think Lisa Franklin would be better to answer that question for you. Okay as to what now I understand that but were you were you aware though that that was being reported that the university actually was relatively flush per a fund balance. I don't disagree the that the fund balance was higher than our cash is does that answer your question okay. Well I guess but it did it probably did raise a question in your mind right yes what why do we not have cash to pay our invoices if we know that there is a. Yes and I know sick that I would use the word significant because it wasn't significant in terms of what it'd be and four years previously been declining fund balance but that didn't race kind of a question in your mind that we should have been able to pay these invoices. Well fund balance is not the same thing is cast. Okay. And that's that's why I don't have a degree in accounting of the dead explanation so thank you very much thank you Mr chair yes Sir. Representative fielding are you still have a question I'm good all right thank you Sir and Senator Rapert I have you back up is that correct yes it is correct yes. Since you were the one issuing the payments on a regular basis. Were you then or have you become aware now of any payments made to any vendors from Henderson state university that was connected to a board member. Which they had a financial interest or they own the business or they were a partner. The only one I was aware of was Mister James Barnes is the the owner of our our outsourced bookstore. And we would make payments to the the bookstore. Okay says James Barnes and in the research so you knew it was well was it well known that he obviously on the bookstore yes Sir are you aware that Mister Barnes was a partner in the construction company that also receive monies related to the building of a dormitory at Henderson state university. No Sir not until recently okay so you now say now until recently so you're now where. Do you happen to know what companies that is. No Sir no Sir so you're now where that he would this partner in some company that did work for Henderson related to the dormitories what you stated. Yes Sir I just found that out this morning overly yes. I was not aware of before so there were several checks in and several payments of going out to an entity to which you're just now made aware this morning that there may have been relation to a former board member. A yes Sir. In your since you just became aware of it do you have any idea and now that you've had a chance to think about it was this a regular pay AD over the course of several years on that project as you can you shed any light on that whatsoever. Well Sir I don't know the vendor so I I okay the project. At that I'm aware of lasted maybe a year and a half or so okay all right so in addition to the bookstore there was another financial benefit to a board member at least one time that the Henderson Henderson was making payments to I don't know that he was a board member during that time okay the he was just a board member for a short time he didn't feel full term K.. Who's in charge of the of the project itself did you ever find that out I know you're issuing payments but there's or anybody that was at the university that was sort of in charge of and made that made the calls on that project. I believe that would be Mr pal rebel yes Sir okay. anything else in in the in the spirit of that question that you want to offer Anyone else that you think of it that may have had any kind of economic benefit any cash remuneration or any financial interest in it in a company that was being paid by Anderson announcer. Thank you. Thank you senator RAPERT members a. We have two to more and then we're going to move on so the if you're only to then we'll we'll do that ma'am just one little bit followed up with what senator RAPERT ask you you said you had you had said you had conversations this morning in regards to the dorms yes Sir. Could you tell us with two. Of the. That was between Lisa Franklin and Mr Shane Broadway okay all right. Thank you ma'am. And. But what what do this one and then. Senator hammer. Thank you Mr chair. When you had a drawer full checks that you knew worked there were not funds to cover or any time invoices were presented to you when you knew money was not available to pay them were you ever directed to pay anyone in a higher priority than anybody else. Retail make payments to this individual this entity before you make payments to everybody else. I remember one occasion Mr Powell had asked me to make sure the subject so was within thirty days. And not I said you know I would try a bit He would later decide who else was not going to get paid. So were you directed. To give priority status to anybody. When it came down to the question not being enough money to pay everybody. Just onset decks so. Okay and then before you came in here to testify were you. Given and direction coached told what to say not what to say or by anybody. No Sir alright thank you. Mr. Okay so the tier two earlier and I got to now so. We will keep going just a little bit the C. thirteen is Representative rye do you have a question represented right. Yes Sir you're a Mr chairman thank you so much Karen all the checks that are cut at the university this air every single one of them go through you. I'd like it report. And that have the vendors names the amount and just a very brief description I don't see every check. Is that does that answer your question you yes ma'am and just a little follow up We would need to know that because I don't think what we're gonna be able to define the problem properly until we know exactly who would know about every single check so we could question maybe some of the expenditures mail. Well I have a. I see every vendor payment on a report I don't look at every check I don't look at the the documentation on every check I have to. To address the. my employees are are following us guidelines. Yes Sir and this will be your this will be your last one. Representative Payton. Thank you Mr thank you Mr chair center hammer's question brought up something I'd like to drill down on just a little bit. Yes so I want to clear for the record Mr pal knew the checks were being held in that some accounts payable were not being paid on time. And he had a intimate enough knowledge of that the he directed. Of property payment to some people knowing that others were going on page. Is that correct on one occasion that I ever call. And if I could follow up with one little cabbie out there. How far back does that go the the you could feel certain that Mr pallone knew there were accounts payable. A past due. I would say Fall fall of eighteen. Because I do recall sending him a text message that We needed to have to hold a bond payment. miss Franklin was on vacation and I told him we needed hold upon payment and an overnight it like during the break. So the way that we would have the cash to pay that so fall of eighteen he understood that you were in fiscal distress. Financial distress I believe that that was when it was thank you thank you Mr chair. Okay and cochair guys was going to finish it out. First let me say thank you Mr chairman person me say thank you miss brown would be in here today. voluntarily. I just wanted to follow up you mentioned that you had a conversation this morning where I guess just this morning you learned about. The conflict of interest or potential conflict of interest of a board member who had an interest in a construction company is that correct yes Sir and so you had a conversation about that we have to. With Lisa Franklin and Shane Broadway I believe for the the ones that. They were standing there okay and up. That was this morning Was that just prior to the meeting yes Sir and where did that happen in the lobby okay. At the others a vast if you have been told what to say here today and you responded that you have not the correct that is correct. Now have you had other meetings so just for example you had a conversation this morning outside with some folks that Related to testimony that you gave here today have you had meetings where there's several people with the other witnesses who were out here in the audience have you had meetings with any of those witnesses prior to today to discuss how to tell you what to say but to discuss. what would be said here today. No Sir not our answers but we did have a meeting to inform us of what to expect kind of how to. What what would happen and and that sort of thing just to prepares for. For being in in front of the committee okay you have mentioned miss Franklin's name several times have you had any meetings within the last year so in anticipation of appearing before this committee or otherwise to discuss what you might say if you were questioned about these things no Sir no meetings is one on one or in a group with miss Franklin to discuss anything along those lines and not our answers. I mean we've we discuss coming here we discussed you know. What the legislative audit found and and but we we didn't discuss what we are going to stay here or what we should say. Can you mention Mr pal you've not had any of those types of meetings with them. No Sir or or with anybody else and all the other witnesses here is it not hear what you're saying is you didn't meet with them individually or as a group to discuss the testimony that would be given here today. No Sir we met one time. Okay thank you. Right we appreciate you being here today and I want to commend you on the way you've done that You the we appreciate you answering all those so. Good your dismissed at this time uh members I'm going to use my discretion just a little bit and change it up just somewhat not mean to be disrespectful any way but I want to ask the employees that are here to testify today that that they go outside of ITS stay in the lobby and then I'm also going to bring up Mr Scott Freeman next some will take it out we're just a little bit and missed a bone I know that you're hearing that you want to testify to will give you that opportunity but I want to do that at the end I just have a thought it was appropriate since you're the acting president that base of the university that you stay there so that was the reason I was doing it. Is that your capacity is that why you're sitting there. Yes Sir I'm actually I don't intend to testify today I'll answer any questions that you have I'm I'm mostly here to to support my employees okay says an intimidating form for them and I I did want them to be sure and I'm doing my best to keep that from happening because that's not our intent I promise you so thank you again but there will be questions for you I'm sure so thank you ma'am. Sir do you mind standing it's just our it's our course the way we're doing this that we we do sworn testimony so that's what I'm doing today we're not saying when you out we've that others to do it also and including department of higher rated so if you would please state your name employer imposition. Got frame and director student accounts. Okay and you work for Henderson state university right I just need down the record if you would please raise your right hand. If you'll turn on your Mike. Do you solemnly swear or affirm that the testimony you're about to give will be the truth the whole truth and nothing but the truth so help you god I do all right miss Freeman. And the as you seen earlier and got the benefit of I will ask some standard questions and do it the same way so you have a little bit you got to see how we're going to that so. I think your is it is said this but what what is the current office that you work in the business office okay and how long have you been in that particular office twenty one years okay and what is your position right now director Steven accounts and you know about how long you've been doing that. Twenty one years okay so the whole time that's weird what you've done all right. Okay as it relates to Those students accounts of course. You know that they were that you all are carrying that balance of course was there anybody that directed you to allow that to happen. yes Sir doctor pal thank. And you know why directed you to do that. We were asked to work with the students try to get a payment plan work with their financial aid. Let them in school and work out a plan. Okay and you're actually talking about the ones that exceeded the forty eight hundred dollar limit yes Sir okay. Where those done on a case by case basis. We ran report and we reviewed those accounts yes Sir okay. So that was on a case by case basis summing as far as. Was one student allowed to. Carry a bigger balance longer help did you have some policy in place that would determine how that was done. The accounts that exceeded ten thousand I specifically asked could those not be enrolled and there were a few that were not allowed to enroll if you are it was it was doctor palace decision. Okay. Are you aware of any students. Of the students were not allowed to register for an upcoming set semester because they had a balances that exceeded the forty eight hundred. Yes there were some okay. Any idea how many. The ones I can kind of recall that exceeded ten thousand was anywhere from seven to ten. Okay. So instead of forty eight hundred do you think ten thousand was the actual. Cut off is that was was that kind of your. And I don't know that it was a policy one because I have not been able to find that that was a policy of Henderson state university that was passed by the board nor do I know if it should have been passed by the board but we did kind of look into that just to be straight up and honest with you. So. One other students that. We're not allowed to attend. Because there balance exceeded the forty eight hundred yes okay. And we're all of those over this ten thousand dollar number that you're saying or were some of them possibly six thousand dollars. The ones I recall exceeded ten thousand okay. So as far as you know. As far as you note there wasn't a student that was turned down between the forty eight hundred and the ten thousand. Now the directive was to work with the student work with financial aid. And put them on a payment plan. Okay. Are you aware of any of these other conversations we had as far as in regards to these invoices and things like that. They were being hailed house okay deeds did you know of any of that I mean I know what what your position but did you know that invoices were being held because of the financial. Addition of H. issue. I'd I'd heard general conversation yes okay same way as before and again I'm just get a light out do you remember who that was were you heard those conversations I do not remember okay. Alright members at this time. But I'll kind of let you start so. Senator sample do you have a question. Thank you not you you got the answers to most of my question but there was one thing and I'm I have just misunderstood and FOR. Did you say that there were some. Students that have a balance of forty eight hundred. Not ten thousand that were not on the road is that Whizzer. A different to in there and he made the decision and FOR works. To my knowledge. The forty eight hundred rule. Anything under forty eight hundred the system the computer system allow the student to enroll. Anything above that. A list. Was produced. Any discussions occurred when doctor pal. Inconsistently it was Scott work with the student. Put them on a payment plan work with financial aid. Enrolled in the school. But the question is worker students with. Forty eight hundred dollar balance. There were prevented from growing because citizens I didn't have a private plan or for. What. I don't recall okay thank you and I'm certain that question I just want to understand. Thank you Mr yes me ask you this before we do going for the did did you have any cap a statement whenever you came in here today were you thinking well I would tell this body anything or were you just going to answer. Questions because if you do up I'll be honest I think that would probably be prudent at this time to go in well you to do it so I've got a note here that kind of it goes back to all the policies right of. House students were enrolled and what those levels were and I'd be happy to share that if if I will be allowed to I think that would be good what we do that because you know. Members may have questions and that may be answer those so that we can get him out of the queue so but one with a checked out for a minute okay so prior to two thousand fourteen. Any student one stay in rolled. Tuition all tuition all fees and if they were living on university campus housing and had a meal plan. The tuition fees were due up front and twenty five percent of room and board charges were due up front as well. And then there was a payment plan for the remaining seventy five percent of room and board. Over three months after the initial payment which is always due on the first day of school. Then in two thousand fourteen the policy was revised to allow students to enroll with a balance of less than seven hundred and fifty dollars. And then in spring of two thousand seventeen. The seven hundred and fifty dollar balance was removed and students were requested visit was student accounts and financial aid to discuss payment options. Beginning the fall of two thousand eighteen the billing program was modified to allow students. Either semester charges over five equal payments. From in the fall semester the payment dates were from August to December. Spring two thousand eighteen students were eligible to pre register with a balance of no more than forty eight hundred dollars. On March the nineteenth of two thousand nineteen I'm sorry March the fifth. The forty eight hundred dollars that was current semester charges was changed to reflect a total current balance to include any previous charges of forty eight hundred dollars maximum. And then in June of two thousand. Nineteen. It was reduce that a student can only carry over at their balance was under twenty five hundred. And then in August of two thousand nineteen. Two seven account policies were created one that would allow any returning student. To register. For fall two thousand nineteen with the balance under twenty five hundred dollars and then for spring twenty twenty that students balance had to be. Less than fifteen hundred dollars and then to register for summer of twenty twenty or fall of twenty twenty that students balance has to be less than five hundred dollars those returning students. We'll have to have a zero balance. Beginning spring of twenty twenty one. Any student who started enrolled at Henderson for fiscal year nineteen twenty. Which would have been beginning of July of two thousand nineteen to enroll in the next semester they must have a current balance of zero. Okay let me make sure I understand one thing with what what you said there so in two thousand eighteen. They couldn't come to school with their ballots was. Forty eight hundred or more that that was the yes Sir that was the cut off and I understand there has to be cut off but if somebody was forty seven ninety nine. They were they could really come to school and then those additional charges would be added on you know if they had any further current for come in the current year is that how you all got up close to the ten thousand so. Doctor pal last me to calculated students bill living on the most expensive. Room on campus. With no financial aid. And and H. installment could be twenty four hundred times five over the five monthly payments. So that's where the forty eight hundred dollars was established so if a student was going to register on March the first hand there April and may installment we're not do yet of twenty four hundred each. And they were current on the first three installments then they were allowed to register when that was changed of March of two thousand nineteen the total balance of forty eight hundred dollars that significantly lowered the amount that has a balance that a student was carried. Okay we appreciate you bringing that information I think that's gonna help greatly with these questions is our common so that was that was good information. Kate members. Absentee Evans Euronext. Thank you Mr chair. Certified if I wrote everything down right thank you for that information because it does clarify a lot from two thousand and fourteen to the current fiscal year. I believe I wrote down seven different changes in this policy this. As we have come to know really almost an on written policy. During the changes of those policies. Were you the one that created and. No Sir. Were you involved in the creation of those policies. I was involved with the creation of the current policy that was established in August of two thousand nineteen to prior to that someone else was the DYS the. Decision maker on what this on written policy would be in regards to student debt yes Sir and who would that be. What a bend Dr pal at all times and so with the authority to make these decisions and prior to doctor panel on the seven hundred and fifty dollar came from the previous vice president okay so going back way back in history I share this with doctor Welsh who is out in the audience back several weeks ago. Somewhere back in the mid eighties I was a student Arkansas state Jones where I went to enroll for my classes and I was not allowed to. I was not allowed to because I had a three dollar parking ticket that was on paid I could not enrolling classes I could not get a parking permit I could not even choose a meal plan for the coming semester so it's really hard for me to understand how we've gone from that to where we are now with this institution do you would you say that is a common practice now amongst all of our. State taxpayer supported colleges and universities. That someone in the system can arbitrarily make policies to encourage student debt without the approval of anyone. The current policy that was established in August of two thousand nineteen was approved by the board of directors of Henderson state university okay so during some prior testimony We ask for some break down of student debt how many were in the one dollar two hundred dollar range and so forth and and those numbers were supplied and now we we find through through audit that we're talking and upward of over two million dollars under this policy you mentioned in your testimony this morning that there were some that had as much as ten thousand dollars in debt. Yet the policy was forty eight hundred how many fell under that ten thousand dollar or higher category. Remember the one that exceeded ten thousand it was like a one page report it was. Best I recall less than thirty students potentially thirty students over ten thousand dollars yet we had students at forty eight hundred that were allowed to enroll. All once again then doctor pal would say Scott work with the student allow them to register okay you also as you as you mentioned that directive that you were given by Dr pal on on other earlier occasions you were also told that work with the student and work with financial aid could you elaborate just for briefly what that means what were you supposed to do with financial aid to refer to satisfy this day at. Work with the student to make sure. First of all have a field at a fast one. Second of all that they turned in all other documents. Verify if they're gonna receive any financial aid. And then lastly. Work with the state to set them up on a a reasonable payment plan that they could pay going forward. One one last question and thank you Mr chair for your leniency just out of curiosity I just for the sake of conversation was let's look at demographics. Of this two point three million dollars that was owed and student debt. And the number of students that were involved. Was there any commonality and if these were in state students out of state students their international students may be whether more that were male or female or more that were a freshman or more that were a junior was there any priority to your awareness given to the demographics of the students that were being allowed to incur this date yet still be enrolled as students. I did not see any preferential treatment given towards any demographic of students thank you. Thank you Sir Senator hammer thank you Mr chair you've been there for over twenty years is that correct. Yes Sir okay and I remember distinctly back I think was two thousand thirteen Henderson university had a really big audit findings regarding some purchases that you know we're not being monitored was was Mr. Is it heard whose Germany been signing is Mr A you have you been reporting to or that you said you reported to adopt pal was doctor pal there during that time and not during two thousand thirteen now Sir okay and when the policies are being discussed. Is it policy of the university that the board approve those policies such as is under discussion with the you know the forty eight hundred dollars in the ten thousand all the sketch we've been having. To my knowledge yes so did the did the board approved then the allowances made for you know those that had greater than ten thousand dollar debt if that was university policy that they were to be involved no Sir why was that do you know why it was kept from the board. I do not. Okay and have you ever been fearful to approach the board and share with them if you if you knew that the policy required that the board be involved but you knew that that policy was not being followed did you report it to anybody beyond Mister Paul. I I did not. And and why would you not do that if you knew that that policy was being violated if that was university policy in the board was supposed to be involved in it. Again he would tell me Scott work with the students and and let them register and at that point I was following protocol. To the to a subordinate to follow on what I was asked to do. Okay and do you know if there was any discriminatory eight Was anybody discriminated against with regards to the selection process who got put on the payment plan and who didn't no Sir. So it was just luck of the draw if you got to get a payment plan worked out or not or I I'm trying to understand who who could get their name put on the list and who couldn't and what was involved in the decision as to who got favoritism and who did. Again we look at a list and doctor pal would say work with the students and then the ones over ten thousand I specifically recommended that we do not allow them to to enroll in school but he had the final say on whether to let them register or not do you know if that list that he looked over head and the question was being asked while goes part maybe somebody was on the sports team were in the band or what his criteria was did he handed Lynch back with check marks bind say give these favorable you know conditions are your consideration but explain why he didn't give some others favorable consideration. I was never given that information you just give elicit said here you here's the ones. Yes Sir alright thank you Mr. Thank you Senator hammer Representative Lowery. Thank you Mr chair it's been referred several times that these policy changes were approved by the board so Mister chairman if it's if it's okay so since the these were policies prepare for the board I'd like to ask the person who miss Kneebone who was legal counsel at that time if she reviewed those policies before they went to the board if you don't mind I want to do that at the end I would I would prefer is just to take I've allowed misty motives that there because she walked forward as I said I think she's the face the university but I would. I would. Rather her questions be at the at the and I and I understand that I just thought contemporaneously while we're discussing student account policies if you don't mind I want to do that way I would just like to be on the record that that that I'd like for us to yes serving you when will definitely well you to do okay thank you thank you represent our Representative Payton. Thank you Mr chair so as director of student accounts of. How often did you look at the bottom line for a county what was the how often did you look at the total accounts receivable under student account. It was looked at several times throughout the each fiscal year yes Sir so the monthly basis where you'd get a balance sheet look at the bottom line or would it be bi monthly quarterly. That definitely by a bomb by monthly okay and so were you responsible to report that figure to. The accounting. Director of accounting or how did it move up the chain. For the financial statements. Miss miss Franklin which was my immediate boss wait it was like that quite often Okay so would have discussions about that I know she miss Franklin would also do the injury once a year for the allowance for doubtful debt okay so. Just off the top of your head no of been there twenty years. how mmhm did you see a period of time where all the sudden it jumped became. Inflated look out a line yes early on in my first twenty years of the first. Five years there was a lot of international debt that spiked and then that that leveled off and then it it did spike again once we reached. Two thousand seventeen two thousand eighteen when the students for allowed to register against the the policy the forty eight hundred dollars yes so were you ever privy to the total of compile ation of the financial statement or with or did you just basically see the accounts receivable for student I just see accounts receivable for students okay so the account stable students that I'm seeing on the financial statement for June thirtieth of twenty nineteen is five point two million. Is that. Pretty. Reasonable for the last twenty four months or three years maybe yes Sir I can't follow up and say that we were you sent out a collection agency that we had been using for a long long time and the amount that they were collecting had gone way down. And in October of two thousand nineteen we went out for bid. We have a new agency we've been with them almost six months on at the end of the agency that. We left we were receiving about ten thousand dollars a month back I can measure for could continue here I'm getting really close to my point keep so it was run in or it's for it runs about five point two million according to these financial statements and what audit found was that it was overstated by two point three million. So I mean you know we're talking about a fifty percent over statement. So with that not of been something that you would unnoticed as a as a huge jump. Hi I am a is in the student accounts able I was not aware of that at the time no Sir. Right so you can't Q. as in basically to the time frame where that extra two point three million. Showed up right but what I can say is with our new new agency that we paid for six months. We've collected a quarter of a million dollars in the last six months well that's good news and and certainly appreciate it you did mention that the bad debt the doubtful accounts is give us insight on the process by which the decision was made to write off that bad to is there set policy on how an account becomes delinquent enough to be written off for did anybody dot Mr pallor anybody else direct you to not write off that bad debts at according to the policy that might have been set on that I was not given any direction other than occasionally there might be. One or two students in less than five per year that doctor pallets I want you to write these off but again the entries made once a year for they'll allows for doubtful that this Franklin. Okay do you have any idea what. Alice two is used to qualified as as doubtful debt I do not thank you thank you Mr chair. Representative rye. Thank you Mr chairman yes Sir I want really two questions to ask you Have you ever. Have you guys ever did compare apples. With other universities and colleges in this state to see if the policy that you guys are are you have or use in at the time that the problem started arising. Our other universities. In this same situation are do you find your sales basically in a situation of of your own. I did have several conversations with other colleagues and at the universities and most other schools required the balance to be is the road to allow a student to register. And When the policy was changed. To increase from seven fifty to forty eight hundred. Although I didn't agree with the policy. Doctor powers my boss and I've all followed protocol of. May not agree with it but that's the policy and I went along with that but I do feel that we're back in line now that students have to be a zero balance and returning students by January of twenty twenty one also have to be at a zero balance and I think this is a very good thing. Thank you Sir and thank you Mr chairman yes and. Other another piece that possibly could be some legislation you know that if we want to do that across the state to try to limit this from happening of course there'd have to be some extenuating circumstances that may be something else Senator hammer if you're keeping a list. That we should lease look at the next session. Rep you Springer. Europe ma'am yes ma'am. If I believe that mac didn't come alone just. Okay okay that's it thank you tear I just want to follow up on the question regarding the demographics of Representative across the way it had asked you about what was the what was the make up of the demographics of the two point three million dollars he didn't ask you about race and gender can you tell me the number of students by race and gender that made up that two point three million. I cannot but if you would like for me to yes get that information I can ask and follow up with that yes ma'am and then you mentioned something the bill if total misprint if you don't mind would whenever you get that would you send that the staff so because some of the other members I'm sure we will want to see that also so that would be great can that's okay if you want to continue his quest thank you Sir and you also mentioned something about international did spite I'm I'm not quite sure what that meant you said something about in international did calls that to spike what does that mean. I'm going on The early two thousands we had a lot of the international students. And we had a lot of debt that just it just went bad in this state is just left and didn't come back and that really spiked accounts receivable early on and I'm sorry what early on me being can you give some specific time we talk about the round the same time. No two two thousand three to two thousand five. Thank you yes ma'am. Senator Rapert. Thank you Mr chairman. Of first of all thank you for coming in your testimony and I'm sure this is really just disconcerting have been there over twenty years. You know we're all trying to get to the real issue here we're trying to find out what's occurred you're obviously talking about a policy issue there that detrimentally affected the university there's no question about it in terms of of just the reckless abandon if you will because Mr obviously was aware of what was happening there's in fact Dr Kneebone animal if your doctor need longer president Kneebone you definitely were aware because you were right there with all those decisions being made at the time in the core of the executive so could you tell us. In your own words. Were you solve the problem where they're spending really was getting off was it was it because I'm wondering is it the was it the dorm project what was the project that was second all this money that was allowed the university to believe and and then making changes to some of the policies like in your own handling the student accounts could you shed some light on that you know we feel like a little bit like we're looking for needles and haystacks here and it's tough when you you know are asking the right questions. And so would you just allow us because there's others behind you they're going to testify. Can you in some way shed some light on what you think the problem really wasn't one. I think at times it was lack of communication accounting is a is in our office in the business office that in but lots of times I'm just so focused on my staff and student accounts and serving students that I just didn't. Wasn't on those conversations especially when it comes to spending with accounts payable. Well Mister chairman I'm I'm gonna go going to ask you more questions on this I do want to point out something that he testified to it's important and the question about Mr palace superiors because there is you know when you're dealing with somebody at your boss and the they have the ability to hire and fire you obviously your do you do what you're told and I've and and I I know which to the doctor any bones mental out to sit at the table I've shared with you behind the scenes my concerns frankly it is a concern for me to that these employees have been sitting here were asking them to speak freely when Dr Kneebone now she was a part of the executive management team the whole time. And she's sitting here right on top of them having the ability to hire and fire them as well I'm not may not be intended but I think it's presented an element of a you brought up the word intimidation person a bone it can be intimidating to somebody could be fired but you for have you sitting there trying to speak freely and just needs to be stated for the record and and that's all I have for now yes Sir not doing knowledge that you've told me that and I wanna had made the decision since we it's worn away and the like to to allow her to stay and I thought that was appropriate so of maybe going to be some different opinions on that so anyway as from that standpoint to. Representative della Rosa. Thank you Mr chair You stated that multiple times Dr Powell gave you new policies it to carry more and more debt you know is from zero to seven fifty two and so on. Was there any discussion or did he give you any reason behind why suddenly more that needed to be allowed me because I would think as if I was in your shoes I would have that question yet what why do we need what was driving it did he have any discussion with you as to as to the reasoning these policies needed to change. This is my personal opinion that. Felt like we needed increase enrollment. More students and to be flexible to work with the students. That education is important and to work out a payment plan so they can get that education. Was there any discussion especially again as these policies changed and the debt load was allowed to get greater and greater was thirty discussion or any indication as to what was expected to happen to rectify the situation or was it just stopping the bleeding with no I just find it odd that doctor power would be saying you know let's keep carry more debt without any indication as to what point in the future we expect this to get rectified and we will recover it just seemed to cat keep going downward I'm just wondering if you had any indication of that either it's saying that the trend once it reached ten thousand dollars that was the concerning point with doctor pal to. The stop it or that he had that the authority to allow that statement to register did you see any policies change that would have increased enrollment while student debt did you see policies that would have rectified that maybe they just didn't work. You're saying you thought increasing enrollment or there any policies that you saw changer any practices that you saw change that were driving towards increasing enrollment perhaps they just didn't work out I'm just trying to understand the thought process. I was again I was in an agreement with work with the student it was very bank to get a get a plan for him on a payment plan the system already had a payment plan in place. And it would be work with the modern alternate payment plan so it the direction was very vague so I really can't answer that I don't know. A couple more quick wins A were you allowed to question the decisions of Dr Powell openly review allowed to say you know I don't think this is a good policy have any discussion about that. You I I did not to be honest fair fair my job okay are you allowed now. Yes. Open communication and the last nine months. It's a great testament to ms in the bone. And it I'm. I think I can speak for the staff that. We feel that we can what we have a say and that we can. Can do that and not be fear that will is our job. Is there any protection in your policies now for you to be able to do that. Like I said you feel more comfortable with and I'm just saying is there any kind of legal protection for you for something like that right now is it in a policy your or is it just a feeling that you have that I'd I don't know. Thank you. Senator hammer. Thank you Mr chair and I would draw attention to the members and I've actually sent and asked for a hard copy this because I talked to doctor Markham I won't give it to her but back in two thousand seventeen what is now ACT seven ninety one deals with protection for people to pull the whistle as far as being able to maintain their job in the event they've been fired because they think they are in the position that you're in so that's ACT seven ninety one of two thousand seventeen but let me real quickly drill down on the policy issue. Fire to Dr Paul and doctor Jones coming on board what was the policy of the university approved by the board with regard to student debt and who could be admitted who could. Enroll in school cut. The requirement was. That the balance had to be less than seven hundred and fifty dollars in order to register for the next semester and that was a board approved policy of the university correct yes Sir okay so when these policies began to be changed from what was a board approved policy and we started seeing the numbers go up and debt management was that an internal policy decision or was that a board approved policy that allowed the allowances for people with forty eight hundred dollars and ten thousand dollars worth of debt to be carried in them still be able to be admitted to school. I don't recall if it did go before the board members for that change I can find that out and get back to you if you'd like for me to miss Nebo would you have any knowledge of that that the question be answered now we will and we will ask her that later okay that's fine I will stay consistent thank you that will okay thank Mister one other one then So your testimony while ago in your testimony now is that the policy that allowed for students to enroll in school with debt above seven hundred fifty dollars that was not a board approved policy which means it would had been an internal policy controlled by doctor Polland doctor Jones Mike corrector how might you correct in that statement I am not sure if it was presented to the board for approval or not. Okay we'll leave it there the thank you Mr. Representative bringer. Can you hear me OK thank you I just want to follow up on my previous questions I asked you about the number of students and the amount are you familiar with the audit findings of the legislative audit committee. Yes ma'am okay and I just got a copy I'm not familiar this is my first time seeing it today and in the find is if I may Mister chair it says that the audit findings. Number two student account balances do we could do DO link what accounts twenty six students tested. And then it goes on to say seventeen were allowed to enroll with the balance that exceeded university policy and in seventeen did not make any payments during the fall semester but were allowed to enroll in the spring and summer semester so and and then I'm just trying to figure out is that the answer to my question that this to the number of students that make up this two point three million dollars or is it more than this that indicated here the findings. I'm not sure. What what what I can say is. Is that those students were discussed with myself and doctor pal. Any would say Scott. Try to get them on a plan. Check on their financial aid. To work out a plan that they can pay and let them get in school. And then it's once it reached ten thousand dollars. Then he he then did on some cases review system to unroll. I'm just trying to figure out if the if if this the numbers that are listed here make up that two point three million dollars that that's in question here that's what I was trying to figure out and you don't know the answer to that do you think that you can figure out and find out. Four thirty isn't it does yes okay and then on the next page it says twelve delinquent student accounts tested eight were not pursued for collection of outstanding balances and then three students were not allowed to enroll with the balance that exceeded university policy so I would ask the question to are these twelve the same is the twenty six on the preceding page or all these twelve different students so to me I just want to figure out what who are the students that there if this the get these of the students that are making up the numbers so if they're like what. Thirty five hundred students that attend Henderson at this point in the end of that thirty five hundred and two I'm trying to do pass what was to walk in the it I can't I'm not very good at that but what percentage of that is this of a we talk about in the number of students that that that were speaking of here. When we get back to our office we would need to to look at that and then and get back with you that's okay all right that'll be fine thank you. A so you'll get back with misprint that represents bring okay thank you Mr Freeman. Okay. We'll go to the Representative Gazaway right now. Thank you Mr chairman and that let me also say to you Mister Freeman thank you for being here voluntarily today yes we certainly appreciate that. A my question really is about the hierarchy of. How things were reported at your level you were in charge of student accounts is that right yes Sir and who directly did you report to with respect to the reconciliation of those accounts at Lisa Franklin okay and I heard you mention earlier in your testimony that you had had. I guess regular meetings of this Franklin is that correct yes we we we discussed in accounts and accounts receivable and balances maybe not on a weekly basis but I mean what we have those conversations okay but not on a weekly basis how often. Please onesearch twice ever ever month or at least a couple months in there once or twice a month you met with Lisa Franklin to discuss these student accounts is that correct. We would have general conversations about students with balances high balances this student is allowed to register not allowed to register so what we had we had conversations yes Sir okay. And I understand that there is a policy issue about whether or not to allow students to have a balance in role in classes and that's very clearly policy decision that was voted on by the board approved and you didn't really have any control over that and so I'm less concerned about the policy than I am the accurate reporting of the numbers for purposes of the accounting. And what interaction did you have with miss prep one. Who was the director of accounting when it came to reporting these student accounts that. and the numbers there. Miss brown I did not have communication okay concerning that all right so your interaction was solely with miss Franklin who was the controllers that correct yes Sir all right and. I thank you will be helpful in may be a lark and help us with this to maybe get a chart that stuff some type of flow chart that shows who reported to who and kind of what the hierarchy was there I think that would be very helpful to us in in really trying to figure out. We're all of this Basically we where the where the blame may truly lie here but. So do you know who met who did miss Franklin report to. Doctor pal. Okay into the doctor pal report to. Doctor Jones okay all right. And so. Do you. What were the number what was the discussions that you had with Mr Franklin about the numbers of the student accounts how to those discussions go I mean give me an example about you had a discussion with her about the reconciliation the student accounts. We would discuss it but then when it was still larger balances We always on the deferred to having a discussions with doctor pal because I mean in the policy two thousand seventeen was written by doctor pal so what's those discussions we would to I'll miss Franklin myself would I'll reach out to doctor pal in understand that but I'm talking specifically about the reporting of the numbers for the accounting purposes like as it went on the ballot sheet. Who did that that would be ms Franklin. A and because I I didn't prepare the balance sheet. Okay alright thank you. Okay members that's all the questions that we have for you for you Mister Freeman again I do wanna let you know we appreciate you coming in project the way you handled yourself and answered all those questions and at this point members is even though it wasn't bad tension we're going to break for lunch bori talked to H. issue and those employees are going to or going to come back after lunch. because I believe we just we still have a lot of work to do and I would ask this of the members and I know it's a Friday and I know its close to you know a holiday weekend however we do need as many of you to come back as possible so that we can to continue through and we'll try to get through just as soon as we can but we're not going to rush the process so at that like I say it's twelve o'clock I hate to say one I mean if we we do one fifteen that sound good everybody we were back here at one fifteen and started. So one fifteen will hit it and roll so we'll see you then. Bill. Sure. Plan. Your. All right and my phone has exactly one fifteen and that's what we say we're going to start so I guess if we could have somebody from staff to bring in miss Sandra Dinning. Get it from you. Hi there good afternoon air you you can remain standing if you out of as I told everybody been telling you on this is our policy that we're going to do on this so if you don't mind if you would to. A state your name important position Sandra tending I go by say Andy administrative assistant in student accounts office. Okay if you don't mind if you raise your right hand the songs were from the testimony you're about to give will be the truth the whole truth and nothing but the truth so help you god okay thank you ma'am. Okay again you got to kind of see the first one of these so you kind of have an idea of what we're doing so if and I know you just told me that but what what actual department do you work and now I work in the student council office of the business office. Okay and how long have you been there A asks I started helping there in two thousand seventeen and became official two thousand eighteen okay and. Were you you're with were you with the university before that yes Sir in what in what department at that time I was administrative assistant to the vice president for finance and administration okay which was to prep Powell K.. So what what was the time that you were on that you remember dates when you start an undergrad Pavel from two thousand sixteen two I officially was read position on the two thousand eighteen fiscal year but I did help student account some in two thousand seventeen I worked both offices for awhile okay and that's fine I'm just trying to get a time line and still have it for the record. So if you don't mind. Animal can I ask you to face thing what what were your duties whenever you were with Mr pile in the and what your current duties or with Mister Powell I was administrative assistant my main duties or in the area of construction and scheduling okay and your current position what what is that kind of an ounce whenever I first started I developed communications with our students regarding their payments I developed a series of text messages and the series of email regarding their balances DO and also met with an adviser students okay. Okay and. At this time who is your who do you report to I report to Scott Freeman director of student account okay. All right new parts in this discussion and you know a little bit about it but I will ask you the same that questions you understand that the students were allowed to carry A forty eight hundred dollar balance or or larger that we that we've heard did you know that did you know that prior to legislative audit company in yes Sir okay. Do you know what the purpose. Was for that to be transpiring yes Sir the purpose was that we were going to a five month payment installment plan and the reason we allow them to carry that forty eight hundred as at the time of pre registration they would still have to installment payments left to pay and that forty eight hundred was calculated at twenty four hundred a month we calculated that high based on an out of state student who might be taking some online classes we just calculated the maximum that it could be and so that was or the reasoning for forty eight hundred is that they would that at the time that they registered during the semester they normally pre registered in October late October for the spring semester and registered in late March for the summer and fall semesters okay. And of course do you know that that amount was allowed to be seated. It was in some cases yes okay can you tell us what you know about it about our about that are being allowed. Well part of the issue is that because when we first in when this was first initiated the forty eight hundred was based on what they owed for the semester and not for the CT balance or the current total balance so that current total balance could roll forward into the next semester and it just divided into their four or five installment payments and the for sure we were doing five installment payments and so it just rolled into it so therefore it was larger than forty eight hundred so that was well for all students at that time at that time cake can you tell us about the only ones worth maybe a case by case basis that there was allowed to be exceeded on that or. It's it's our understanding that some students were allowed to. To go to school even if they had a larger larger balance it maybe there was some payment plans are you aware of that there were some students that we receive direction from Brett Pavel to allow to register for instance I am aware of a few international students who still had large balances and they were allowed to carry over or perhaps a student that had financial aid pending and they were allowed to carry over okay. Are you aware of any students that were not allowed to register for an upcoming semester if they had balances balances exceeding the forty eight hundred yes Sir okay. And you know. Since some of them were and some of the more can you make any distinction between in a while somebody may have been somebody made have not be if if they didn't have if the. If they could not acknowledge that they had a way to pay for that or get financial aid of that it was difficult to set up a payment plan for them to move forward but the first semester that we initiated this we provided a list to Brett Pavel of all the students and all of their balances and at that time we did have a few that were over ten thousand dollars we were advised to drop them. That is that right Powell okay and we were we dropped them we notified them other people were called and asked to come in and so that we could work with them. Okay. Then why she some were right here about the financial statements or anything are you aware about the I certainly would be of course about the two point three million dollars that was the for the allows for the doubtful accounts I believe it was a. Actually a understatement own that were you aware of that no Sir that is not something that I would have worked with okay so prior to legislative audit company and you you had no I deal that that was being done that way yes Sir okay thank you ma'am. Who do you who do you think and that's just a broad question I know but who do you think would have had to. Who would have known about that as far as those financial statements who would in your knowledge to do you think would been most active known that that there was an understatement of two point three million dollars. At the university. I do not know. Okay as a fair statement. Okay and then. Are you aware that the possibility exists that you were actually by don't think this possibility existed does exist that there was invoices that were being hailed and maybe not paid yes Sir I am aware of that okay prior to wake audit coming in did you know anything about any of that are of heard any discussions in regards to that I knew I was aware that there were some issues with cash flow okay. But. But as far as you knowing that an invoice for ABC company are X. Y. Z. company you didn't know that anything was being held or not paid no Sir not in specifics okay. All right. Okay and I've been doing this. I've been doing this do you have some type of Statement that you would like to make to this because it seems like it helps us if you if you were prepared to do then I understand if you're just gonna come down here and answer questions and that's fair but you're all gonna probably get a whole bunch of questions so sometime if you can go ahead an elaborate here on the front and it may help so now honestly the only thing that I had prepared is the list of previous practices in student accounts and the current policies which is the same listen Mister Freeman went up for okay do you mind going over with this if you you cannot run through on so so that we could could hear him again absolutely. it's my understanding that prior to this year of these were student accounts practices that they weren't actual policies but they were practices that we had followed under direction of the administration. And that my list goes back to The four of two thousand fourteen students were required to pay their tuition and fees plus twenty five percent by the first day of class and the remaining seventy five percent of room and board was to in monthly installments. Then in two thousand fourteen fall semester it was changed so that students could register with a balance up to seven hundred and fifty dollars the students still paid their room and board by the for twenty five percent by the first day of class and room and board was spread out. then beginning in spring two thousand seventeen that seven hundred and fifty dollar hold was removed and students were allowed to pre register regardless of ballots students were asked to visit with the student accounts office and the financial aid staff just because payment options. In spring of two thousand eighteen students were allowed to register with the balance of up to forty eight hundred dollars. Students can then register in the fall semester based on five they had five payment installments rather than having their payments to up front. At pre registration that student as I said would have had to installment payments remaining. In March two thousand nineteen the forty eight hundred dollar balance limit was changed to forty eight hundred dollars in current total balance and this included the previous charges plus remaining current semester charges. On June twenty fourth of two thousand nineteen we worked on with our administration and other committee members a new policy requiring that all new students pay in full and returning students were allowed to a three semester stepped down plan on that plan thank you could twenty five hundred the first semester fifteen hundred the second semester and then five hundred which would get them to zero balances going forth on twenty twenty one. Okay in the may I ask you are you could if if that's the only thing you have on that piece of paper you are you okay with sharing that with us so that we would have that or okay and we would appreciate that to so we can have it. And did you to is that something you prepared by yourself yes yes no that's something I okay just based on notes that I had well that was helpful and we appreciate that. Okay Representative yes Gazaway is going to. Ask your question here okay. One of the things that you mentioned was that you had knowledge of unpaid. I guess bills is that correct that is I was aware that I payment might be on hold. For thirty days until we had cash flow in hand okay and specifically what bills were those that were being held sometimes that was related to construction. Okay. Do you know why they were being with held up because of the cash flow okay who was holding these bills. Well it was Brett Powell was made aware that we did not have the cash flow to go ahead and pay at that time. And but I don't know since I didn't work in the accounting office I don't know specifically. Okay and the reason that the bills can be paid is because the money was in the bank wasn't in the bank I assume is that right. I. I cannot say for sure since I'm not in the accounting office okay but you just know that they did hold on. to bills that they did not pay yes okay and what exactly is the basis of your knowledge of that how do you know that and and the basis of my knowledge is if Brent said We will get this one page at this time. And that was in agreement with the person that the money was sent to. Okay so specifically the basis of your knowledge about all these unpaid bills was conversations with Brett pal yes okay and when did that occur. That would have the courage. In two thousand eighteen. Okay how many times did you have those conversations with him I'm only aware of a couple of times. And what in what time period with that have been. what sometime period light. Two thousand eighteen eighteen yes okay so within the year of two thousand eighteen yes okay. I think that's all for now thank you thank you. Okay we're all we're all go ahead and go for three members ask you some questions first only is going to be Representative Lowery. Thank you and over here she's over these over the right idea. Thank you very much thank you Mr chair of I've been trying to get a better understanding up of the the student account issue yes and and the reason I've been confused is because I had heard information prior to this hearing that were the two two point three million dollar figures seem to be far less than. The outstanding student debt that I had heard existed and I just got an explanation was talking to some of the issue folks that. Some of that was it thank and accounting I don't an accounting trick in accounting issue not not a deceitful trick but just one where the certain amount of debt is not carried on the books it's not. Necessarily taken off of the bottom line would it. What I've been told is that the figure of total student. account debt. Dates back even to the eighties and it is a figure closer to ten million dollars does that does that sound like something that you'd be familiar with no Sir it is not when I came on duty and student accounts my job was strictly to work with communications and advising student I was not involved at all on the accounting side of it or on the actual collections agencies information okay so you don't dispute that that figure could be real you just were not aware of the actual writing not dispute or confirm okay and my understanding is that that there are so be accepted in it and I'm flying blind here because I don't know anything about accounting I've already proven by some of my questions I don't know the difference between cash flow and and net but a fund balance but never the less My understanding is that there are some accepted practices that maybe even audit our legislative audit has it given Advisory Council that some of that student debt can be not and I'm trying to remember what the terminology was it was presented to me but that it's it it accepted addict acceptable amount of debt of. Again that's just something I am not familiar with at all okay but as the controller in the last at least the last second and I'm sorry was late coming back he and how long have you been the the controller no I'm not the controller I'm administrative assistant in student account so okay I'm I'm sorry I'm questioning the wrong person that okay well all right of a week we have a lake or it's got those records to and be honest represent Lowery I believe the it's somewhat right I believe that the total debt including the ones that are not pass do is right under ten million and then whatever drops down you know they got the allowance like that so that's that'll be what that is and we have those records also all right. Well I apologize I was directing my questions towards the wrong person maybe that's because I'm really have you're not surprised that I didn't know if you will I'm just I'm having trouble seeing these days so I'm not being able to to read the reports or to in order to see your face but thank you so much for being here and trying to help us thank you clarify give clarity the situation thank you Mr chair yes Sir thank you. By Representative prior to. This does the yes I think always always they never go green and that'll down here now to fix you because that green but no okay yeah okay you mentioned in your testimony earlier that you've had given to Mr Powell a list of students that had pending debt. You recall that and then I guess my question is do you recall the number of persons on that list and the amount it was our total amount that was sold on that list your call that amount of the number of students I do not recall the total number for students I do know that Mister Freeman and I met with Dr Powell and provided a list of students with current balances and I. Pretty sure of it. There were not more than maybe twenty twenty five students who were actually in the neighborhood of being draw. Okay so that was a drop list may I follow up to a Mister chairman yes ma'am please adjustable so that was a drop possible drop listing ansible possible right okay it I. We prepare the list and I was using that in preparing correspondence to students with balances and I have one type of correspondence for students who rode the forty eight hundred or less and another type of correspondence with students who all live more who owed more and what they needed to do and then we had those few that were over ten thousand dollars that we're not allowed to re register okay and you don't recall what that total amount was no ma'am I do not have used may I follow one more question yes ma'am Mister chair. Have you seen the audit findings. By the Legislative Council I have seen them are you familiar with what they is found with respect to Number students can you explain to me to us what this means on that note number two finding and the number yeah it is this continued on the next page if I may file can read it number two finding students with account balances the delinquent accounts twenty six students tested seventeen were allowed to enroll with the balance that exceeded university policy and then seventeen did not make any payments during the fall semester that were allowed to re enroll in the spring spring and summer semester do you understand what that means Yes and no because I do not know the specific students that were tested and at the time there were some that I did not actually work with because Mister Freeman worked generally with those who had higher balances since I was new or into the department so it without knowing who was tested and checking their accounts I I I'm sorry I do not know so Mister chairman I asked what does tested me what does that mean. See issuing as you can yes ma'am you just continue sent I'm assuming tested means that's for the ones that the auditors tester ochre and check their balance focus all right and then on page two of the findings it says that there were twelve delete wood student accounts tested and eight were not being pursued for collection of outstanding balances and three students were allowed to enroll with a balance that exceeded university policy can you explain what that means no ma'am I cannot of because I did not work with the collections agencies Mister Freeman took care of our collections list and worked with that and I did not work with those students who had higher balances generally. So the last question I hope so in in the me understanding your testimony are you saying that since the time that you've been at the university that there's been a number of students who have had outstanding balances but not in excess of a certain amount that did not hear it the Representative on the side say that there were balances dating back to the to the eighties like the ten million dollars as I just want to get clarification is that your understanding that there was that much debt owed by state is not something that I am aware of it all because I did not work with student accounts at all until two thousand seventeen I had no knowledge of. How they operated or the student account balances or anything in that area and I was strictly at the beginning asked to assist with communications to those students to try to get them to pay one last question yes based based upon your communications what type of response that you received from the students what type of response was about thought your following up on there you check in with them and finding that telling them that their hate balances we would send out emails requesting that they set up a meeting schedule a meeting with either Scott Freeman or myself and asked him to come in at that time we were allowed to set up payment plans with the students and also Encourage them to set up financial aid make sure they are down there faster make sure that they were visiting the financial aid office and it was basically under direction of Dr Powell to try to work with the students to give them in school of but also to try to have them pay either balance and and I was just trying to get a number is to the number that you sent the request put per can you give me a number of percentages that the route that you got positive responses from the students that they were willing to to address the situation I cannot because often times we would set up a payment plan and the student might not follow through for various reasons the they lost a job or they had a hardship and so that payment plan was not followed even though we set one up. And so eventually that student was not able to register so do you have the last one I promise you have records of of that information that you just testified to is for is your contacts at the end would eventually happen as a result of the contacts I do not the only records I have one be the correspondence that was sent out. Thank you they're all fitting goodness Springer you just. Next is Representative Payton. Thank you Mr chair and I think I have a question for staff first of all yes Sir of we had a mean which whatever you say staff do you mean J. P. R. staffer lego its death that's a good question and that's gonna question that out for a so we had a meeting and Mr pal and some board members appeared and I can't remember if that was legislative audit or if that was in this committee. That was legislative audit I thought it probably was since their testimony not for the minutes that I have here I would like to ask staff of legislative audit to. Give us a transcript of their testimony from that meeting. And that meets the me ask you this go over what I remember that was possibly a four five hour meeting. Is there specifics that maybe we could pull for you well I'm fixing the as a question of the witness here and it's based on my memory and I'm always reluctant to do that because my memory is not trustworthy but the as I proceed maybe often help me out with comments from the chair I wish for I'll try and then we've got a leg audit here that they can jump in also so. In reference to the cash flow crunch it hit it seems apparent to me that there was general knowledge that there was a cash flow issue and that these bills were being held. But if I remember correctly Mr Palin some board members testified before us in legislative audit. That they were not aware that there was a problem until a certain at a certain date and so time frame is important to me can you tell me the time frame that that you became aware that there was a cash flow problem I know you can't give me a specific date probably but I mean was that six months before everything blew up or was it a year year and a half before everything blew up what's the time frame that you became aware that there was a cash flow issue well first in reference I'm not sure about when everything blew up okay I just was aware that there were some issues in two thousand eighteen regarding our cash flow and that was just in passing conversations. It was not a you know specific formal meeting of any kind or anything like that. Okay what part of what we're looking at here if I may continue for what we're looking at here is whether or not there was a cover up in the reporting that was being done to the department of higher is. Regarding. The financial. Soundness of the university and and so it seems. The. If Mister Powell was. Was aware that there was a cash flow issue and not reporting that to the board or if if he and the board were aware of it not reporting it hi to the department higher it. That we may be able to. Narrow things down just a little bit on the forty eight hundred dollars that you talk about when they made the decision to allow students to re register with the balance of forty eight hundred dollars yes Sir you said that was because of a payment plan where the last two payments were not do yet that and they could have totaled as much as forty eight hundred so that would not even be considered a delinquent account with it right. So it would not be part of the delinquent accounts if it's a payment that's not due yet was not due yet. So would you say that when that decision was made to put to allow the forty eight hundred dollars. On the account to not interfere with the re enrollment that that intent had nothing to do with delinquent accounts. Had nothing to do with I'm sorry with delinquent accounts. A no it was just so that they could go ahead and register because I still had to payments to but they would not of been considered delinquent no okay thank you thank you Mr chair. Yes Sir Senator hammer you're next thank you Mr awhile ago you're reading from a piece of paper that the chair asked if you'd mind given a jam was that practice or was that policy that you were reading the only part that was policy is that our policy with that was formed in June this past June it it we started working on that in June it was implemented over the summer prior to that it's my understanding that those were student account practices. And the practices were stabilised by who but again I I'm assuming three administration but again I was not part of state in accounts until two thousand seventeen. And. I guess I go it this way who gave you those practices and told you to do your job according to those practices those practices were written up Gerry two thousand nineteen to review what we had been doing in the past and they were discussed between myself and Scott Freeman and Lisa Franklin. And at that time we wrote them down to have a record of what practices had been followed do you know if those practices wherever communicated up to the board so that the board was aware of the practices and do those practices violate board policy I do not. Who would know that question. The. I mean in the food chain who do you think would know the answer to that question. I'd I would think administration by the. Yeah just your best guess own name who would you who what what people within the organization do you think would have that skews me. Their own record this is well I. If they were policies when we got we would have a board record and I'm not aware of that also in working with Bobby Jones former vice president for finance and administration I know he works with the seven hundred fifty policy but I do not know that they were sent through the board Senator hammer I apologize just was trying to get those names on record thank you do you know if were you ever instructed or do you know anybody that was ever instructed not to advise the board of the policies that you just cited from a little bit ago now Sir in fact those were shared with the board it's my understanding our list of practices prior to this policy was shared so somewhere the board minutes those that should be documented somewhere that the board was cell practices yes Sir but that was only recently okay there might be some worst finding the alright thank you Mr. Representar airy are you back uppers yes Sir. Thank you thank you Mr chair yes now that I've figured out who it is that. The house should be directed by questions to and I think Senator hammer's line of questioning it is very appropriate to help me understand better some of the answers that we received earlier. This difference between practices in policy right your understanding is that everything prior to. Of frankly trying to clean all this stuff post Brett pal post Glyn Jones. Everything after that was policy everything before that was practice is that is correct that is my understanding. Okay because the reason that I'm trying to clarify that is that in previous testimony of from the director student accounts the he said to us that the board was familiar with policy changes and I'm and I'm trying to figure out a time line on that it sure it certainly would be true that they're familiar with that new policies that have been adopted in the last year. But I've maybe it doesn't even matter because you've actually said that you believe that the board was being kept up to date of where Henderson stood in terms of the practices weather was a policy or not they were being apprised of whatever the practice was at any given time is that correct I would think so but I cannot say for sure since signed was not involved with the board yes okay alright thank you very much appreciated. Okay I'm more AS one and then Representative Gazaway has one and at that point that's all I have at this time just just one question as far as like this allows for the delinquent accounts. Who within your organization would have actually hit the button on the key of the computer that would of enter enter that information. If you would have been you know Sir okay I do not know okay so you don't know who matter who might of had the responsibility of entering data. If your organization for that okay thank you ma'am Representative Gazaway. Thank you Mr chairman. Of. When Mister Freeman was here he discussed that there were some meetings that occurred fairly regularly between. himself and the controller this Franklin. Are you aware that. No Sir I was not involved in that we did think she was involved in our meetings when we worked on this year's policy. Okay are you familiar with this Franklin yes okay how do you know her she is our controller and I have been with the university since ninety two so we have worked closely together I worked with her through my position with the VP for finance and administration when I say work with her as far as she being a member of his staff okay so how long have you worked with her how long have I worked with her in total. Well I've only been under her area since two thousand seventeen. Now I understand that but you said you've been at the university for a long time yes Sir and so is she I take it yes and so the two of you work closely together when you're in various other offices so my question is how long have you worked with her as for and interacted with her. Routinely since you've been at the university well I can't I started as administrative assistant to the vice president finance administration in ninety five. And I can't recall if she was assistant controller at that time or if it was a little bit later. Okay a little bit later to some people is a year a little bit later to other people is ten years what does that mean right Bobby Jones moved over as vice president in ninety. Ninety eight or ninety nine. And I believe Lisa was already in the business office. And later became assistant controller in controller. Okay so I'd go back to my original question how long have you worked with miss Franklin at the university. I honestly I'm not for sure when she started I know when I started and I'm not sure when she started that it doesn't have to be precise but just the pure your best estimate. Okay Let's say since two thousand. So twenty years yes do you feel like you have a close relationship with her. We are friends and have a good working relationship. And since twenty seventeen since you have worked in the student's account. Department. As administrative assistant. How regularly have you interacted with miss Franklin. Not regularly of on business because Scott Freeman and I work closely on business and if we need to confer with her discuss with her get directions then we do meet with her at chief her doors open at any time okay so. Since twenty seventeen that you've been there how many meetings would you say that you've had with her as part of the student student accounts department. Not always formal meetings but you know we may go in and ask a question or trust make sure she's aware of what we're doing what's happening okay so generally with the with these what you've described occur once a week once a month. how would you describe the. All. Yeah maybe every other week or once a month. That you would have some form of a meeting with the sprinkler I some form of maybe Just discuss saying whatever issue we may have but there it be a policy or student or you know just whatever's going on okay. Did you and Were you involved in meetings from twenty seventeen through present with miss Franklin where the numbers related to the student accounts that were delinquent. worst where that was specifically discussed now. Not one to know okay are you aware of whether or not Mister Freeman. We had meetings with Mr Franklin during that time period where they specifically discussed the dollar amounts related to the delinquent accounts. I am not specifically aware I feel like he did but I was not involved in those meetings now you say you feel like he did why would you say you feel like you did. Because I think that he made her aware of any issue that might be going on. Okay and do you have any. More specific knowledge about that. No Sir Mister Freeman never told you that they discuss those things that he of miss Franklin had discussed the delinquent accounts and specifically the amount of money that was related to those no Sir. I was not involved in discussions of delinquent accounts. Did you ever have those discussions with Mister Freeman. The discussions that we had were related to specific student story list of students or something like that it was not related to amounts listed on and a budget report or anything like that are you aware who compiled those numbers that would go into a budget report related to the the student accounts in the amounts that may have been of no Sir I'm not you want a part of putting putting those numbers together no Sir do you know if Mister Freeman was. I do not. And if he ever had any conversations this Franklin about it you're saying you were not a party to it you don't have any knowledge of that that is correct okay. Okay misstating we appreciate you being here we really do in the like I say what we're trying to we're trying to get to the bottom of something and you understand that because you've been affected by it and again we appreciate you being here especially during this for referral that you all of that to have so thank you and if somebody could bring in. Miss Mandy net miss by Mindy Daniel she'll be our next one. You can remain standing miss Daniels I'm Jimmy Hickey of course you got to see the first one of those you know how that this is going it is kind of our policy that we're doing with this that we're doing sworn testimony so that'll that's what we going to do first so if you would If you would state your name employer in position and you may have to push that button button if it's not on. Can you hear me OK yes ma'am we can thank you my name's Mindy Daniels I work for Henderson state university I'm physical support specialist okay if you don't mind would you raise your right hand. Kate do you solemnly swear or affirm that the truth that you're the testimony you're about to give will be the truth the whole truth and nothing but the truth so help you god yes Sir okay thank you ma'am you can have a seat. And as you heard this is not a got you session or anything like that but we will be asking some questions to try to get to the bottom of it and so the only thing we ask you is you know if we ask you names or something like that just as you're supposed to under oath beat be totally truthful with this and and we'll try to get through it. So I heard what you said about where you work. Could you tell me that again as far as what department you're in yes Sir I work in the business office physical support specialist Katie and how long have you been doing that two years okay so do you know when you started yes our may fourteenth of twenty eighteen twenty eighteen okay and prior to that where did you work ark are let me rephrase it did you work for the university of yes I had started in February of twenty eighteen in the registrar's office okay. And prior to that you were not with the university yes Sir okay were you with the do any type of employment with anybody that was involved with the university for anything board members other employees or anything like it no Sir okay. And tell us exactly what you do. I will answer the phone and take student calls if they have questions about their bills I take payments I print and mail out accounts payable checks with the invoice that goes with them also and help with long refunds and pale grant refunds things like that as far as printing the checks and get a mailed out okay all right and who do you who you report to who's your boss Fite Freeman okay. All right. Are you aware of this situation where the students were allowed to have like forty eight hundred dollars in debt are you aware of that yes Sir okay were you aware of it before our legislative audit came in and make you aware of it yes Sir when I first started and in the business office as the head cashier I was told that forty eight hundred they had to be under forty eight hundred to be able to register because on our screens were more help in the students we can see if they have a hold and sometimes they'll ask wine okay do you remember who may of Told you that information yes Sir Scott Freeman just was telling me that that was the policy at the time and I didn't even go any further because out let insurer team announced sure no I understand that and again I don't you think I'm trying to trap you with some words but but you said he told you that was the policy do you know for a fact that he said that's our policy. Yes Sir okay and. Do you know why are. That they were allowing that that much money forty eight hundred no Sir I don't K.. Would it be fair then to say that if you didn't know that you would know that if there was more than forty eight hundred that that was being done on a case by case basis or some other other way right that would be a fair I wouldn't know either way okay. Financial statements there's been some talk about the financial statements of Henderson state university they're not exactly the way they were supposed to be you know the words there were some miss rep misrepresentations or misstatements I guess is what I should put say on those financial statements. Were you aware of anything like that or was a rumor of that or any discussion of that before they go to came in no Sir I did you know about it no Sir okay. Okay I heard you say something about the accounts payable whenever you're saying that's part of part of your job one of the other things that we're looking at is. the that invoices may have not been sent out they may have been hailed although the checks or something I don't know if they were the checks were already cut in the not mailed so that would be cash or the invoices themselves we're just being held and not paid do you do you know any of anything about any of that prior to like already coming in. I do know that there was some checks and at certain times that would be conveyed in they would ask us not to melt them okay and which were usually the one that would actually cut the check in the mail okay. With the. Would to who who would tell you if you would kind of tell me. Who would tell you to cut the cheques normally let's just say if the check was going to be mailed out were you just brought an invoice and and you would cut the check and then may look at yes Sir well the way it would work is Kerins Bradley would bring me a spreadsheet to let me know what I would be cutting for the day right And so that's how I would know what was going to need to be mailed out and it has gotten a lot more streamlined since the audit came out and but prior to that I really wouldn't know until they would bring this the invoices that we knew we were meant when the check out to match it to okay. Tell me about some that possibly might have been hailed how how would that work and and whatever I say hello that I guess first thing as to say. If if the list was brought to you would you sometimes go ahead and cut the check not mail the check or were there times were you would just not cut the check right off how would that process by the time the process came to me at that point time in the process I would cut physically cut the check and then we would lock it in the vault until time to we were told by her to mail it out okay. Who would tell you who would to a who would actually tell you were going to cut this check but we're not going to mail it out Karen Spratling Karen's press okay and occasionally Lisa Franklin if Karen was out the office okay. Would you like it in the vault yes Sir okay and. Hello this is a broad question because I don't know how many that you may have done can you give me some ideal if you just had to make a guess was it to tier two hundred so you've been doing it. For the two years that I was doing have been Dan and I would cite. Ninety TN I mean it wasn't excessive it was more than it should have been I'm sure but it wasn't like just got off the sure and that's that's for for statement. Okay and if you had to guess do you know approximately dollar amounts that cumulative total would have been if you had to say were they. Five hundred dollar checks or were they twenty thousand dollar checks or. An. Mixture of both I think there is probably make sure both and. Maybe one time there was one large one that we would held and I couldn't remember if you would base the decks or SSC maybe one of our bigger vendors but other than that they would just range from different amounts okay and could you tell me what those vendors do just so all of an idea. No Sir decks is usually I believe our cafeteria and things like that and then S. S. C. they are maintenance and things thank you maintenance at the college thanks and they do more than that but I don't know it specifics okay so you were your total and you normally lock it in the vault. And then I guess that that's it would stay there for a certain amount of time. How would you know when to go get it out of the vault and drop it in the mail well a lot of the time they would say mail this on such and such and we would just put a post it note and stick it on the air end on the calendar so it pops up and says Hey mail this and then sometimes we would just asked to see if maybe they've heard back if we need to mail it out things like that okay. Whatever you say they you said sorry no no that's fine would you state that you would do that to Karen Spradlin mainly are sometimes Lisa Franklin okay all right. Give me an idea of how long were they held normally. Sometimes a couple days seven times a week or so but I don't think anything over maybe a week or two. Okay that I can remember. Okay and kind of the way we've been doing today is I've kind of started with these standard questions just the way that we had just done that the And the next thing I've done in the email just came saying and I'm just going to answer whatever questions I have but sometimes hello this state could let me yes good we of could we go outside with the converse or we're kind of getting some feedback appear out of the man's of Mike owner what so I apologize the Lost my train of thought there for just a moment Do you have like a do you have like a statement or can you tell us anything else that you may know. Do you have anything planned like that in case I would case you walked in and I just said what can you tell me what you know and no Sir I think I've told you about what I do know and again with the audit findings I had no idea until it came out to the public like everyone else okay alright that's fair. Okay at this time some of the other members going to ask you a few questions okay okay Senator hammer thank you Mr chair When when Mister Freeman gave you that policy did you ever on your own occasion did you ever on your occasion take a look to see that the practice actually aligned with the policy or did you just take him at his word no Sir I just to commend is wired okay and then. Why would you. From your perspective and your job duties did you ever wonder why my cutting a check and being told to hold it until you could cut the check and be able to put it in the mail the same day. Mmhm yes Sir I did wonder why at some point. But then you could see on the invoices that they were pass to do that you were matching it with so I mean that kind of gave me a good idea that they were pass do. Would be well we we are holding. Did you ever ask anybody why in my cutting a check that I can't mail for an invoice instead of. Waiting to you had the money to cut the check and then be presented the invoice no Sir I was just doing what I was told to do and who is telling you to do that. Karen Spradlin okay and then You said you dealt with the students when they called in is that correct yes Sir and when you had to break the news to a student that they could enroll because they had over the forty eight hundred dollar Do you remember just. Did date did does seem to get resolved or just tells about the reaction and the was it hi how you how that conversation of terms that you want when a student called in there and a balance where they can enroll we quickly let him know let me get you with either sandy Denning or Scott Freeman let's see what options you have for us to be able to help you to get enrolled we don't stay on the phone long I say wait me and my other coworker we don't have lengthy conversations on what they can enroll we just can look income to see the balance and say well that's what the hold on there for and we get on to the director or sandy to see what we can do to help on and you may have said this before and I missed and I apologize but did you know how many were over the forty eight hundred. Dollar limit last semester to enroll no Sir I'm sorry I don't. Okay hi. Mr can ask a request to the chair to. Like to know what it was but yes Sir. The. When when we go to get the list that was asked for previously with the A with the Late the day that that represents spring here ask for. Delinquent accounts when we when we get that list of delinquent accounts would you add a column that asked what program they were enrolled in. You know whether they were and you know. Yes Sir that's a good that's a good thoughts of their an athletic sure if they were in the arts or you know what they were and I kinda like to see if there's any connections farmers who is doing what with the school had any connection to with why maybe they got the exception worked out yes Sir that's a very good point we will put that down. Thank you. Thanks for share yes Sir. Representative Payton I think you're right next. Thank you Mr chair so you are the one that printed the checks yes Sir I may get a little too technical for myself so just bear with me when you went in to the program to print a check. did you basically deal with one bank account or multiple bank accounts there is usually to. Okay so you choose which bank account you're going to be writing a check from and when you write the check IT post to that account this most programs that I'm aware of ask you what balancing account you're going to. Post to to make it to make it balance out which would that mostly be accounts payable thank would that you would tell it the code to check to or what at yes Sir if it makes sense I cut the cheques but as far as seeing the bank account and where it needs to come from it is flagged on the system prior to me getting it. So I don't really ever actually see the numbers of the bank account so you're not the one that so that's what account this check post to well I select the account but I'm already told by report that's given to me what we're bringing that day so I'm not. I'm choosing the bank accounts system was just to print on the check but I'm not actually looking or seeing the bank account as much as I am the the other account whether it would be accounts payable or an expense account. But one of the problems we're dealing with here is that two years in a row accounts payable is under state. So that could either be because the check was not being posted to accounts payable or it could be that the invoices were coming in and not getting posted to accounts payable. But as the Czech writer when you want to write the check and in most programs that I've dealt with. You would see the difference and awards you go to print this check and the accounts payable. Would not have a balance showing. Or somebody might ask you to post it to a different account and evidently you were not. The one that go to the check to this to the specific account right no Sir I'm not carry Spradlin would actually code it to where it needs to go I'm just like literally training the checks can I'm ready to mail but is stories where it's going to come from things like that it's already done before that part of the process get basically the check is built in the system and you're going in and saying print yes Sir so that would be Karen's Bradley okay thank you thank you Mr chair. Representative rye is. Thank you Mr chairman you know a in most cases I know. Personally of I know that there's bills that are already at certain times. And I know that there's periods that if you don't pay it before certain time that you can get a late charges and things like that you know that occur. I don't know if you can answer this but I've been listening to a little bit about it but do you think may be the reason that you were asked to hold those checks is maybe because those two accounts set one that you were standin astro actually may not could of handled the amount of the check you think that's possible yes Sir. Seeing as many past due invoices and stuck it gives you a good idea that the money's not there for the checks to go through and that's what our whole yes Sir thank you and thank you Mr chairman. Representative prior. Can you okay thank you first of all I would just like the record to reflect that I did speak with Mister Norman and he explained to me the process that there were a number of records available for the auditors to review and this number that so here the twenty six students tested this from a sampling so thank you very much for that information and my question to of miss Dinning is have you ever seen a list of students who had delinquent accounts have you ever seen that last. A no ma'am so you you don't do you have any idea how many there were. At. No I'm sorry I don't alright thank you. That's all for you thank you we appreciate you being here we really do. Okay. The next person I have honored this is miss Karen here in. And they will have one. One additional after that. An animal that the miss Kneebone speak and then I will ask if there was to be anybody else here today that has any information that they want to come provide. You can remain standing for if you can get that out. Are a. Miss hearing is that correct yes right I'm Jimmy Hickey and you got to your part of it we appreciate you being here today the first thing we're going to do is additions warn your what else were you in so if you don't mind state your name important position for the record hearing hearing I work for Henderson state university and a cashier okay would you raise your right hand I'm sorry me to cut you off what did you say that the business in the business office okay okay do you solemnly swear or affirm that the testimony you're about to give will be the truth the whole truth and nothing but the truth so help you god. Okay thank you ma'am. Okay I will start off with this kind of a standard set of questions that you may have heard with the with the first one and again your tell me your name but tell me I heard you just say that you worked in the business office is that correct yes okay. Exactly what do you do for them. I take payments from the students process their payments process deposits for organizations just a cashier I am part of the accounts payable. Okay just spoke about right right miss nothin just a cashier that the yes that's what I want to hear that's a large job and we appreciate you and how long have you been doing it five years five years okay were you with the university before that yes Sir okay. Okay and you told is what you'd already done Kate the report to who would you consider your boss got framing okay. I personally will ask. It. This forty eight hundred dollars at that students were allowed to carry as a balance do you know anything about that prior to lake audit coming in. Yes timing that was our procedure that we did our policy or whatever and then we just knew that okay not all right it's got it towed you your I mean do you remember any specifics about that or was it is common knowledge to you. It was just common knowledge to you that that was your. You said procedure or practice what would you call it. Procedure okay fair enough of. Did you know that some students were allowed to go above the forty eight hundred. Again whatever I ask you this I'm saying before we found out through their dollar it not I mean you could see the students a balance is. But you weren't really aware okay was it you know carry over balances are within a balance for the semester. You just. You just saw the student's balance okay. So you would know why the in that it was allowed to be to go over the forty eight hundred okay. Financial statements of. Some of our findings were that there was misstatements misrepresentations on the on the institutions financial statements. Did you know of any items on the financial statement that you thought may not be correct prior to legislative audit company in or had you ever heard rumor otherwise necessary and. That was not my department in the area of department sure I understand but you didn't with it and I know I'm going way out here but as far as within your department or something like that you never heard any of your co workers say say something to that nature even our financials statements are not right now okay. Okay and then we have an issue about bills that or R. skews me invoices there were not to. Paid on time checks that were healed. Do you have any knowledge of that prior to. Prior to legislative audit coming in. This is the department that many and I work together and she would process the checks I would find the invoices that matches the checks we would put them in the vault if we were told to hold the checks Kay and let me see A hated it could it if you were towed who who do the telling on that that would be Karen Spradlin okay anybody else or just care and made love I mean if Karen was not. I have a processing that day care wasn't there the day at least the could okay me the one Franklin continue on that if you have anything else to say about that. Okay And I'm what I'm what have you make a estimator dis. This so say in the last couple years of or or at least during the time that was audited eighteen nineteen maybe even seventeen I don't know but. How many checks do you think were held during that time can you give any type of estimate on that. Now And I was checks in each cycle that we would hold okay health is a soccer mom we were doing on like twice a week okay and now we are doing them once a week okay. But back during that time it was twice a week that you we're doing yes. All right. Do you think you would normally hold water cycle or maybe not just I'm again I'm just trying to get a range of what I'm trying to do is figure out do you think it was ten or do you think it was two hundred two hundred that's what that's what I'm telling. Yes so I'm not try to put words in your mouth but that and so if you had to say that what would you get this ten fifteen okay all right. Did you notice that Never let me just put it this way who what check for be inhaled to what vendors. Could you do you remember any of those. If there was a check that was going to be held in the vault. Who who is the vendor that those were would have been able to that would have to come from Karen Spradlin on the board to hold it right in the board up yet what I'm saying you said that you would go get the invoice to match up with the. That's what I'm saying. Who is the who is the invoice from the me put it that way. It can't be any All the check that was hailed centex though okay None of the small business of this size small businesses but like office depot or anything like that we mailed out because they were smaller invoices right so is mainly the. Larger ones is what you think if your is that what you're saying well in the small ones are you holding the large ones is that the now now I'm not saying they have it's just there's just a range fair enough fair enough do you remember any of the amounts on checks it may have been held like that now Senator K.. All right. What we've been doing here is I asked the standard questions and then I can I ask you this because the members might come in and ask you a whole bunch of questions but it seems like it helps us like if you had something you were also a prior to like if you were thank you will go in there they will ask me what do I know. Did you have anything prepared like that or any type of statement that you were going to make yes okay so you're just going to ask questions it. Answer answer yes F. get like somebody's is getting late in the day so. All right but that time this we're going to do all right we have the. Senator hammer. Thank you when did you ever get a call from a vendor that you had to tell well your check is cut budgets in the bank the fault and I can give it to you. Strange at the ask. I would get several calls because I was Karen in the business office and saying that there Karen Spradlin in the business office so of course they would miss direct the phone calls to me and they would be vendors wanting to know you know. Where the check was our so yes in effect that didn't get phone calls that way but not that I had to research I would just send amount to Karen Spratling okay did you deal with the students any or were you just dealing strictly with vendors now I take payments from the students and processor payments okay and the reaction that you would get from students when they would call you deaf dumb they could register because they had an outstanding balance Did you have to deal with that environment any now we would just. Ask god to help us with them. Okay Sir telephone number in their name and Scott would reach out to them okay do you have any idea about how many that might have involved that what we're about the forty eight hundred dollar mark necessary okay alright thank you Mr. I thank you for being here today. Representative Payton. Thank you Mr chair so On the accounts payable. Karen Spradlin would direct miss Daniels to write a check and then you would match up the invoices where did you go to get them voice. We have books that has the invoices all stacked in them so they'd come in the mail or various ways who filed the invoices. At that time Caroline Hatley she was It is the she was the actually the one that put it when she got a invoice you would put it into the computer house warming in France is a Carol is the one that was responsible to get in to the accounts payable at that time yes was she the only one that you know of that yes when you say that time your term CTC retirement yes but in two thousand eighteen two thousand nineteen she was the one that input the data they created the accounts payable yes Sir. So. Accounts payable was understated by a hundred and eighty thousand one year and a hundred and ninety thousand the next year. Do you have any idea. How that could happen other than she just didn't post the invoices houses that have that I don't now I mean she would pose the invoices when she received the invoices is she the one that got on from the mail or from the source. As far as I know yes Sir do you know if she was ever instructed to hold invoices and not Postum yet yes I would not now. You are now All right thank you thank you Mr chair. Senator hammer you're the last one on this one so for thank you. Were you ever instructed. To put a check ahead of other checks knowing that other invoices were further past due than the one you with maybe we're told to make sure it goes out ahead of the others. I would not know unless I knew what other invoices were. In the stack. So honestly. We just how the checks that Karen Spradlin tells asst hi. Were you ever told to. handle check to a vendor more special than any of the other ones was anybody that you know of this farce of vendors given preferential treatment as far as getting a payment made ahead of others out now Sir. Okay alright thank you all right thank you. Representative Payton do you have another question thank you yes Sir I want to try to track those invoices So did you ever go to to get the invoices to match to the check and and fundamental Aug location or that they had not been filed yet or that there were no invoices to match up to this check. Now we would eventually find a. So maybe in odd places or what now not and I places we've got like several books. And that's where you have to go each day and find the invoice that matches the PO what was the lady's name you said that had retired Caroline Hatley okay thank you. Thank you Mr chair. Yes Sir. Yes Sir and that's all for you okay as we told everybody we do appreciate you being here and understand that you're here during the time that you've been furloughed that means a lot to this we appreciate the way you. Answer the questions thank you yes ma'am thank you. I right Mister Franklin in next. She's the controller. You can remain standing. Frankly not present yes yes I'm Jimmy Hickey and I know that you sing that so the first thing we're going to do is we have an oath so we're going to do that if you would state your name employer imposition first force my name is Lisa Franklin I work for Henderson state university and I'm the controller okay if you don't mind would you raise your right hand K. do solemnly swear or affirm that the testimony you're about to give will be the truth the whole truth and nothing but nothing but the truth so help you god I will thank you ma'am. Okay I'm going to start off with the some standard questions and then the other members are going to come in after that and ask as some others so I know you're the controller but could you kind of tell me what your duties or and and. Let me back up how long have you been the controller. twenty years twenty years so at Henderson state at Henderson state okay. And now if you don't mind just kind of tell us what that what's what's involved if you're the comptroller of Henderson state we do a lot of the reporting to AT Eiichi some federal reporting we prepare the financial statements of you know we we do general accounting winter whenever you say we are you saying you well yes me a that's what I'm after is what you days yes that is what I do I do some entries journal entries to accounts and things like that I help in preparing the budget and just I answer a lot of questions okay. Who is your boss. Of the city info okay and who is that currently it's read a flaming K. and during the time period that we're discussing here. You know as far as the audit. Who is that at that time a doctor Bret pal okay so you're reporting to Brett pal from what time to what time I believe he started in two thousand sixteen and he left in two thousand nineteen okay. Okay and then I will ask you some questions about the student counts I assume you're aware of the student council yes student accounts the. Okay. Though I know you're aware but who communicated to you that the student to student accounts. That the students will be allowed to carry a balance of forty eight hundred and and still be able to register for classes for the upcoming semester. I heard that of from Scott Freeman actually he had had a conversation he insane the of leave with that doctor pale and I had not been in that meeting and they came and told me that he was raising the limit to forty eight hundred dollars they were concerned. Okay could you go a little further with the concern part they they just felt like that was a large amount to allow students to carry and release you know the payment plans that we had there was no teeth to it there was no consequences if the students did not Make you meet their obligations that they'd find when they made their payment plan so you know they were concerned that it was it was gonna snowball sure. And during those conversations or other do you know what the reason was of wire that was increased to forty eight hundred. No I really don't of. May not I think a lot of people speculated that it might be to increase enrollment of that. You know I really don't know. For me the. If somebody's not paying their tuition how does that how does that help the university as far as when the enrollment increases would you tell us that. Of I suppose it mine at depending on the funding formulate might increase your state revenues of you know it's good PR sure. You don't know how much how much per student your state revenues would increase. No I do not for that okay. So you actually did the approval. For the forty eight hundred dollar limit who who who actually said this is the way that we're going to do this minor standing it was doctor pal okay. And. How to wear that understanding come from who just from my conversations with the staff and student accounts okay all right I think it was I don't know if you'd call it informal but it was more of a conversation lot this is how we're going to handle it. Okay in your where of course I'm sure that these balances were even allowed to exceed the forty eight hundred. Can you tell us do you know anything about that that I heard about it and you know when when someone would be allowed to enroll sometimes I would hear about it I didn't hear about all of them that I did occasionally hear you know at your Scott would mention something about and. There were he received at instructions to let somebody in role in K.. Was there some of those accounts that were delinquent they were not pursued for collection it appears lack. Any talk any thoughts you need anything known about that. no I really don't I don't know anything about that I know we sent a list of. To the collection agency our previous collection agency I think we may have waited A little too long to send them. Before you. They were no longer in school and maybe we waited you know because we do you really. You don't want to send them to collections if they are still in a student and of that we raise the limit so high that their balance just of sure we came to match form I understand. Was the I guess we'll move on and talk about these financial statements and I guess that you're going to be your area of expertise that's right so. Were you directed to prepare I mean this was your job you prepare the financial statements so. I guess at this point to make it Jean just there's. These misrepresentations misstatements whatever you want to characterize in the what what has went on. well. In two thousand the two thousand eighteen financial statements of we had had we had to staff that were on a medical leave and I was trying to cover it all I was trying to. Keep the. You know the banks covered and I was trying to do that I think one of the ladies that was out had she was our grand king on it so I was given the Gran account I was drawn down the funds and and I was just trying to do at all and him I made some mistakes I was I was doing things fast and not being careful enough. K.. What part of it or or a lot of that you know kind of points to the point to the fact that you know. The mis representations in other words they made it so that the finances of the institution look better than they were instead of worse so from our standpoint you know if it was just a whole bunch of stuff for it was one way that was this way in the other it would be a mistake can you kind of a. It was totally unintentional I mean add I didn't know I had done it until auditors pointed out to me and when they did I corrected it. So there was an understatement. On this the allowance for doubtful accounts on the students. To the tune of two million three hundred nine thousand four forty five. That's a fairly large number okay. And I don't want to be disrespectful here but I will tell you that I have a hard time thinking that we have two point three million dollars of mistakes one way so what I really want you to kind of expand if you don't I'm at on the allowance for doubtful accounts we had a way of calculating the allowance that that really didn't reflect How it should be I think you know that there were doubts and that yeah that they were doubtful we were trying to incrementally increase are doubtful accounts rather than just do it all in one fell swoop and so we would calculate what the amount was Proposed to be and then we would do an incremental amount of that every year and after doctor pal time I thought well he might want to change how we do that so I did asking me if he wanted me to change you know how we did that and he told me he thought that was a pretty good practice so I just continued on with it but our our actual written policy says that you need. Student account that has had no activity for two years is I doubt parking. And we were just doing a portion of that each year to increase our doubtful accounts rather than the full amount and the the. Adjustment the auditors bay brought it to what it should be. And I think I understand before this body and for what we're doing here. Explain explain to us what the benefit to the university is if you just do it in increments instead of doing the one time entry. it gives you ask pose a little bit of a one eight to a coverage from year to year you know maybe you can increase your fund balances and and cover some of that and so when you recorded it doesn't you know it doesn't doesn't H. fund balances. Right. Okay all right so. That's happening Who knows about that you know about it yeah I won't we I will promise I. Can answer the other people in this room. Who all knew about that. That that was being done. And I know you you to at the death penalty it okay I don't honestly I don't think anybody else the. I don't think. I don't know if you share it with anybody okay I'd like to share it with anybody okay about the board of that institution. Okay. So what you're telling me then is that and how would you told doctor pale I mean just I told him in an email okay that was how we were recording it and asked if he wanted me to change how we are practice of why we were recording K.. Face to face conversations about it also I don't recall any about the allowance for down payments okay. Other mis characterizations on the financial statements I mean that's not the only one and I can. I can get lego it appeared we go over each one but I know you know will so if you don't mind I just want you to. Going down that road for me so that we can fix the accounts payable to you know the hundred thousand dollar accounts payable it was understated I think I ask let audit what they were and when we recorded accounts payable at the end of the fiscal year we do it by we have a program that runs that helps us identified the the invoices that were expenses for the previous fiscal year so that we can record images and accounts payable those invoices that did not get recorded came in late we usually cut off around the first of August and say we've got to close the books because we've got you know the calf report we've got to do and all that surround the first of August those invoices came in after the first of August so it was a manual thing and they did not get caught as being an invoice that should have been reported as of June thirtieth two thousand eighteen or two thousand nineteen. Okay. I work for a bank for twenty five years it took me awhile but I kind of got to know the ins and outs of things and I had to a feel of what I consider was. Right and what was considered for all. You're the controller that institution. These mis characterizations of the financial statement that make the revenues appear higher possibly the ballot sheet first appear a certain way. You had I would assume you had to know that. That that's just not right. Well I mean I didn't know I had done the The I guess the okay the entry I did not know I had made that error which but which one thinking it may have been in the second audit funding where the the pension liability yes ma'am that there was a I did not realize I had done that one until auditors brought that to my attention. Let me see if I can find them. The there's an overstatement of a five hundred eighteen thousand I think. Is what that was. Which I believe maybe a quite a two hundred ninety six thousand in the an understatement for cation accounts payable. That sound right yes okay. Again there's gonna be some members as some other questions let me just ask you about these invoices There were healed. You can you can you expand on that tell me what you knew about how you were involved in you know that. And we've been towed now then this US Spratling I believe that there what was your discussions with her own that's to we would usually discuss how much how much how much funds we had in the bank and if we had any funds coming in either from the state or from the federal government usually if you request money from the federal government at. You know for Pell grants reimbursement FOR pales or direct lending it takes about two days turnaround time from the time you requested for teacher bank so sometimes we would cut the check and we would know we had you know hundred fifty thousand or we had an amount of money coming from the of the G. five website for federal for the federal government and we would go ahead and cut the check and we would say okay we're gonna be able to mail this on you know in two days or three days and you know as two thousand nineteen carried on especially after the first of the year in two thousand nineteen we became it became harder and harder to cover things up so you know that that's where you know it really started getting bad at that. Right. You've been in the educational field here for twenty years at Henderson I've been here thirty two years thirty two okay. You probably over the years develop relationships with higher it need right did you talk to anybody with higher it about any of this at any any point of time. None whatsoever okay. Okay members. This point I'm late show. Begin your questions of senator. No I'm sorry Representative Lowery your first. Thank you Mr chair. I guess first question I want to ask is you related that the conversations about the student accounts your understanding was that And I've got to make sure I get the names of the names right here. That you had conversations with Scott Freeman and his staff about their concerns about student accounts. But they have had conversations with doctor pal directing them to do that of and again I've asked this question to previous witnesses ballot or an organizational chart. Which would that not be I mean. Isn't that a conversation that you should have been included in with doctor pal in terms of the organizational chart. Rather than them relaying to you and now when they came to you did they come to you after the fact of talking to doctor pal yes okay so you being included in that would do you think that that would have had any influence at all and changing. Probably not okay. But you were aware of it enough it it to know that in preparing the and and you are the one you would provide for produce the financial statements for the board is that correct okay yes Did you ever have a me was it ever a red flag for you that the financial reports that were be being shown to the board. Where a miss representation not not a we'll. Never miss perception. Of what Henderson's financial fiscal position was that they that what they were seeing was really not an accurate snapshot of where Henderson state stood financially of when we had a board meeting we normally I would normally prepare a budget report. Rather than a financial statement and it would indicate revenue budget and revenue year to date activity and expense budgets and expense your date activities and it would show that you know we're how much of revenue have you collected that you budgeted and it would show how much of expenses have you expended that you budget and what percentage you know of the budget had been expended A and that it didn't include things like cash in accounts payable and things like that now there after we prepared the financial statement I think the board gets an audit from the legislative audit they get one in the mail the board members and but I'm not certain question I have there was a shorter time where I was an interim be paid but I don't know that the VP's normally presented the financial statement to the board in a board meeting if I did I'm not a I'm I'm may not have been involved in the. Okay. You were asked the question or are you actually made a statement awhile ago that really caught my attention in answering the question of What do you feel like the motivation was of keeping the students enrolled even though they of significant amounts of money and use said I don't know possibly that it would by keeping them and rolled it would affect state revenues that really caught my attention because I know previous to I would assume the I believe the eighteen two thousand eighteen two thousand nineteen academic year state revenues to universities were based on enrollment the that changed somewhat with the productivity funding model but anyway your speculation was that it could have been tied to state revenues would were you not as the controller also in a position to prepare that information or input that information of what state revenues would do to the bottom line for the university we entered what the expected revenue was from that the department of higher it would give us a chart of what the as expected revenue that Henderson was to receive and that would go in the budget but to I did I was not part of the funding conversations and things like that no okay but you didn't notice that there was any significant change from sixteen seventeen to seventeen eighteen eighteen nineteen from St year now because okay in in the. Last question I have is a about this. Incremental I make should doubtful accounts that you have this total this large pool figure of of doubtful accounts but you only. It been practice maybe not necessarily policy but in practice prior to doctor pal getting there to incrementally report that that's right and you asked him when he first came there. We should continue that was there ever a re visiting of that that discussion or even a. Re visit to the extent of him suggesting that the incremental portion be downsized now. There were no future discussions after that he just said that's a good that sounds like a good practice let's continue that okay well thank you very much I may have something else that comes up but I appreciate your answers thank you Mr chair. Well yes Sir one thing for Representative Lowery said and then we'll go to the other members he ask you if you see the state if you'd seen any noticeable differences you would have seen any noticeable differences though because you always enrollment was basically saying the same was it not and the reason your enrollment was staying the same is because the students that had. Have been allowed to come back to school that was over even though their balances were still so large that's why you would have not seen any decrease in that would that be correct possibly I mean I I didn't. I didn't always I look at SS C. H. when I'm looking at tuition and things like that and I don't pay the as much attention to of the hit king L. so that I'm sure you know on a on a higher level eighty. Okay it would appear so but again Mr chair you Mr sense I jumped in on your after question well no I appreciate because and I may not completely understand and if I could see head nodding or whatever from doctor market she probably would correct me but when when we adopted productivity funding model I know that in part that some somewhat affected the way state revenues were tied to institutions of now I know that that was tied to new money but I think it also affected their their base so I I guess I what I was asking is with the base of change because we changed the funding model not so much the student enrollment but that that may be something that could be explored later in a. Senator Rapert. Yes Sir and I think I'm hung on live over here and they were trying to figure out a way to get it back in so many click off eighty four but and I appreciate it miss Franklin appreciate all of you has been a very long day for all concerned so hopefully reading close the and you rear thirty two years correct yes and you know I know it you're doing a great job answered questions and talking about it and you know my question really is what are we missing. If anything year it because you know the thing that sets but this be filing many of us is we're getting a lot of input from people in your community that is concerned and frankly they brought up of what they believe might be conflicts of interest and things have occurred you were there and your name's dimension to the day you know you you knew you knew what was happening but obviously you weren't the one making a final decision and you worked for these folks and so. Can you shed some light in some way for us. What might be going are we are we headed down the wrong road or is there no road what are your thoughts. Well I don't know I feel like our cash flow issue is the big story and you know our decrease in fund balances or are decrease in net position you know we've got our gas be financial statements which have the decrease in net position of fund balances are assets lists the liabilities and accounts receivable is an asset the same as cash is an ****. You know so if you're cash goes down in your accounts receivable was it you still got some assets on the bill so who was the person is really that that was really charged with all this you know you were doing bits and pieces right at that so I mean I would say probably I had the most day to day Contact with it of the call you know Karen I because of the cash balances we will we will live in it every day and at one point I was trying to draw down funds from the federal government I would go and see if there is anything available every day. And a you know we get it is as quick as we could but the the cash balances. What were you know they were just me we've overspent I think we've ever spent over the last few years. That's a good point because you know thirty years of anybody this appeared here today it I think you might be the longest tenure of anyone you know. Lot of history Henderson. Good times bad times ups and downs but never crash and burn. And so Dr Glyn Jones. Is is there and if we keep hearing Mr pal the first power from doctor Jones right so it is again you know when I Hey it may just be that there's just gross incompetence somewhere that occurred I don't know I'm more concerned with those that would allege that there was any kind of financial benefit maybe to somebody that had to an outside interest and that that's why there was just a continuous spending frenzy even though you all could see the money's not there. So so wanted somebody not for on the brakes and I'm sure dot Persian the bill's going have a lot to say when she speaks species are all this today so. I can't figure that out and that's what really bothers me the most in it's troubling when we're getting input which frankly is even coming in today and I've come in the past few weeks that you know they're they're pinpointing relationships and so we've even heard testimony that brought up the name earlier today so I just wonder what you know were you told to pay a visit invoices that might have benefited some of those folks that you know you so. So spend issue for me I'm just trying to route if you know and the our reasoning behind holding an invoice I you know I mean it's been a wall that at the best I remember it you know if we knew we were going to be fifty thousand dollars short we not say well okay we just got this invoice four days ago and it's going to know if we hold it for a few days we'll have the cash to release it and so you know there wasn't a rhyme or reason is to now there might be a we need to get the electrical bills paid but we don't want the you know the power to be shut off or something like that but there was not a you know my good buddy as you know we need to get him his money now there were some phone calls company and if people wanting to be spent Speaker that I got a message during the meeting today that there was people call an eight eight calling Henderson today vendors want to be paid are there any yet still unpaid vendors out there that you have dealt Hey we use the due date on the invoice if there's a due date on the invoice we say okay we're gonna pay it we're gonna try to pay it by that due date and if it doesn't have a due date which a lot of them don't we we assign a thirty day due date and we keep that in our system and we try to get paid but sometimes it's at twenty eight if it is more than sixty days or if it if it gets close to sixty days it moves up to high priority on you back here but I do want to ask you again make sure I get this clear are there any other unpaid you know you see perceive six million there if there's been an ask for a hundred thousand more which got turned down here the other day so let's lead to these furloughs and all this are there any other you long term existing vendors that it remain unpaid yeah you say long. In term existing vendors are long term exist let me put it to you this way I'm I mean I'm trying to lead a horse to water here I I mean I'm just want to know is everybody paid up or is there more that are hanging out here we've got some invoices that are between thirty and sixty days past due there are some that are less than thirty days past how much money we talking about of. Off the top of my head ACT I couldn't it yeah I mean it's it's really more than five hundred down yeah it's fire in five hundred thousand I mean honestly I don't know that I would say it's more than a hundred thousand okay okay more than a hundred probably five hundred not more than a million now okay thank you Mr chairman. And that would be over thirty. Between thirty and sixty over thirty over thirty okay. Maybe I should say between zero and sixty because there are some that you know are we because we get him in our in our queue to be paid the minute we receive and let me ask you this could you get that for this body and send it so I can send it to the members thank you. That way there won't be any question. Representative bringer are you in the queue. Yes Sir in center RAPERT you should be off now are you off with this thing. We don't know what's going on so. Representative bringer thank you Mr chairman. I'm still on this list about delinquent student accounts are you familiar with the list that was given maybe a few months ago will during this time I'm familiar with the list that we had as of June thirtieth of two thousand nineteen yes okay how many students were on that list. Add could not tell you that I know there's a list and it's around the fully is without any allowance for doubtful accounts is around ten million dollars as of June thirtieth of nineteen that that's what I want alright thank you K.. We finished. Representative yes. Representative Payton. Thank you Mr chair so I've been chasing this accounts payable all day thinking it was something that was on going but you made the statement that was just the end of the year oversight yes and so we have audit findings from two years in a row. And so it was the end of the year oversight two years in a row that's correct so did you do monthly statements. just into the year we have a. You know we have an old computer system and we email out a balance sheet report and an expense report and revenue report add this prepared at the end of each month and we E. the email that out to you know several people on campus about that so many then the each month would it not be a practice to to pull in the accounts payable. To pull it in to pay the current month of. Yes but we don't it doesn't go into accounts payable into all the invoice is received when we posted invoice does it ask you whether to post to the head or posting current month. Yes house in the current that's right. It was to be in into the your oversight unless somebody has. Not respuesta out received until August of two thousand nineteen or August of two thousand eighteen and we did the end of year as of June thirtieth of that year and hundred ninety thousand dollars worth he honestly I think one of them was was a pretty large invoice. Was two years in a row grab hundred ninth if I may continue Mr chair of got a couple more questions yes Sir so on the doubtful accounts the the practice you said was to. Not. Right off the bad debt but to write off a portion of it that's correct. Was that a percentage a set percentage I think it was around twenty five percent. So if you're right now for twenty five percent year after year after year. You AS A contra army you're obviously know the effect that's going to have well any it's and the and the balance of the total accounts receivable was going at. Orders yes of. So how many years is that practice in place. After. It probably wasn't it might have been like maybe eighteen years. For a long time we had no allowance for doubtful accounts and we started we started it one year based on recommendations from legislative audit I don't remember when that was but I do remember if there is some indication was the only right off twenty five percent. I don't I don't know that then a recommendation as to a male. It's been it's been a long time but I don't remember that they made a recommendation of the amount. Okay and I think I have like one more coffee. You made the statement that you did not provide the the board of directors with financial statements just cash flows. Well budget at budget reports is what is income and outgo. That's all they never saw a statement that gave them the way they all the I'm not gonna say neighbor because There. I know they had a they had some board workshops occasionally I don't always go to those so I don't know what was presented to them and I know they had a retreat in the summertime I don't know if they presented financial state whose decision would have been on the material that be provided to the board I'm sending that would have been the president and where the CFO but I really don't know well somebody would directed you on what they needed. Yes and no I mean a lot of cases brit pal would prepare his own information that heating always you know you can always get it from so did you prepare financial statements for brick pile at prepare the financial statements for the university. That how often. Every year at the end of the gene thirty three okay thank you thank you Mr chair. I just want to make get some clarity Brett bel though never prepares financial statements okay thank you. represent the Russia. Thank you Mr chair I'm kind of in the same boat is Senator Rapert is with there's kind of two key things in here that still don't click in my head and that's one. The motive for these policy changes which were clearly For lack of a better term running the school into the ground financially occurring over time so far there seems to be no motive for it other than perhaps press but I would think running a school into the ground would make much better or much worse press then who are enrollment went down by a hundred or you know whatever it is so that part's not making sense to me unless we say you know gross incompetence they just made a really really poor choice so I've got one concern with that in my question to you is from your perspective. Was there ever any discussion officially or unofficially amongst you and your co workers about. When this was supposed to end like that I would think that this would have been put forth as a temporary measure we're we're gonna let him carry more debt until. I have yet to hear what the until was it just seem to be an edict that said we're letting carry more debt and thou shalt go do it so is is that that's kind of how I I mean I wasn't there when it was presented to the director student accounts and his staff but. That's kind of how I think it was presented I don't think he gave them a reason I don't think he felt he needed to a. Was there concern amongst you or your co workers about what this would do to this bill yeah. Did anybody take these concerns to a higher level above Dr Powell so either doctor Jones or the board or eighty eight she or anybody why not do you suppose I think from from my take on it if you had gone to doctor Jones he would referred it back to doctor pal. A and you know I don't think you would have gone anywhere you know. That you know so far as the board I mean I had heard. I don't know he told me that that you know Dr Jones really didn't want us talking to the board members so you know. I don't think we feel comfortable I didn't feel comfortable I would have felt comfortable. There's a lot of people that don't want people talking does too so I can I can understand that I appreciate that Since since since there was no oversight at this time that and what I'm saying is. People in your position that are seeing. first hand what's what's happening financially it doesn't seem that they had anywhere to go you know in many eight just like you said there's a dead end you know the there's there's a got top and that's where it's coming from so there's no where to go. That seems to be a critical piece of how this occurred do you have a policy in place now that should that same scenario occur you have a place that you now can go to with concerns like that. Has that been rectified or does it need to be ready as of. I know we have a we have a way of reporting for you can go I'm sorry I'm I'm not certain I I know we've got we've had so many different policies this last year if they're just all run together I'm not aware act I don't know that I can tell you that there is one regarding local whistle blower type thing that I. I think I would feel more comfortable mail if if this happens again I don't mean of course it's not gonna happen again because we don't have the same people in place but never say never never say never well I have two years so. That the you know I will I don't I don't believe it would happen again with the people we have in place now A that I do think I would feel more comfortable mail them out then I did Two years ago who would you go to at this point all I would go to the CFO read it and I mean that's all I would have to do I know that's all it would have to do. A and she would you know she would address it and you know maybe not maybe mob. At she not find that my things are in fancy but she would explain it to me and she wouldn't just you know say okay and. Move along. Okay appreciated thank you. Representative Richmond used to over there some more I'm still here I can see you bind the poll so you're a I did that on purpose thank you Mr chair. Yes ma'am earlier in your testimony I just need a little clarification here when senator Hickey was asking about the over statement is that some of these accounts of things in the financial report you said that the. One of the reasons for that was the fact that you're basically a one lady show that you had a lot of people out and everything you were trying to put all this together by yourself. But then later on you also said something that created perception in my mind that I need clarification on you said you didn't realize you had over stated that one the retirement balance until the audit and that sounded like to me that you when you stated that that you were in fact where that the other ones had been overstated I just need to know did you know when you're doing the financial. report the statement that you were overstating some of those balances. And then didn't just didn't happen to know that well I ACT kind of think I realized that our accounts receivable policy or practice for how we recorded the allowance for doubtful accounts we probably needed to revisit it and review it and so I ask about it and uh I was told continue to do what you're what would it. And so that was the one I mean you know I know you know you know when your accounts receivable is that high that you know you've got more than at the. A couple million dollars in allowance for doubtful accounts that you. Our allowance needed to be larger is what I guess I'm trying to say okay so you were aware that you're overstating. Yes I mean I I I think we need to change our policy so far as how we calculated the allowance for doubtful accounts yes in my personal opinion I thought we needed to do that. Mister chairman I have another question. Yes Sir make that if you don't mind I'm going to get some clarification on what she said to you okay please he represented rich and ask your question I'm just getting this on the record. You said that you went. And so right to tell some about the allows for the doubtful accounts in the in the were said keep doing it that way I want. Hi email not that I just wanna tell doctor doctor pale okay Representative Richmond Mr if you continue thank you Mr chair lists let's go the fact that the some of the things you stated before. It sounds like if you saw something that you were concerned about. And you bump it up to somebody that was superior to you that basically you just that they gave me the where for salute the shrug and that was it and really nothing else come of it is that it was that the general feeling that you had and was that as far as you're concerned was that wide spread throughout the staff within the as far as you could tell that there was generally the feeling is why bring it up because if we do then nothing's going to happen anyway. Well yes and no I mean that. Sometimes you just. Our stubborn enough that you bring it up anyway just so they can they have to tell you know you know A so you know I I usually tend to air on the side of bringing it at that it just for my own peace of mind. You have any estimate of how many times you brought something up and and so no action. No not so far as you know the. We have something like that I mean if it's something that's in auditors recommendation I mean there's you know there's no question we're gonna do it that you know if it's something like that you know I mean that was one of the ones that I guess I was an uncomfortable with so I ask about and I felt like when we got a new CFO that some of our practices would change and so I wanted to check and make sure and you. They didn't always change. Mister chair last question and truly is the last question no Sir your I appreciate what you're doing. Continue. It still is the last question. But that it. Thank you you own thank you Sir but anyway continued on with some some of the things you said earlier about the the concern that people have expressed about Mister Jones not wanting anybody talk to the board or anything like that do you know of anybody within the financial your cell for anybody to work in the financials system including your superiors or anybody actually ends in in the universe the staff that was told specifically you will not talk to any of the board members about any of the this type of subject did you ever hear any kind of directive or did anybody ever come to you or was it just one of those we got the message even though nothing was put in writing no email or anything else yes I'm not aware of the particular instance and and if I was I don't remember it that I'm not aware of any instance I just I just recall that you know that was the you know it was just kinda like office conversation. One more look no I'm just kidding thank you very much thank you Mr. Gazaway. Did you have a question or comment. Thank you Mr chairman and thank you miss Franklin for being here today we certainly appreciate your coming voluntarily. I want to go back I don't know that we've covered this with you exactly but can you tell us a little bit about your education. I have a bachelor's of science in accounting Ian from Henderson okay and when was that. Eighty three all right and. Have you had any additional trainings since then I'm sure I have gone to some you know what college business management institute and things like that so workshops sponsored by secu bone if you bill and. Okay AT A certificates or any other advanced degrees or anything now okay. And you how long did you say you've been working for the university thirty two years okay and. In your capacity as controller how long have you been serving in that capacity twenty years okay and have you had any special training about how to perform the duties of control of. Okay so how did you learn how to how to do all of the duties that come along with being the controller for university when I became the controller the previous controller was the CFO and I basically received on the job training with PM and you know through. A. People at other universities and things like that you know sharing information there's always a good the workshop with the legislative audit and the kaffir I usually always try to attend that so we you know we know what new regulations or upcoming. See. And so you certainly were familiar with the concept of doubtful accounts. That correct yes okay and that's something that you had been dealing with in your twenty years as controller with university right yes this isn't something that was new to you in twenty seventeen now. And so can you tell us how you previously had defined doubtful accounts and how you dealt with doubtful accounts in years prior to twenty seventeen we we defined doubtful accounts is anything that had to had no activity by student no payment from a student in two years more than two years and those were doubtful and what we had been doing was taking was increasing The are doubtful account. A liability. By twenty five percent of that each year. And you know and is that as the amount changed you know we would just record an additional twenty five percent each year okay. And you have been dealing with I guess operating under that formula for many years several years I don't remember the first year you know we were courted allowance for doubtful accounts that we had we didn't have one for a good qual and then the legislative audit they suggested that we had put one in place all right and then. Mister Freeman you're you're familiar with Mister Freeman I take it right yes how long have the two of you work together thank you city been here twenty years so I guess twenty years occurs about the same time that you've been comptroller he's been at the university in some capacity is that right yes and he's been in student accounts and you work closely with him there is that correct. And you would meet with him pretty regularly about the student accounts did you. yes I mean it was usually always towards the end of the fiscal year when we were gonna prepare prepare a list of accounts receivable for the financial statement but I mean you know we were in the same office we the you know we might talk about it and it might not be an official meeting that we not talk about it or something during the day. So if Mister Freeman said that he met with you at least a once or twice a month about the student accounts with that be accurate yes I think so rolling okay and in those meetings I take it that part of your discussion would be about The doubtful accounts is that correct not so much the doubtful accounts probably more some of the. Of. Your some of the students that had higher balances and things like that towards the towards the end of the fiscal year we talked about in the at the doubtful accounts because we were trying to get a an age to counts receivable and determine you know how long some of these balances had been without any having any payment or any activity on the account okay. And so it between twenty seventeen and I went legislative audit discovered that there was an issue I guess it would be fair to say that you met with Mister Freeman about these student accounts you know at least somewhere in the area of since may of two thousand nineteen I mean that the university has had many many meetings now I'm I'm employment seventeen before they came to life okay you but you were me it would be fair to say your meeting with him anywhere between just in that year alone about the student accounts twelve to twenty four times a year. Okay and. You've been there twenty years. You are very familiar with since doubtful accounts have been part of the balance sheet and figure in those. And so. I guess explain to us how. It didn't dawn on you at some point or if it may be and I think it probably did that there's a real serious problem here that we are under stating The accounts receivable and that that is resulting in an overstatement Riva said that backwards that that the doubtful accounts reading understated in that the accounts receivable as a result we're being overstated and that causes a real problem in the ballot she now with you haven't been there twenty years and a degree in accounting and haven't dealt with this issue a long time I think surely. You would realize that said Thursday sure so tell me about the I mean. Yes it's a problem and I had requested of Mister doctor pal that we you know maybe revisit it and talk about how we're doing it and he did not want to so And I think that's where. Some of these questions have Centerton I think that that's I think it's a. Appropriate as to you know the Buck has to stop somewhere. And you're the person who is responsible for submitting the financial statements to the board is that correct. Technically I would say doctor panel would have been the one that submitted on he's the chief financial officer toward and in twenty seventeen did you meet with doctor pal to discuss the financial statements yes how often we review the financial statements how often would you meet with them to go over those I usually send him the financial statements and I sent him the detail of the accounts that made it the information on the financial statement and he reviewed it he also prepared the. Management discussion and analysis and find that as well of and if he had any questions he would. Get back with me. So my question is how many times would you say in twenty seventeen that you met with doctor pal to discuss the financial statements maybe twice okay but you were the one responsible for preparing him and he was the one responsible for approving it was that correct correct okay how many times a you can you said that you were regularly meeting with Mister Freeman is that right yes. Okay. And so how much of this of the blame I guess what I would say would you lay on Mister Freeman for the inaccuracies in the understating of the accounts receivable and I'm sorry of the Of the doubtful accounts understating of those in the overstating of the accounts receivable how much blame would you lay on Mister Freeman in that election. Now much would you put on doctor pal. I don't know I mean honestly of. I don't know that I'm that I need to place blame but to you know I mean I'll accept the blind because I mean I did asking me if I want if you wanted to change it I didn't forcing to change. U. S. doctor palace he wanted to change our policy our our procedure for calculating allowance for doubtful accounts I emailed him. And he told you know any tell me to continue the way we were doing do you have that email still I believe we send it to okay we have that okay. The end so you seven two meetings approximately that you would have with the the CFO about the financial statements. Maybe I mean honestly I couldn't tell you the dates and the times and things like that I mean it was not it was not much I usually send him the information you know you might catch you met another meeting in you'd say I'd say well I need you to review the of financial statements or something like that and he you know send it to me in a look at it. Okay well in those two meetings was there ever any discussion about the doubtful accounts and now and the overstatement of the understatement now. is this something that you would have expected them and you knew that there was an issue is this something that you would have expected a competent CFO like doctor pal to catch yes. Okay. Did did. I mean did he review the financial statements with you when you were in a meeting the meetings with it now. It didn't even look you're prepared amended and look at him he didn't look at him with me okay. I don't know what he did you know after I sent him to the. I'm assuming he looked at them and review them with the you're saying that the two of you when you have these two meetings that you talk about didn't go over I'm in great detail no not at all. This. All right thank you very much. Representative Lowery we had to cut you off the are you back on yes I if you're of next thing actually. Thank you Mr chair. This one is Get some clarity on this the question I asked you while ago about the doubtful accounts and about the policy miscues me not policy the practice that Henderson who stated had for a number of years and this was previous to doctor pal coming on where you just incrementally accounted for it. You told me that you asked him if you want to continue in the line of questioning that you just got from chairman Gazaway he asked about you re visiting. With doctor pal and you said that you had re visited with him and he said to continue the practice now that I emailed him and asking was that the initial that was the initial the initial one so there was after that email if you asking him there was no follow up on that okay good The and I may have heard this incorrectly it wasn't your testimony but Mister Freeman. I believe he indicated to me and talking about the student accounts the outstanding student accounts that is conversations were with. doctor pal and doctor Jones. Do you know whether or not doctor Jones would have been included in those conversations. You you don't know so it but as far as you know because you had heard from Mister Freeman and one of the other staffers of they're concerned that they had had a conversation with doctor palette that you were not included in that in that okay We've also heard of and it seems like I don't know sometimes the the figure gets thrown out there and it doesn't really land in on anyone's. I don't hear a collective gasp for me anybody when the number ten million dollars is mention but that that is the. Total amount. Over the years back to the mid eighties I understand or maybe eighty three of student accounts outstanding student accounts. Of that it that were Not collected correct ten million dollars okay you city become practice to incremental any of. Take. Accounts it can't be I've got to make sure I've got the document the doubtful to make the doubtful accounts twenty five percent. Well this is if that's correct it seems like that that ten million would be wiped out in four years or at the most six or eight years if you're if you're just taking twenty five percent of it it's twenty five percent of the amount that hasn't had any activity in two years so I any hit it has increased but The in the accounts receivable also has been has increased as well okay okay but for some of that dating back to eighty three and I don't know how much but I know it I asked you Previous to this hearing you know about the international the reference about international that that was in the nineties. Yeah I think Scott mentioned it is like to the early two thousands early two thousand okay so that was definitely not collectible because of students that left the country so it I'm just wondering about this incremental about whether it was it smaller portions but I guess what's most important is was this not an issue that was ever discussed. On previous legislative audit's that with the auditors would meet with you over the last twenty five years this issue of doubtful accounts. It was. I mean I guess that was It may have been to be the only I had you know. I may have gone to the last I didn't always go to the audit exit conferences but you know for the last twenty years I have I have worked with the auditors and you know. Thank you and I may have talked about our accounts receivable balance it's possible that they have mentioned it before that you know it's not it will it has not been in the form of a finding for sure but you know it's possible that they have mentioned that before. Okay. It in and I'll try to make this my last question of the appreciate your your thank you. Some would say thank you of thank you your for your patience Mister chairman of. So since this is something that's been going on for decades the these outstanding student accounts. And. All of this really came to a head as far as finding out how bad the financial situation is for Henderson upon it basically upon. Doctor pal leaving June nineteenth June of two thousand nineteen. Just need for a six million dollar loan from the state or an advance. On state funding that it's now become alone payable. Sometime way off in the future. There had to have been some other issues I mean the the invoices that were not being paid the hundred eighty thousand or one of those with that can't be it there had to have been larger amounts of invoices or something that was found. At the end of the fiscal year. What would that total have been. Of invoices or bills for bond payments for anything that should have been paid what was that discovery amount that really got. If everyone so alarm the of god you we've got to give a six million dollar advance I think there is this schedule of our accounts payable outstanding accounts payable as of June thirtieth that basically total total you know around the six million dollar I think there is us a schedule that was supplied if not I can get it. It's got our outstanding accounts payable as of June thirtieth of two thousand nineteen okay the NC I don't know that that's ever really been discussed today I mean I appreciate that there's a schedule not probably should have found it but there you know we've just heard well there were some sixty day you know outstanding said ninety day and and the audit finds a hundred eighty thousand. All but there your your there was a total close to six million dollars yes okay the last thing I would say I should of told everybody early on it's not necessarily a conflict of interest because I certainly have not done myself any favours but I do teach periodically at Henderson state. maybe no longer but I I just have to say I have a great appreciation for the people the students and the faculty that I have interacted with with that that campus I have I have taught at a number of university campuses and I will just tell you I have never met students who are more engaged. The date they don't walk across campus with their for face stuck in their phone they actually make eye contact with you and they say hello how are you and I and I just have a great appreciation and and a great understanding of why. We need to do everything we can to save this campus. better if that might. That might include some really painful decisions that have to be made in terms of the administration of the campus and and also appreciate a issue in them stepping Ford and taking on basically what the is is god's work to try and salvage this for this campus for for that community for that region so thank you for the answer you your answers to the questions. Okay. And since we're kind of went down there the masses question I assume that since the you all been looking at this or Tom but all these doubtful accounts how much is truly on collectible. Of those student accounts. I know that you all had of looked at that so. If you're with for everyone get you back where you need to be what's that number. And I'll ask ms Kneebone in a minute or somebody else may but to what will you all by those discussions correct. yes it's been awhile since I have been involved in it but I do know that some of the students that have been making payments cash check and credit card have been some of the older balances you know so what's what's what's the number you all think I think we have collected outside of the collection agency about one point two million dollars okay. Years of Bob was right to think and represent our it said it with your total balance is. How much do you feels on collectible. You got to have a number I know you all discussed it I know you don't say it in here but that's what we need to do and what it what is it I do not have that all right miss the bone and I'm not going to start do you have that number. You would like to speak to or I don't have it off hand but you know approximate when we get there. What would be a healthy amount for a no I've never mind outcome wait wait with you I thought that it I will if if the other ministration of not had those discussions after we have had what we've been through I will be very disappointed in what I've heard here and you know part of all of this is to is I know there's been a request made for some extra money from the state so I feel and again always say this I'm talking for me that we have to know the total financial. Situation of this institution before going feel comfortable doing some things. It's going to go a long way to know those I could not believe with what. I have heard today and I know that you all have been through those books. From eight is the. If you haven't looked at all of those two counts receivable when you're sitting here telling me that well we decided that we're going to take twenty five percent. The five percent. Of an account that has had zero activity in two years. I will tell you right now. There's a ton of of turn of other money that should be taken in the current year. We have to you have to have a number. To know about what what you think is on collectible in that total in those total balances. So if your bill senator Jim you don't know that's fine but I just don't this will be hard for me to believe so on Westgate one more time. Have you all discuss that number I have not been in discussions where that number was discussed okay thank you ma'am. All right Representative Burch. Thank you Mr chair which is first character or make sure that we characterize the airforce salute as an individual opinion and not the opinion of this committee. Ma'am I was read the checks of another member sit me what what did you just say make sure that it's really clear that the entire committee doesn't consider an airforce salute to be a shrug. But moving on with that if if I may yes ma'am so basically co chair Gazaway character from characterized you as an expert witness that's what he did he kinda lead you into the used showed us exactly how you're qualified to be in this position and with that qualification in your expert opinion what was the exact business practice that you believe started the catastrophe that led to us here. To be here today. Of. Well I think it's two fold I think it's over spending and I think it is our accounts receivable the the balances that are collected. In an in your opinion. When did each one of those things start to the extent that it led to the spiral. For which we are listening to you today. Of. Probably. Two thousand fourteen. Since two thousand fourteen and your position what actions were taken to try to stop those spirals. None that I can recall offhand. To include you personally. Main right I mean I mean we we monitor budgets and you know if somebody's trying to stand in their over budget you know we would we would prevent that that in some cases you know there's deferred maintenance and things like that that occurs that you know you have to pay if you have a roof leaking or something like that. Mr. Even in this position for how many years twenty seven in in that time is there a group or a an association or someplace where you get together with other controllers from other universities and colleges around the state the all talk. US somewhat but not not all the time no and I would expect you to be airing dirty laundry but was it ever your understanding and that kind of setting that what was happening that Henderson was. Either okay or commiserate with what else was happening around the state. No. Thank you Mr. Okay members will get four more Or more people in the queue right here to talk the first one is Senator rice. Thank you Mr chair. Cochair JP are my last term and house this bring flashbacks with you of A and doctor. Your heart Mr Dimon. It's painful to try to extract things in and that's not derogatory toward any but you're voluntarily testified. Mister. Are we going to have trustees here in the future. It's it's my of. My thought that that that that'll be requested for the next meeting I just don't have the Senate but it'll be quick I would I would request if you need some that do that this right on I believe Mr Ragland is wanted testified that her office your office research side by side and That the. I'm in the day Mr piles officers across the hall. Are you where did did your office have anything to do if you were of anything. I hate to bring this up again seem like I'm I'm on that track but it just jumps in front of me about multiple trips to China by Brett Palin Glenn Jones. I know that we and do you know if you know where the financing came for that. I know some of it came from the foundation of I believe some of it came from the university the the the that go through your office yes. I and and I believe Mr file with the even up to the last couple of months before you left that right down but sometime during may of two thousand nineteen you no object or the reason is that is that you get far learning over there you have what what's the what's the connection I'm sorry I'm not a I think they were working on a a joint effort with the music school. A in any did any money other than that the trips any you know any money going back and forth. A no okay I'll have some questions for mission the loan I would just say this centenary to as a businessman it pains me. For companies in nurse big ones do that says yeah we we we I even know they had fifteen day or thirty day term yeah we don't plan on going thirty and sixty when we paid a grossly incompetent person this is my opinion two hundred thirty eight thousand dollars pair she. Twenty thousand dollars a month I believe what I remember from on it. Somebody that all been fired. In my opinion. And then another one that that may be worse than that would not have much money I hate to see the university's name. Being. With that because I but rather to do want to Henderson to thank you Mr. Thank you senator rice. Richey Springer. Thank you Mr chair yes ma'am of I would just like to echo would Representative Lowery has said about Henderson state university my experiences there have been great I'm a graduate as I said earlier of Henderson state university and Miss Franklin Dr doctrines that ring a bell with you in accounting use your account to tear okay mind to I just wanted to inquire a little bit more about the lead the previous legislative audit's in since you been there quite awhile can you tell us about the findings in the previous audits were some of the same kind of things discussed in the previous audits. No I mean this was the first audit with findings in quite a wall that You know I don't recall anything like this you know and you know occasionally there might be something where they had tested a group of the you know a random sample and I'm not find one instance of something and you know usually we would go and try to find out what happened and that no nothing like this so did they test these do delinquent accounts that we're talking about today so that was done I think so A yeah. I'm not exactly sure what they do that okay last question and I think god we got career vocational this sold the. That I'll stand in big delinquent accounts date back to the eighties is that accurate some of them days and a total in excess of ten million dollars right before you apply the allowance for doubtful accounts yes ma'am final question was tear and of the oldest accounts. Date back to what date I I think there may have been some from like eighty three nineteen eighty three yes alright thank you. Members at this time we're gonna take a five minute break I know that you all been down there but we're going take a five minute break at this point was will be back at the. Four clock. All. Hello miss the bone to be sitting there the whole time to wait for her to come back I think that's appropriate. Sir yes Sir. Since our of. Okay members of. We're back in. Senator hammer. Your term Sir thank you Mr chair ms Franklin you made a comment while goes others have made today about being afraid to approach the border being given directed not to approach the board members did in the board members ever approached you and ask questions and have concerns that they wanted you to address. Probably not prior to the IHS you know they may have I probably had more interaction with them since July of two thousand nineteen and I ever had before. And I think was in June of nineteen when the university was in danger of not making the payroll if I remember right did you were you directly involved with that and what did you do if you were when you became knowledgeable of the. Of. Well I mean the after Bret pal left of he and I had discussed our Thank a line of credit. And So I ask him several times if he had process whatever he needed to get the board to approve a line of credit because we need you know I was discussing with you mark problems we were having and then when he left he did get a one million dollar line of credit or either he was going to request it and But then after he left I mean one million was not going to be enough I knew it wasn't going to be enough but he. I went to see doctor Jones after at bright house left and telling that you know we were in danger of not Hey and we were in danger of not making or make payroll and I mean we did make it. In our state funds came in and we we were able to the payrolls covered we were able to cover the fringe benefits. So the doctor Jones not know until Mr Powell told him that shall we're not date that you're in danger of not making payroll. He acted surprised I don't know if he didn't know but before that or not I had not told him personally okay. Okay and the do you know and maybe Mr chair of over a couple more questions if you don't mind but I think miss Rita Fleming's in the audience maybe she could answer the question we're looking for wall go but do you know how much student debt has been turned over to the collection agencies. Of our new collection agency I think we have it's it's over four million dollars that has been turned over to the new collection agency okay that was about six months ago so while we may not know the total debt we no four million dollars of the debt has been turned over to the collection agency and what percentage if all that that was collected with the university realize out of that. It's probably almost fifty percent what what we turnovers probably almost fifty percent of the total okay and do you do you know within all the discussions is this is kind of involved were student tuition raised or do you know if student questions were raised in order to compensate for the excessive debt that's been under discussion today. One year I'm thinking it was eighteen we did not raise tuition based on a recommendation from the governor. Of I mean I think all higher education I'm I'm not sure if it was two seventeen or eighteen I think it was eighteen and then two thousand nineteen we did have a tuition increase. But I don't know if that was. To. Compensate for the student debt. Okay and then Do you when a student leaves the university. And they debt to the university. DO you either hold their transcript or do you hold their diploma if they graduate speaks students in state. You know in in you US forces students that have gone back. We we do not allow them to get a transcript and we with all their diploma. So how many students are you withholding transcripts on now do you know now. And you don't know how many how many diplomas now. Your holy I'd like to get that number because it I wonder how people go out and get jobs and they're they're not able to transfer to other schools if they still of debt so I'd I'd be curious to know how many students you're holding The policy of and also hours or transcription on Mr chair if we can get that please and maybe. If the chair would allow ms Flemming could come answer question at some point thank you I'm my attention if the if she will come is which I assume she with is to have her. Of of next members it's a my intention allow the other witnesses that have already testified to to go ahead and leave but I didn't want to do that until making one percent sure that nobody here wanted to recall anybody back from anything we've heard up to this point so. Seeing none. Mr Burton Broadway that'd be great. Representative Payton. You have a question. Yes thank you Mr chair this so regarding the four million dollars it's been turned over to a collection agency I just wanna make sure I understood your answer correctly. Our agreement with the collection agency if they collect a dollar how much of that comes through the to the university. Usually a collection agency has a percentage. I think well. I'm not I'm not a hundred percent certain that we do pay a fee for that but I think one hundred percent of what the what we collect from the student gets applied to their account. So you don't know what the fee is now I do not a member try I'm trying to realize of the four million I assume it's all still on your accounts receivable yes and if they were successful in collecting it it may only you may only realized three million dollars with positive cash flow out of insurance on trying to get to yeah okay so on the policy regarding the doubtful accounts. When. You're saying that you only talk to Mr pal one time about whether or not to continue that policy. Did he ask for any explanation as to how it affects the books or or what effect it would have do you have reason to believe that he understood that well he's a CPA okay. So Did you ever over the years you know I I know you just answered a question about June of nineteen but prior to that over the years did you did you ever raise red flags that Hey you know something's gotta change were we're going in the hole we're going broke I did it to doctor pal is that the only person needed yes I mean we discussed it in the business office amongst our sales but I you know I would go to minute telling you know we're having trouble paying bills and you know we need we need to do something and how far back with that date when you first started out is that would have been at. Early fall in two thousand eighteen for sure two in the fall of eighteen for sure thank you thank you Mr chair. Okay miss Franklin I believe that that's all the questions that we have in the we do appreciate you coming and taking all those questions okay thank you yes ma'am. Mister Fleming. Do you there's been some request for you to come forward is are you okay with that ma'am. Okay thank you. And. Where will do your oath of if you would. If you would please a state your name employer imposition. Redefining Henderson state university vice president for finance and administration okay if you don't mind please raise your right hand. Do you solemnly swear or affirm that the testimony you're about to give me the truth the whole truth and nothing but the truth so help you god. Thank you ma'am. Okay of course I have one question and I know there's gonna be others my question is is of the total. Of the total student debt that we have zero to. Six hundred days binder whatever may be how much of it is estimated to be on collectible. I have not done a thorough review of it but I have looked at it and just looking at it I could identify roughly five million dollars we have a process that we would need to go through with D. F. and A and so I've talked about that with the issue system and. Some. Sometimes I think that I've talked about it with someone and they'll go on of that that was someone else but I think that I've even talked about it with Lisa that she and I have talked about at some point we need to do a thorough analysis of it because only want to go to D. F. and I'm wants with that request so I'd like to be able to identify all of the what I would consider to be an collectible day AT and ask for permission to write it off right do they do they keep what they do is they keep that on so that future tax returns or things like that is all set yes are that's all set against that that's correct we would still pursue that I understand that but we would not carry it on our books right and that is the number and I understand it's it's an estimate known the wife need to say all or five million dollars or businessmen that's what I was looking for is for somebody to tell me that number. And I will take the liberty there were the collection account money there was uh Representative paid Payton was asking animal job you may be to plan into done this but I will do it he was asking I guess we've got this stuff some of the accounts at a collection agency yes Sir his experience my experience in many others in this room is being that they always to usually take a percentage of what they collect this been negotiated do you know what percentage that were paying that collection agency on those accounts that they may be collecting now yes Sir it's twenty percent twenty percent. So if a hundred dollars if a hundred dollars is collect is collected. How much of that is given to the student is the act I guess the best way is the university paying the whole twenty percent or is that. Student also having to pay that. We cover which I believe they should but if if they collect a hundred dollars against the debt for the student we credit that students account a hundred dollars and we accept AT and then it's goes against a charge for collections. Okay so the students not having to pay the collection for the yes Sir even though they've been buying even though they've been behind. Okay well does the answer to the question whether we like that or not so I appreciate that members of the. Senator hammer I think you're next. Thank you Mr chair. How how long you been in your capacity. Based on an email that I received this morning that my password is going to expire in nine days I think I've been six months okay so you're the you can inherited this mess yes Sir I did okay I'm on my to comment but I'm not directing chew just escapes me that nobody knows the answers to the questions that we've been asking as far as the amount of student debt which implies to me so my one doing their job are paying attention to the details that has led to this the minds FOR the university that's not directed at you but it needs to be stated do you if that student debt is written off. Does that at that point allow the student to get their transcript or their diploma because that debt now has been basically for given or eliminated from the books and is that allow them to get there transcript diploma. To tell you the truth I don't know at this point if that would but we can certainly have a policy and it would be my recommendation that we have a policy that we have a student that we've had to write off their debt that that does not mean that their account is clear And that they should be able to receive their transcript or their diploma okay and I'm expressing my opinion my opinion only anybody else room but I think that be a good policy because you're about to give away a lot of leverage that if that happens you lost all your leverage as far as being able to get anything out of this and I don't check with you legal staff I don't know how that applies use law me that something will work on together but I would just caution you for you step up and do that and I don't know that would be better to carry the death on the books in order to get that that'll be all to call to make that decision so that that's just a word of caution I would give on that thank you Mr. Thank you Senator hammer center Malek. Thank you Mr chairman of there's so many parallels in our discussion today between these receivables of the allowance for bad debts with with banking is the chairman knows when we have an allowance the provision for loan losses allowance for bad loans of. I haven't asked questions day because I'm not a member of the committee and a lot of this was trying to look at what has happened I'm more concerned and I appreciate the opportunity to ask a question about do we have things accurate now and is it and or the issues fixed going forward so my question specifically is. If your estimate of approximately five million. You know bad debts on on these receivables from students and and I know you're estimating what is our current allowance for bad debts. With the cover that amount. We don't really have an estimate yet because it's not time for us to do those estimates those things are done after the books are closed and we're getting ready to prepare the financial statements so I would be working very closely with the issue system and their office because there are various ways to calculate bad debt and so I think with what may have worked when bad debt was really a lot lower for Henderson than it is male we've seen based on the audit that is not an appropriate way to calculate that bad debts so I would get with the issue system and come up with the a method to calculate are bad that would it's not time for that yet so we we haven't been working on that calculation thank you we we've heard testimony earlier of. Sure try to get like twenty five percent correction a year to to build it up but I'm assuming that if if your complying with gas be or other accounting standards whatever the bad day it is today according to calculation is what needs to be provided for them so. Are we. In your opinion following all the gas be guidelines at this time. I believe that we are following all the gas but guidelines and I think maybe what has had had happened was that even a bad debt calculation may have been off in previous years it was not a material I know of a mail out so that it it popped to the top in an audit but what happens when that escalated and we had you know so much student debt that then that calculation did not provide an adequate amount in it became obvious that that number should be higher because it it's always an estimate of what you think is not gonna be collectible. And there be any changes since you've taken over in the the. Matter or detail of reporting both to the president and to the board of the of the financial. Reportage I believe there has I've been to two board meetings we provided not only a budget to actual presentation but also sort of a recalculation of the budget as to where it should have been based on actual collections to date and also a cash flow statement because just because we have revenue that we recognize and our budget in our financial statement doesn't mean that that's actual cash that floating you'll understand I mean all the bankers if it and it doesn't take a banker to understand that you may have somebody that that owes you money but you can't go buy groceries or pay your house payment with the Nile you so what we have in the bank is what we have to operate and we've got to make sure that we have that adequate to cover operations even though our budget may allow for additional expenditures if I don't have the cash in the bank to cover those expenditures we can't really expand that money and I've taken There's been two actions that are recommended and that were done and that's that we cut off credit cards if you have a credit card expenditure on campus that you want to buy it has to come to may with adequate justification to make that expenditure so far the only expenditures sob approved have dealt with advertising to let students know that Henderson is an ongoing operation and will be still in business come fall of of twenty twenty and to also pay for nursing courses so that are nurses will have what they need to pass their exams and I believe there's another one and it also deals with nursing and it was the something that deal with their accreditation needs so those have been the only expenditures that are approved plus something that would grants I did allow grants to go ahead and continue using their credit cards to pay for their grant expenditures because we are going to get reimbursed for that the other thing was we implemented a furlough this week so. Almost a hundred percent of our twelve month employees are on a twenty four hour work week and I've I've told everybody you need to work with your offices because there doesn't need to be three days of coverage there needs to be five days of coverage and you need to work with your office to figure out how to cover. In twenty four hours work for each person. At least forty our coverage and with the police department which covers. Twenty four seven I made sure that our captain had gone through and evaluated everybody's time so that we steal even though those officers are also furloughed and only working twenty four hours a week that we still maintain that twenty four seven coverage and so those are things that are saving us money ninety all in and will help us in the year and in a. Good position maybe not a great position but if I can break even I consider that to be a good position given where we're coming from. Thank you Mr Fleming thank you Mr chair thank you senator MALOCH. I'm not sure anybody else in the queue to speak so we appreciate you miss landing for coming forward. Mislabeled I'm no of. Maybe I should have allowed you to come down there but I made the at the very beginning but I thought that was appropriate so I apologize for just having you to sit through a lot of times and I know that you wanted to speak so at this point. I guess we'll we'll we'll have that if that's okay with you thank you senator I appreciate you allowing me to sit next to my colleagues while they're here and I appreciate the opportunity to be able to speak with all of you today. I know why we're here. I understand that you're angry I understand that you are sorely disappointed with how the university operated what got us to the point where we needed assistance from the state beyond what our appropriation is. I understand that because I feel it myself. I'm a graduate of Henderson state university my husband is my sister is my family we are our Kansans because of Henderson state university because my father came to teach a Henderson state teachers college in nineteen sixty seven and he's been his entire career there. So the fact that this university that is so ingrained in my family and in my community that depends on it found itself in the situation it did last summer. I couldn't be more angry. And what the people that the Henderson it had to do and had to sacrifice to continue in the last ten months so we have a university that is still operating. Not only are the the people that read a mentioned are they followed the same employees have already taken a three percent pay cut to all of our non classified staff and faculty have also taken a four percent cut to their retirement accounts. It's been a very difficult year. But I don't think you want to talk about what we've done in the last ten months I understand it to know what what you're here to talk about is how we got to the point that we were last summer in terms of. Our financial situation. My name is Elaine Kneebone I currently serve as the acting president of Henderson I've been in that role for ten months when Dr Glyn Jones step down I and was appointed as acting president so I've been in this role for since July. During the time that you are and the the findings that you're reviewing right now and I was the general counsel and that is the attorney for the university send that role you I was charged with the legal business the university including writing contracts when I was request I would write policies of provide advice when I was asked if situations arose that I knew had it risk implications or put the university legal risk I would it provide advice to the leaders of the institution I'd provided assistance for the board of trustees in in drafting resolutions and things for their meetings that was my role at that point and since July though we've had to learn a lot about the general operations of him Henderson state university we've made a lot of progress but as you've heard. You know at the end of last fiscal year this fiscal year we and we expected that we are going to end with a very slim. Positive margin. And then cut it. On the day that the governor announced that we were going and that he was going to have to and reduce funding in this fiscal year. For all state agencies and institutions. That was the first time that I thought we might not make it. Up to that point I thought we would. So that requests that we made I I just want you to know it was not taken lightly. When we got last summer to the point where we realized that we might not make payroll last June. As we know it exceptionally hard times to know that my colleagues May not get paid. We work very hard. To never be there again and as someone said never say never I say never. Because we with what the AC system has brought in terms of oversight and letting us and see how a university should be run what the proper controls should be. We know better now and we've done better will continue to do better every day because we will not be here again we will never be in a situation where we don't have or service to be able to take care of our institutions and our people again. You want to continue some questions I'll take some question Sir thank you for your comments. Okay Senator rice. Thank you Mr chair This new loan for a new appreciate you being there and been there all day and and understanding of the seriousness that that you take this you were is used to describe it at the university for how long total of fort full time the university for ten years a previously also work part time for a doctor Charles done as interim general counsel a part time basis we were you first aware that diverse financial problems in may of two thousand nineteen was the first time I knew that it was serious enough that we might not we were paying our bills. Are you aware of thank you Mr Margot something about board of trustees that you had. Relationship with some of the dealing going on there you you where of the annual. Progression ladder is my term. Changing from one year to two years. The following. Instead of a lot of board every year you move up year to year vice chair or chairman and all. Was it was there a change. Somewhere in recent years the change from one year to year. Are you for into the who the officers officers this. I believe that was a practice that they followed that they they manage themselves in terms of when an election would occur and then how long the term would be for the the the the and the chairman and the secretary and a vice chairman you but you said something on your account that you something you did as far as advising the board of trustees did I not if you say so well my role would is it in that process and as the general counsel I prepared the resolutions so I would put them in in legal for you know in the format that we and we present them to some people wanted to make a change that the board would have to consider I was the one that would put it in the proper format also sit there and and if they have a problem any procedure question or something like that sometimes they will call on me to answer those questions but not always thank you would have been there then you would be knowledgeable if they change the progression of the officers. From a one year. Rotation up. Two two years. In the sense that there might be somebody that ask more questions in some people's comfortable with that would put them off another year are you familiar with that happening. I believe some chairman had your serve one year and some chairman had large censored longer terms I am aware that okay in recent years yes Sir in that strictly is something that the board trustee does a months their sales yes Sir thank you for that. Are you familiar. With what I ask. A little bit ago about the. Janet trips. I was aware that there were trips to China. Okay do you know she a believer testimony was a foundation paper some of that you know where the other money came from. I'm not aware that it came from that it was pay I know there was some some of the expenses are paid from foundation money that was part of the president's discretionary fund some funds are given to the university and FOR without a purpose specified those funds so that are given to our foundation or for specific purposes I believe I I've been told I do not have personal knowledge though that some of the funds for the expenses for those China trips were from the presence discretionary fund from the foundation to that would be at the discretion of the grand Jones in my pile. I believe me Dr James yes okay are you aware of when H. issue funds were moved from summit bank which is now bank of the Ozarks to southern bank court. I was aware that we did and change banks yes Sir do you know what reason that was some who made the decision I believe that there was a and a competitive bid process that was there with the. And and request for proposal and then those are proposals were received and they were the committee reviewed them and made us made a recommendation do you know if grand challenges chairman of or on the border southern bank or I'm where he if he has been on the board of southern bank coarser jury thing that would in in your policy was mentioned earlier in the day. That would have required public notice of that. Was the public notice of that well as a as the head of A an institution of the state of Arkansas he did have to disclose that as part of his the annual disclosures that we do every year to the state of. Is the chairman. Sir I don't know right now I don't I'm not sure what is exactly what its role is but I know he's involved my understanding is that he is and and my question is that is that same locker of. Credible conflict of interest. And Mr out of get out of the loop and get back in it and they do thank you. Thank you senator US open Senator Rapert you're up Sir. Thank you Mr chairman. Isn't a bone thank you for all this today obviously it's been a long day two major questions for you you probably or worse closed to Glen Jones are bred palace anybody that's address this body yet ever since this came up and so what why do you think. Bridget Jones. And and I hate to say and Britt pal the president Jones or them both why do you think that they just steered Anderson right over a fiscal cliff I mean you were there you get a front row seat to this and you tell me that you just found out about this in may of nineteen which was kind of like right when it was all being developed publicly. So you're telling me that the president you work force general counsel had shielded you from all of this she had no idea that you couldn't pay bills up until may of nineteen and so you know obviously you're still there you got a lot of affection for Henderson you've well your whole life you're committed there your family. We're just no but I know it does not make sense. That they can see all the problem to the point that it almost took the university out. It's so that's where I'm getting so why do you think that this occurred what what are we missing here. Two things. First I want to say I I've worked for four different presidents in this role in it every president designs what they want their general counsel to do and sometimes you're very close to the decisions your advice is is heated your word is taken you're involved in the critical decision making steps and sometimes you don't know what's going on. And sometimes within the term of one presidency can go from one into the other. I have spent the last ten minutes trying to figure out exactly how we could get to this point. The best I can understand is that it was a little layers and layers of bad decisions. And then perhaps making decisions to make things look better than they were. In. Perhaps to give them some time to try to fix it. Is the best way I I mean that's the most generous answer I have. But a lot of the decisions that let us here and they don't make any sense. There's no rhyme or reason to them. Okay the second part of that is you know. There's a lot of voices coming up about potential conflicts of interest right and so. What did you know what do you perceive what do you now know that you didn't know. And you now looking back in you know hind cents twenty twenty here is there anyone that was on that board at any time during this period I'm talking about since the date that the doctor Jones was you know became president. So either there now or they were on their for season. Are there any of those folks that you now see that my goodness they actually had contracts that were receiving funds that were related in and it's been stated today so I can guess I could just say the dormitory and some of the construction contracts that were going on related to it and I do know that there's apparently reports about the fact that that dormitory is really in bad shape and is not put together is best as it could be it's what I've heard as well is there anybody there that you now know maybe didn't know them but she now perceive that there were probably conflicts that worked may be made known and or maybe the policy was not yet there to address it because I understand that the policy that finally was implemented in December of twenty nineteen actually a issue basically wrote the policy and and it was then adopted right so. Really trying to get to the devil of the details here you know and you know what I'm I'm not looking for details were there aren't any. But voices are coming you know and I mean they're naming names. I mean I've even had some of it here tell me that they had a meeting with Brett pal and Bob Jones. About concerns on contracts related to that dormitory is supposed to be a confidential meeting and they tell me before they left the parking lot. They were already getting phone calls. So I said a lot they shouldn't of said so much but you know I'm frustrated to. I'm at I'm irritated and angry for the taxpayers of Arkansas and all of the alumni that have given money to Henderson all these years it's not fair to anybody in so. Given all that's been said. Do you see that there was any conflicts that now are questionable. I'm not aware that a board of trustees member attended to influence any decision that would benefit them. Sir you telling me you're unaware that there was board members serving that had contracts with the university. I'm aware that we had a board member who was appointed after he had a contract with the university. In what contract was that the our bookstore to operate our bookstore on campus did that person have any other contracts or have any other business dealings in which they would have had financial interest. If they had the interest at the time they were appointed. That conflict is the debt that what's not. You have to have the interest you have to have If you have a business relationship with the university prior to your appointment well it is a a a you know it would be a conflict of interest you work pretty didn't participate in the decision because you didn't have the authority to make the decision to your point is that makes sense I'm sorry no one with you maybe you know so the time for I guess what I'm trying to say is that the time frames are important in terms of when a person was appointed and when those contracts were entered into and my understanding is frankly as it relates to the door. Did you know that there was a of existing former board member that had a financial interest in some of the contracts related to the dorm were by the way where a lot of this money was spent. Are you aware of anybody I believe I've learned that he there was I understand I bit let me put this way I do not personal knowledge that I have been told that there was a former board member that had a business interest in. The company that built one in one or both of the this newer dorms knew her presence halls and were you also aware that there are allegations and apparently litigation in which the contract money was paid from Henderson to a contractor but yet they have not paid many of their subcontractors who worked on those buildings again I've been told that I don't have personal knowledge Henderson hasn't been named in the any litigation but I've I've heard rumblings of that and but it has not I've never seen any actual legal pleadings about it I think there were some things posted in Arkansas business I was even told about some of the the issue surrounding that. Well. You know. This is in a court of law and we haven't had everything here today that I think would be helpful to us and that we're going to keep on talking about it will keep on working on it You know the claims adjuster in me is there anything that I have and ask you that you feel would be important before we stop here today. I think I want all of you to know it is our intention as a university to be as open and honest and answer all of your questions as we can. We had to rebuild our the confidence that our own employees and our own people had in the university over the last ten months and the only thing the only way to do that is is to answer every question that you have. So I hope I hope you know and I hope you sense from the people that you have talked to today. That date. Want you to know what they know. Because we do want to move forward and we want you to have complete confidence in the people of Henderson. Moving forward. Thank you Mr chairman it's all for me for now. Thank you senator RAPERT. Senator. Hammer. Thank you yes Sir. We could I could to if we cut you off thank you not a cheerful and not for cut me off but thank you thank you Mr Outside of those. Conflicts of interest that were disclosed in the related party transactions section of the audit. Are there any other Conflicts of interest that you're aware of. Are you aware of that section of the auditor that part of the audit that that had that listed in it I'm aware that the that section audit thirty meeting with our trustees well trustees or anybody else just a quick tag on to senator RAPERT question are you aware of any others other than those listed in the auditor identified in the audit I'm not aware no Sir okay who who do you answer to. At right now and my I. report to and Charles wells okay prior to a issue getting involved who did you answer to the board of trustees the of Henderson okay did the board of trustees ever approach use legal counsel expressed you concerns about the direction the university was going in related to all that's been discussed today let me pause the let me correct my answer in and as acting president hyper now I report to doctor Welch in before it the the change and with us joining the system or the approach of join in the system I report to the board of trustees acting president as general counsel I reported to Glen Jones or whoever that the president was the president before him okay and so you will you always in your I thank you said twenty years of service or for presidents always answered to the president yes Sir that digital counterparts directly to the president okay and if you can answer this question because of legalities I'm not a lawyer but give you an out did you ever give doctor Jones legal counsel related to the subject matters of today that you've listened to and him not follow your legal counsel and he chose to go its own path instead of legal counsel you gave him that might have otherwise kept the university out of the situation that they're trying to get out of now. And I don't know if you can answer questions lawyer if you cannot appreciate it if you can't I respect that. I can tell you that I ask questions about and. Without I wasn't and involved in decisions sometimes I would ask questions about why decisions were made. Al off and there were times where I did not get any answer. I was basically told I didn't need to know that. That was he I was being towed I didn't need to know that At one time I was told and I needed to have plausible deniability. Okay. And who told you that doctor chance at any of the previous president she worked for ever told you that now. And I think you would when he said that it was in a joking way kind of don't do it don't worry about that dear. I call it inappropriate humor but that is not directed toward you establish H. being here it wasn't enough at the time to set up a red flag with me that I thought something was being hidden it was more of a I can't tell you this now because there are times when things are happening and the the it's up it's above the general counsel's you know pay great it's the the president's doing a no work with the board of trustees or you know it it's just not time for the general counsel to know and there's times you just have to understand that you're not going to know everything that's going on the university but there were times that I was concerned that big decisions are being made and I was hearing about a third hand. Which I would have thought that is general counsel you would have been included in those discussions instead of finding out secondhand that's not a derogatory remark made toward you yeah I do I agree it's it's kind of like representing a murder at a at a trial you can't defend it they don't tell you everything that happened yes Sir okay when you can provide advice if you don't know what's going on exactly which did you find yourself in that position hindsight twenty twenty now looking back do you find that had you known at the time the things you know now. The. The direction you would have given would have taken the university in a different direction than they are now I would hope so if it had been heated yes Sir okay and you don't work for the foundation you work for the university correct necessary the foundations a separate legal entity but you don't work for the foundation starting on okay alright thank you Mr. Thank you Senator hammer of representing Gazaway. Thank you Mr chairman Miss the bill I just want to confirm a few things with you that I think maybe we can clear I can try to help clear up a little bit as an attorney who is represented cities who are who operate very much along the same lines as a corporation or university had decision makers at the top and that can be the mayor and city council or that can be university president and board of trustees and just simply as a lawyer for that entity Sometimes so as a lawyer you may very well be the last person that they want to include in on the discussion would you agree with that yes Sir sometimes those decision makers don't want to tell their lawyer everything because they know is as their lawyer you would tell them that's a ridiculous thing to do and I would strongly advise you not to do that is that correct yes Sir and so I understand that You know there there may be some who would try to. you know as general counsel implicate you in and in some involvement there but it's And just for my experience and and you can relate this to your experience at the university as an attorney for a for a entity or or group with that decision makers to have their own power in their own free will sometimes is the attorney you may be intentionally kept in the dark and not inform the things is is that accurate and can you relate that to your experience. Yes Sir I am there are times when. Your client in this case would be to the university don't tell you everything that's going on. At the time it'd make sense I thought I was But not everyone understood that I was there to help and to advise. After working at the university for ten years I at one point I was the the longest serving person on the Executive Council and so I I thought maybe around easily that I could bring some context to some of these decisions to some things that we've done before it had worked you know I wanted to be a trusted adviser. I wanted to help Henderson move Ford honestly I wanted to help Dr John succeed. But there are times when I was in including conversations that I I wish I had been. Thank you. Record represented Sullivan Europe Sir. Thank you Mr chair I was contacted by several board members well before doctor Jones resigned and there was evidently tremendous conflict I'm in the board during meetings. Are you aware of that. Yes Sir okay and those those conflicts surrounded the lack of information that was being passed from the president to the board and the fact that there were no board policies to four of the minority board members to address some grievous concerns would you agree with that there were a lot. Disagreements on the board about how helping should operate in in one of those disagreements was about whether or they needed specific policies and. That that's true. Thank you. So S. the attorney for the for the university the fact that there is no policy to address grievances that current board members have is there are few Disher responsibility for the attorney to address that and to write those policies. Yes they be written yes Sir I wouldn't that conflict arose I was asked to create some draft policies for their consideration and I believe in two thousand eighteen those a a set of draft policies was presented to them so what I did was I found and policies firm for other state institutions and basically compile them into a list so is everything any of those foreign stations had so they can pick and choose what they wanted to add that was compiled in a binder for them and given to them at their border tree I believe in may of two thousand eighteen as far as I know no action was taken on that that that work so you know one with your experience and anyone who's been in large institutions like that would have to understand that when we don't have policies to address specific critical issues were headed for a class investors would be the natural understanding for one four to whom would you as an attorney report would you could you go to the higher ed committee are you a state level and say look we don't have policies and we're getting ready to go over a cliff if we don't have this is there a mechanism for you to Our responsibility are not an opportunity for you if your desire to see the university succeed you know we don't have policies you know that in this that's going to end up in a fall over a cliff what do you do. Well you not only need to have a good policy you also need to have people that are willing to follow them. House and have been judge what do you do when you do as a returning your and you also have a fidelity personal and family to the university of expressed it sounds like there are a number of people in the community there that did not take the opportunity to steer this away from the class and ask the attorney with the knowledge that you're expressing in the the desire to help the university it seems obvious there were four months before this happened that there were clear indications that were things are going bad wrong even though you don't know what they are. specifically it's obvious there's a big problems ahead and nobody goes and really reports that ARE pushes it pushes the envelope little bit further can you tell me why. What are board of trustees are the governing board of our institution. For years I mean Henderson been around for a hundred and thirty years and it it operated well without those policies for the board for most of you know that you know with now it may not yet the conflict on the board is significant to the point that some people expressed came to nearly to blows in board meetings so obviously whatever work for a hundred and thirty years and working now. And that that somebody's going to have to to take a very strident position and step up and take this to you just. We should out of where we are these guys can't handle. Our people whether it's meant when I don't know but people can't handle it. So you know I'm just wondering at some point someone could have gone to the department of ed going to the governor and said we have serious problems here that if we don't resolve them we need you to step in Matt who I don't know who that who might be made his department of education maybe it's the governor's office but someone should have stepped up and down that and I'm hearing that no one did is that would you agree with that. When I realize had to how dire the situation was in June of two thousand nineteen I reached out to our board chair. Which was getting out of the but it was out of control with way before that. Correct among the board members. There's a lot of that was a lot of tension among the border a lot of attention. Okay thank you Mr chair. Thank you Representative so. Representative Payton this point members. We have five people in the queue and I told Joe that I'd staytal Sir you're sending out do that but I was hoping that I was joking but we're going to get all these questions answered because a. They're good so again Representative Payton Europe. Thank you Mr chair not keep it short because my milk cows what norm You obviously have been in charge for ten months and you have. Some pride in what do you think you've accomplished in ten months and and I know a lot of us in here would love to see a rosy future secured and it's painful to look back but the things that happened. I think you referred to it earlier about you know you made some comments about bad decisions that were made and decisions to cover up you know the losses and and the financial situation so I think we agree you and I that that there were decisions to covered up. Can you tell me after ten months surely you've investigated surely people's whispered in your ear will. Are the bad actors down all of them. is is do you have concerns with anybody that still there in the accounting department that may have helped in that aided in that cover up. Yes Sir none of those people are still the institution. So you're confident they're gone yes Sir thank you thank you Mr chair. Representative Lowery. Thank you Mr chair. I I appreciate to chairman chairman gas weighs clarification as to the responsibilities legal counsel has of you know that they can only do so much when they're dealing with people who. At half may be elected authority or pointed authority but as an officer of the court would you not agree that you have a higher burden upon yourself and maybe any other person whether they're on the Executive Council or otherwise a higher burden to know all the facts of what. Governs the decision making going on say it you Henderson Henderson state. Is there a higher burden on you as an officer of the court. Not in the context of of serving in in the role of general counsel and now if I had known of any illegal activity or I mean I would I would personally not necessarily even as an attorney. I think I would have had to accept the fact that I probably would lose my job but I would go and I would notify the authorities meeting you know. Our prosecutor if there was a fine and was aware that anything was legal I would have done that just because I couldn't live with myself otherwise sure I understand in the end not only can you not live with yourself is illegal you could you could be disbarred correct if if you buy participated in participate if you knew about our but there are issues of I've of confidentiality so would have to rise are pretty high level and. But I. I wouldn't I would be a party to anything including being knowledgeable of anything that was illegal okay. You know in a in a you probably already heard by statements of the the great appreciation I have for Henderson for the students and faculty from the interaction that I've had with them and it it's really a pain to me that I'm sure we can all agree that there has just been house bill alignment of just bad news after bad days after bad news related to Henderson. And one of those has been in and this does have relevance to what we're talking about here one of that that alignment has has was the discovery that to chemistry professors were using Henderson chemistry labs as a math lab. I have I have an affidavit in my position that says that you. You will wear a year before arrests were made. That this was taking place that there was suspicion that to chemistry professors. war using the the labs as a math lab that there was evidence that was developed to affirm that can you give us clarity in context on that knowledge that you had to date I have is of November. Of eighteen skews me. December of two thousand eighteen which was about a year before the arrests were made can you provide is context on that yes Sir. In December two thousand eighteen I was told that at an off campus location one of the well I faculty member had a vacated a rent house and had left behind some suspicious material. Because it was an off campus location I got in touch with the sheriff told him what I knew and they began a majestic dating that it with that information. This year has can cat has access to the you to that that the skills of the drug task force can are in our area. in my previous private practice of law I know that's that's the people that know who were involved in drug activity in our area. So. He and. He took it from there he requested some information from the university including invoices for chemicals we provided those and. He asked for access to the laps to go in and have to to investigate the mean of to view the labs and see what was going on we provided that And then we didn't hear anything after that. And there was there was no production or any proof of anything that that took place in the labs themselves even though that was thought that some of this activity hat did take place in the labs. There was no evidence at that point that was told that there was no no one told me at that point there was any evidence that there had been drug activity in the labs. Drug manufactured yes okay I can tell you that when we if you fast forty year ahead to this past year. With everything that happened in October. We had several elements of law enforcement with into that lab those big same labs a year later and look around in those labs it wasn't until. Thank you Mr the state crime lab came in the second time collected samples and then spent I believe three weeks working on them that they were able to say yes there wasn't legal activity there and I tell you that so you know it was not obvious that there was kicked there was criminal activity occurring in the lab. To even law enforcement officers a year on after that time. It was a sophisticated operation. very high level chemistry going on. Can well. This the the facts that I have in this affidavit in this was this is from of a law enforcement officer is that the that there were was discovery in the labs January of two thousand nineteen the relevance that I that I find to this issue is that you know there's so many significant financial hits for through either incompetence or malfeasance or whatever and then on top of this now because this was not dealt with previous Henderson is is now incurring more expense my understanding is it this point it may be a million dollars in trying to re have the science building and I mean this was something that I was brought to my attention by students I had talked to some of the students about understanding that the science building classes that had to be moved because of a chemical spill in the student's go gosh you mean you don't know. Cement slab. In the building was not able to be used and to this day I I don't know if it's able to be used but I know that there's been expensive extensive cost to the university And I and I just I raise the issue because it it it was brought to your attention you did report it two some officials to do investigation but I'm not sure that enough was done. in terms of dealing with those faculty members that whether they had done it on university property or whether they had done it in an off campus property it certainly was something significant enough that their continued employment it Henderson probably should have been curtailed and may be might have salvage that science building and salvage that million dollars or more in costs and so that there just seems to be a pattern of looking the other way whether it is conflicts of interest. and you're exactly right on the conflicts of interest it does it does matter whether you get a contract after you've been appointed or before but it certainly shows bad judgment on someone's part that they would appoint a person who has a contract with the entity. Appoint them to that trustee board and those are the kinds of things that if they're not alone I would think an officer of the court would also make that that aware because that is a conflict of interest whether it happens before the factor after the fact so thank you for the clarification that you're able to provide but again it seems to be disputed by the affidavit that I have in my possession what I do want to point out that affidavit that you have in your possession it says that there were they discovered in two thousand eighteen some evidence of criminal activity when I saw that affidavit for the first time in two thousand nineteen that was the first time I found out that they had discovered any criminal activity in two thousand and eighteen. Had I known that there was any criminal activity or any. Main elements a manufacturing methamphetamine I assure you that we would acted on it at that time and I regret deeply that I didn't get that information in a more timely manner so we could have done something about it but up to that point all we knew were rumors and as you know on a college campus there's a lot of rumors all the time one I thought the students were just passing along a rumor to me in class with a set that and I'm like oh what it's a rumor and I I kind of alerted A. issue officials say there's a rumor going around and much to my chagrin we find out that it's actually a real thing that's going on but. Identifying the very curious because it does it does detail that you did reach out to these drug officials or they are these people to actually do the investigation the I. I find it hard to believe that they didn't report back to you with their findings were. you don't have to answer that but thank you Mr chair. Thank you Representative. Representative Rosa. You're next ma'am. Thank you Mr chair of I want to switch gears and kind of move forward to today can't fix what's already happened what we do going forward so. You're not general counsel anymore ninety percent. Switch your hat so I wasn't actually very familiar with this entire case actually I've heard the vast majority of it here today so. This is my summation of an and if if it's incorrect it's because I'm not is aware is probably many other people in this remark but it seems to me in listening to everybody that's come through and spoken about this they kind of the the situation that was occurring. For lack of a better term is is. The university was kind of getting run by king Jones in general pal and. There were no checks and balances on them. The people underneath them did not feel that they could report above them they did not feel that they could really report much of anything to them with their word went and so much was on written there were no policies on anything it could change depending on the whim of of the person that was in charge. So you had it in we still don't really understand their motive for doing what they did but I think we we at least grasp how they did what they did I don't know why but it's probably money it's always money but we do know the house so that's what I want to address right now there seems to be a significant lack of policy and I'm actually not usually a huge fan of written policy but in in this particular institution I think that it is seriously devoid of written policy a lack of transparency a lack of protection for those that report I am I ask multiple people AT and you hurt who do you report to should you have a concern and as of today they still don't know the answer to that question now that's not a problem right this second because you're not running the institution into the ground but who comes after you and what might their motives B. so you always have to set your policies without knowing who's going to be the position but to make sure that they're that they're accounted for in there also seems to be a tremendous lack of obligation to report concerns to express concerns and take them up so that's actually what I I want to point out right now and and request formally request because I I've looked through a little bit maybe even some of the existing policies and some of the even the policies are written right now if I was an employee of Henderson state I would be very loath to go report issued anybody because even just looking at the procedural due process there is no due process it flat out states here's our due process has but we don't have to follow it which basically means there is no no due process so there I see a lot of issues with the policy in this and I I would like to request me now you're the president your job to fix what what went awry. That's what I would like to really see focused on and and Mister chairman of that something that could ever come back to us that we could see what policies have been written and address but I would certainly like to see that because I think that's a huge factor in how this went on so long. With so many people seeing bits and pieces of it and it never or coming to light until it basically blew up like a like a meth lab. But I would like to make that request please. I think it's it is appropriate for us to to make sure that not only do is there a appropriate process for employees to report. What they what they see. We've had a a reporting hotline for years and but people are gonna report if they don't believe that the people that receive those reports are gonna do anything. So it's to me it's not even it's not just the policies and having the the practice it's about building a culture at our institution or rebuilding a culture where people understand we want to hear if you think something's not right and you can trust that the people that are above you are going to do something about it and if they if it's a big if the decision that you don't agree with the least explain it to you in a way that doesn't mean you. I think there needs to be a very strong policy on the protection of people that come forward like I said it means reading the current policy on the website right now for your employees I wouldn't come report anything any less it was illegal or something of that nature and I felt that obligation but. You could fire me for just talking to you I mean that's what the policy says as of today so this is not blaming it on doctor Jones that's today and so you know it's incumbent on you now is that the current president to set the proper tone going forward for the transparency in and all these obligations and the protections of those who do what's right to make sure this doesn't happen in the future not I make that request point well taken thank you. Thank you Mr chair yes Representative in we've been keeping a list of things that this body is has wanted throughout the day so we will add that because the thing is is although we're trying to get to the bottom of it you know we can use as an example to help develop legislation that'll keep things from happening and and what you may give us their one other thing that I would like to add to the list in the reasonable say this is because of keeping up with the time of when it is so that we can check back but I want us also to look at to on these accounts in the balances across all institutions maybe there should be a statutory limit that said on that so anyway just something that we can look at whenever session comes but again I want to get it get it as of the record because that way we can go back and find all this so. At that point of represent Jett. Thank you Mr chairman. Stay by all my notes on make sure I get this right that you made reference that doctor Pallin doctor Jones went on a magical and unexplainable decisions and made finance maneuvers to try to not let those bad decisions come a lot Senate correct the correct they did make decisions that I still don't understand it speculation on my part that they made decisions that would allow. Then the time and the opportunity to perhaps correct things amend make the university actually better. But but I understood you to say that to try to make decisions not come to light as well did you not say the amount. The to try to hide so some of the decisions that are made. Yes the question now. I'm I'm trying to decide of ice if I said that Sir. What is where I'm going with this is if it is I mean based about the bird this definition is that not fraud pretty isn't taxpayer's money is that is on a definition of fraud somebody committing fraud. If they made decisions not trying to let the bad decisions come to light and try to in the the lady Ron said you know they know the decisions there but they they kept sandals push it back and push it back until the Roger Normans fine folks caught it is not very nice definition of fraud. You should taxpayer's money. I think fraud requires that you intend to deceive. I think in this case what it appears to me and I I don't know because I don't know what their motive was it just appeared to kick the can down the road. Not dealing with the problems as they arose. Making decisions and doing things. Just to put off the problems. And when I say that what I think of our ET using using reserves the university's financial reserves tend to fill holes in your budget. Instead of looking at your budget and saying we can't spend this much money. And if you do that year after year. There are no or sars and that's where we are. No I understand that ma'am but I guess circle back around do you think that they they intensely tried to hide the problems the money problems I don't know. In if they did try the intentional had problems with the constant would you would you say that's the definition of fraud. They did if they intended to but I do not know if they what their intention was thank you Mr. Thank you Representative. Senator Rapert you're are you in or not your. Okay. The what Europe then Sir. Of. One one once quick question and and I'll finish this It would did you become aware when did you become aware of the I don't even know what that call a policy or an edict. That the board of trustee members. We're prohibited from even walking on the campus of Henderson unless they checked in with the president's office. When did that happen. My understanding. That that issue came up when I compiled the set of. Example bylaws. For the trustees to consider that was there's a the example policy in there that says if the board of trustees member intended to come on campus as a matter curtesy they would notify the the present that they were going to come on on the case when did that when did that happen I believe that was in may of two thousand eighteen so that was about a year before nineteen in so I don't know but I the I'm not sure. If if that that was just. There was an eight eight I'm not sure if there was or not. Well thank you Mr chairman first of all compliments on Friday before Memorial Day for what you put in here in the effort you made I will say to you that given everything from the audit perspective what we've heard here today I appreciate that your intention is to get the board in and have them have an opportunity because a lot of the contention and lot of voices are coming out of that board and you know to at the end of the day to be honest with you if there's anybody that had oversight over Glyn Jones of Brett ballot would be the board. And so I'm very interested for the board to be able to respond and help us as we try to come to closure on this this is not been fun this is not been enjoyable it's been time consuming it's taking up a lot of resources and I do hope that we can finally get to some closure one way or another on this this issue on what is going to a parent would be a sad tale that will live in infamy within academia in Arkansas thank you Mr thank you a Senator Rapert yes that is our intention. To get them in because as you are correct the Buck stops with them and we will we will request them to to come in as a invite is what what the intentions are. At this point the the last one that we have our own is Senator hammer. Thank you Mr chair of the board members the dynamics of the board how many are current board members that were involved during this time frame that we're talking about are they are they all still there some rolled off the new ones rolled on. A one board member rolls off every year. So depends on what time frame you're talking about but and. I'm all right we can get you that information of who is who is serving in any particular each calendar year okay and the and give me straight you are you're not permanent president you are enterprise is that right no Sir I'm not permit on the acting president your that can present okay so some of what we're having in the way of dialogue today's going to be communicate needs to be communicated to the new president coming on which right now you're just kind of bridging the gap between the bad experience and hopefully a better experience to the future correct I certainly hope so Sir okay do you intend then to remain on as of counsel I guess that would be at the discretion of the president coming are you serving in both present are you serving as both interim president acting president and legal counsel now yes Sir. Senate. I mean is that a conflict of interest just educate me or is this just make an. Do with what we got toward making do Sir we do and lean heavily on our colleagues at the issue system office of general counsel as well though okay and so when a issue ask you doctor Welsh and I guess a issue board approved the decision to put you in as acting president they didn't find anything questionable about your pastor your actions in the pastor your decisions in the past and made a issue feel uncomfortable about appointing you to current acting president or you wouldn't be where you are is that a fair assessment well I was appointed by the Henderson state university board of trustees okay and it any point if someone from the issue system are doctor Welsh had any concern I could be removed at any point okay alright and then the as far as interaction that you have with the current board You don't you can't be fired by the board right. Well it I mean you're a unique position because you're acting counsel and president yes Sir how are you resolving that with the contentious board as we've heard testified day that you're in the unique position you're in just help me understand because I'd I'd like to think when the board comes in here we give them what you all got today that that's not going to cause you any undue hardship when you go back to do your job after that gets done well I can tell you that when I was appointed as acting president they did allow me at the a provision that contract says that I'll have a contracted general counsel for two years after I returned to that role so I have a little bit of job protection and FOR when the next president comes in for a couple years okay so you're you're you're good through the internist forced him to deal with the board and just because you have that protection are you giving the board advice now that they're being resistant to about how to move this thing for sure we can get this chapter closed and get on with the new one or what's the temperament of the board toward your recommendations in both your dual position well at this point Dr Welch is the person between the the interfaces with our in the Henderson state university board of trustees if they need any we don't work for me they they they can call me they can ask questions that they need to but for the most part in terms of and dialogue with them he he handles that. But that's good to know our prayer is that we put the same behind us and and get about the business so thank you thank you Mr Speaker thank you Senator hammer okay. Okay missed a bone we appreciate you being here today I know this been a long day for you especially since you've been down there This portable to dismiss you but I am going to ask if there's anybody else in the audience that wants to come forward and have any type of testimony or anything else as it relates to the subject. Okay seein see nobody I want to thank our staff both be or in legislative audit for being here today again thank you thank all of the employees of a tissue a issue and everyone else this done that and also for the members I do appreciate you all stating because the way I think that we need to do this and we will be having the getting another meeting scheduled just as soon as we can thank you thank you Sir for German.