Joint Performance Review (JPR)

One. Lowery. You can be in the. Okay yeah. Yeah just a just man. Shall we. I'm just going One. Lowery. You can be in the. Okay yeah. Yeah just a just man. Shall we. I'm just going to E. mail. Thanks with the. Thank you. The. All. I have. I mean that. The. Yeah. We should. By. But it all. Market. Or. Tell us what will. Yes. Test. Which are. Two thousand. With the. I guess that's going. Create for what's happening. Just staying over. The vocals. Until now my just one all. Runs on still. I will go on. Okay members will get started sorry for the delay we're having a little bit of technical difficulties but will go ahead and begin we're here today of course to discuss the continue our discussions with Henderson state university representing Gazaway do you have any opening comments. Yes Sir. I just wanna say that I appreciate all the members for being here as we continue this sort search for the truth as to what happened with Henderson state university and also all the members of the board of trustees here here today we appreciate your being here voluntarily and I look forward to trying to get to the bottom of exactly what happened thank you. Okay in. Re OR with JP or we are somewhat partnered up of course with legislative audit as it relates to this of being and I will Alcindor RAPERT do you have any comments and then represented Womack all well you to comment if you want to. You should be on okay thank you Mr chairman both of you cochairman appreciate your work on this diligence is a lot of work being done in the committee on this I think that It's for full for the work that you're doing I think it's going to not only fruitful for the situation that we were talking about but I think it's fruitful for other universities and colleges think about maybe what not to do only thing I want to say because I don't know the link to the meeting today is that absolutely have another meeting I must get to in a couple of hours really don't like the fact that I'm not leave before things or would you see how it progresses but I do want to state my top two concerns issue as a leave your and number one that is still remains to be did anyone. Financially benefit. From the excessive spending that went on. If the root of all this we know it was a spending problem an issue there and with the over SAT but I still can't figure out wine nobody raised a hand to say we need help and they just kept staring it right over a cliff that does raise the question was there anyone benefiting. From all of that excessive spending that led to the demise of what we know is Henderson state university is really is an independent because frankly right now they're really not that independent at all office. And so the other thing that I would say since the board of trustees are going to be here today is how did you not know this why did you not raise a flag and the second thing is we can't forget though I'm not trying to spend a lot of time on it the question was raised about this meth lab that occurred it Henderson. And I've heard feedback about that and why that that scene to go on and I'm just going to lay it out there be straight with you. I had a message from. A person and I let me say the law enforcement community. That reached out to be independently once we started these these hearings and this was actually several weeks ago this was some of the first issues that we brought to light in audit. And the they had great concerns about the fact that this lab seem to go on for a very long period of time and we now know that the fallout from that which I think Representative Lowery pointed out is that you have a building that may still at this particular time not be able to be used because of the clean up factors with this meth lab. It's just is odd to me that any of these issues. Could go on for so long and people have been exercising proper oversight. So with that Mister chairman that's my comments thank you Kate thank you senator RAPERT represent Womack co chair of the lego did you have any comments okay thank you Sir okay members will the way we're going to start and you've already heard or some of you all of her already heard the presentation from lake audit however I thought that it would be appropriate to do that again in case some of the members were not here last time or some of the members from the audience so that we would all know that will what we were looking into so with that If you don't mind if you want to continue. Thank you Mr chair Patrick new I'm deputy legislative auditor for legislative audit for educational institutions I'm going to present what I did last week I. A joke but it's by popular demand you'll ask me back but I'll. proceed with With going over the findings for the two thousand eighteen and two thousand nineteen audit reports. And this is a little background information located in Arkadelphia of course in the and the student romance about thirty three thousand four thousand students for the fall and fall two thousand seventeen in two thousand eighteen set semester. During the audit years which is two thousand eighteen in two thousand nineteen 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 that a deficit amount of fourteen point six million dollars. In addition the university's cash and cash equivalents decrease from 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 in July two thousand nineteen. The next few slides details are findings for the in the two thousand eighteen audit report and that's that order report is identified as one as exhibit C. two a in your packet. The first finding the university's internal control system did not detect a prevent material misstatements in the financial statements those statements statements included the allowance for doubtful accounts which is recorded to to ensure that you have your net estimated. Collectible accounts receivable on your balance sheet that was an understated by two point three million dollars which resulted in the accounts receivable net figure to be overstated by that same amount. Accounts payable was understated by almost one hundred eighty four thousand. A deferral of debt the fees ins which is related to when the university refunds bond bond issues was understated by net amount seventy eight thousand. I'm in on this slide of IT relates to the recording of that misstatement four allowance for doubtful accounts this is the other side of that entry tuition and fees revenue was overstated by four hundred and seventy four thousand athletics auxiliary revenue was overstated by thirty one thousand. Housing and food service auxiliary revenue was over state about two hundred thousand. In a restatement for prior period adjustment of almost one point eight million was not recorded. Continuing with that finding supplies and other services were overstated by net amount of almost one hundred eighteen thousand. Bond issue its cost were understated by a hundred fifty thousand. And interest and fees on long term debt were understated by net amount of over seventy two thousand. Of the university agreed with these misstatements and they corrected their financial statements during our audit. 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 of automatically and rolling the students in an installment plan each semester. During our examination of twenty six student accounts that's the number we tested we noted that seventeen of those twenty six were allowed to in row with a balance that exceeded the forty eight hundred dollar thresher. And seventeen of those students did not make any payments during the fall but were allowed to re enroll for subsequent semesters. Continuing fight with finding to we also tested twelve delinquent student accounts determine compliance with universities policies and procedures and state regulations regarding collection of outstanding debt. artist revealed that the university was not diligently and actively pursuing collection of outstanding balances for eight of those twelve accounts A tested. And three three students were allowed to enroll with a balance that exceeded the university's policy of the forty eight hundred dollars. A management responded to both of those findings and concurred with both for the first finding they stated that a new VP of finance and administration had been hired an additional review procedures were implemented. One finding to the they stated that a plan to address the student county issues was developed and additionally the board of trustees approved unamended student accounts policies for current and future students. The next few slides details of two thousand nineteen audit findings again there were two findings and they were very similar to the previous year the two thousand nineteen the audit report is in your packet at exhibit C. one B.. The first finding again we had missed statements in the financial statements this year it dealt with the net pension liability which was overstated by five hundred thirty thousand the deferred inflows which relates to that pension liability were understated by by over three hundred sixty four thousand and deferred outflows related to the pensions were overstated by six hundred eighty five thousand. And finally the onet finding the cash in accounts payable were understated by over a hundred ninety six thousand and that deal with a miss classification it was actually outstanding checks they have recorded as outstanding checks when in fact they were actually accounts receivable budgets when it hit and recorded them in that in that have an eight that Avenue. Finding number two deals with their student account balances in two thousand nineteen we tested ten student accounts. Eight students were allowed to and row with a balance that exceeded the forehead forty eight hundred dollar three showed and five students did not make any payments during the fall but were allowed to re enroll for subsequent semesters. Continuing with finding to we tested ten delinquent student accounts for that year eight we're not we're not being pursued four collection. And again in two thousand nineteen management responded similar to that of the two thousand eighteen findings. As you see on the screen. The final few slides we go over are going concerned due to financial issues detected by the audits we were required by auditing standards to question universities ability to continue in an exist as a going concern. as stated previously the university's unrestricted net position at June thirtieth two thousand nineteen was that a deficit up fourteen point six million. But when you evaluate that for going concern issue going concern the you have to take out the net pension liability and other post employment benefits liability to get a true more true deficit and that that that came out to be approximately four million dollars. In July two thousand nineteen the university request a six million dollar advance on its general revenue appropriation from the state and moody's investors service downgraded the university's bond rating. All these factors created an answer to the about the universities ability to continue as a going concern. In response the board of trustees and university management management have implemented several corrective actions first the university ample mated a three point five million budget reduction for the twenty physical year. Including reductions in professional staff and faculty salaries the retirement manage contributions and supplies and services budget. The university also implemented a hiring freeze and travel restrictions. Second the board of trustees unanimously voted in November two thousand nineteen to merge with the Arkansas state university system with an estimated effective date of January twenty twenty one. I 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. AS initially agreed upon language was included in that universities twenty twenty one appropriation ACT addressing this six million dollars. Mister chair that concludes a summary of the twenty eighteen and twenty nineteen audit reports for Henderson state thank you Mr nude okay members it appears that we have some questions for lego audit Representative Lowery do you have a question for. Mister eight yes yes I do thank you Mr chair Yeah and I'm just raising this question just to you maybe bring to the attention of my colleagues some of the The gaps in reporting that universities have to do I know I I've served previously on the educations the educational institutions subcommittee of audit let go audit and I remember getting reports from time to time we're legislative audit would find one of the findings might be that a school district entered into a contract with the with an employee or with someone that had a relationship with schools we know that those kinds of relationships exist with Henderson however they're not part of the finding so can you give us some kind of and I understand that you you've already preface preface to me when we talked before in that you're not an attorney but could you give us some guideline or get give us a description of how the record maybe the reporting requirements are different for higher ed than they are for K. twelve school districts. Yes And as you stated school districts have do you remember haven't specific findings concerning that school districts have there has to have a specific ethics law and it deals with board members administrators and employees so we often see that in our school district audits where they did not follow the procedures Dictated by that those laws on getting that those transactions approved it's not that they can't do those transactions I just got to go through the hoops of getting the approval and go through the department of elementary and secondary education as well if it goes over a certain amount okay now the higher a it's they they would fall under bore and their the state agency laws and again I don't have all those laws with me at this time there's several laws that dictate what they have to do also in the audit reports there are disclosures of related parties with the board of trustees and the administrators as well which I it's required by our auditing standard accounting standards to include those disclosures as well. Follow up Mr chair. Yes Sir okay and I know one of the handouts has been been presented to us is the is the form that board members trustees have to fill out stating any conflicts that they they may have but it it appears that this form is not something that they have to present to the the other board members maybe when a contract approval comes up or or something like that let let me make sure that everybody understands that was not given by leg audit that was given by a member of one of H. issues trustees yes no one asked out this morning you were right as I understand that and and I was wanted to ask about that handout There was a newspaper newspaper article back around I think two thousand nineteen we're one of the board members who may or may not be here today I don't know resigned or resigned his board position it because of. Issues that have been raised about a contract an existing contract ET AL and the the article stated that That the board member Henderson had gone through a process of reporting that conflict and that the determination that there was not a conflict was made by Larry Walter with DFA is that the is that the current requirement is that the person that actually ultimately would make those determinations of whether there's a conflict and not say the Arkansas ethics commission. I and I don't know all the specific steps just right off the top of my head there is a process of getting certain certain items approved through the department of finance and administration pending again I don't recall the specific steps. And what contracts are required to do that I would have to do some research okay but that but that is typical that it would go to DFA for them to be in of the will they do fill out a conflict of interest form at the beginning of whenever the whenever about to serve in that capacity so I know there's a there's a process of getting those conflict of interest forms filed with the state I believe there filed with the secretary of state's office if I remember right okay but I just. Raise these questions gonna will want to bring to the attention of the members there was a discussion at our last meeting that there are a number of she statutory requirements that we probably should be looking at in terms of reporting and this may be one of those areas that we need to add to the list because they're still seems to be there should be some uniformity if if we're gonna hold K. twelve school districts to the standard we should be holding higher ed to the same standard and and hopefully that those if the standards are violated that it would come up as as audit so thank you very much for answer my question thank you Mr chair yes Sir. Senator hammer UNCTAD yes Sir Europe Sir thank you the policies you reference to couple time changes in policy. Did you in your examination determine that as a result of those policy changes in the time at which they changed had any bearing or contribution or contributed to the financial demise of the university. Okay Senator hammer you're referring to the accounts receivable policies that policy or any other policy did you did you draw correlation between a time at which a policy was changed which resulted in the up downward direction of the financial condition of the university well when that forty eight hundred dollar policy came about in two thousand six eighteen I believe that's wins the accounts receivable balance the student accounts receivable balance significant significantly increased over that time period On the flip over to. I believe that policy because started sometime in the fiscal year two thousand seventeen is what I was referring to before that at the end of two thousand sixteen I had five point six million dollars as of student accounts receivable and then from that from that point on it grew to almost just below ten million dollars by the end of six thirty nineteen so we definitely had an impact on their cash reserve they weren't getting that money. To help supplement their cash reserves during that time. Okay was that the only policy change you found identified that contributed to the financial condition of university or did you see any others that was only specific policy I believe that we found other the and they just weren't dealing gently and. Collecting on their student accounts making sure that students were aware that they were to balance and they were working with them to collect that balance okay would you refer to those as practices not necessarily policies in right that's practices that wouldn't policies there is policies that they diligently deal until only try to collect those accounts they just weren't I guess it is kind of a policy they just weren't following that policy to make sure they were diligently collecting dogs okay sorry about that and then with regards to policies as a whole refresh my memory lake auditors established you don't mind for the record when it comes to the policies is that really the the duty of like audit to look at the policy side of things or only in the case for those of policies have a direct financial impact yeah we definitely don't look at all the policies there are specific during an audit we determined the risk areas and we determine if there is like student accounts receivable became more of a material account balance during that time so the. In two thousand eighteen that's when it became material and we looked at those policies when performing or test and I do want who we already knew that they were they had a zero policy up to two thousand fourteen to carry over balanced minutes which to seven hundred fifty at that time and then forty eight hundred dollars in two thousand seventeen and who did you determine change that policy did you reference or site to board a minute ago or who is it that you found no that was more about the forty eight hundred dollars was more of a practice that was the from the what we that the documentation there was no board approval what that. That was just a practice that started happening with that okay and then the last thing is on the financial reporting as Henderson report their finances is that pretty much mirrored by the way all the other universities that you have any auditing authority over are they pretty much aligned the same orders Henderson's kind of a unique structure the way their financial reporting is so it might have contributed to some this financial issue no the governmental accounting standards board has a set way of how it should be reported so all the colleges and universities public colleges universities report in the same manner was Henderson reporting in compliance with what of standard practice yes I work for you I'm sorry yes they were it was just they had some misstatements the that I it I did noted earlier or thank you Mr. Yes Sir. Representative Gonzalez. I think you kinda just answer my question but I just wanna make make sure we're clear on this it says several times in this slide that They exceeded university policy over the forty eight hundred dollar limit did you actually find that is written policy that they had that they could go to the forty eight hundred dollar. Tuition carryover. You Sir no Sir that that wasn't a written policy that was when the auditors did the audit they inquired of the director of student accounts at the time and that's the that's the practice he told him that they were using okay thank you. Thank you Sir. Representative Springer. If you are or pure and see ninety. Yes. I don't think your own yet. Good morning okay thank you thank you Mr chair yes ma'am are you apart how are you Sir are you the person that we need to inquire regarding the documents that we requested at our last meeting last week what is the status of those receiving those documents for instance that list of students who have those delinquent accounts in the amounts and that sort of thing so is is that you are you the person to give us a status report on those documents I believe that I believe the the university's someone from the university staff was going to get that for you that the let me interject here the of the our staff would be able or is is trying to obtain that information so that's where it'll be coming through so it'll it'll come through barber with our staff here okay so has that requests been made the request is made but I don't not believe that we receive the information okay right okay alright thank you yes ma'am. Representative rep. Thank you Mr chairman. Patrick going back to what Representative Lowery was speaking about about the the standard Arjun for public K. through twelve and also higher education it is saying like the K. through twelve have a little better maybe harder audit. Then the higher education is that. Possible. Let me make sure I understand the head of his order two different tap Patrick of already seen one for higher education one for. K. to twelve with it this is an auditing is an audit is his same across it issues different what different aspects because our it has different things like student tuition and find and and housing and food service and things like that Higher higher education just at a higher level the school district I'm more and more little more simplified because you don't have to deal with all the tuition and revenue and things like that a follow up please yes Sir okay if you've got the reason I ask you that question is you know K. through twelve as long as of a child is not go to a private school. Everything is covered as far as all of the tuition or you know the cost for a child to go to school where in college higher education you know actually there's. Actually the amount of money that the the student would be paying their sale. So I just wonder if there might be a little bit difference there delta that right there along well I mean we just amend our audit prissy we just are audit procedures are focused on what that particular entity does so I mean an audit is the same universal you're going in there to verify that the financial statements are materially stated is your age your Is what you're trying to prove. You just have different areas like I said just has different areas that you have to look at more so than school districts. Yes Sir okay Mister new we appreciate you a. Okay I'm sorry. You got one more Representative Payton thank you Mr chair sorry I thought I had my button pushed that's that's fine So I've I've been question in a lot about the Understatement of the doubtful accounts I call it bad debt and the accounts payable. But I just like you know from an auditor's perspective account's perspective Would you agree that these are not what caused to the financial problem it was just what helped to mask the financial problem by her by understating these in the accounting records. Bill. I'm going to try to. Misstatements are common thing I think it's just more. It's coming to the come to the forefront here's just because they have the financial difficulties. If you go through some of audit reports it's common to see a misstatement and there are some that just doesn't fall go above that materiality amount so you don't even see it in the audit report because we can still at a time that it is the the financial statements are meant to really stated so it's not a anomaly that Henderson state has a misstatement they are there are there have been read some reported in other colleges and universities. so if I could erupt. I'm not I'm not asking you to assign motive to the misstatement I'm just asking your opinion that these misstatements are not what caused the financial problem but what help to mask the financial problem on those into your reports. Well the cat the it didn't mask the cash balance and I think that's the key to look at this the cash balances what needed to be looked at yes the ballot sheet was misstated but if you had looked at that the cash balance. Which was basically stated correctly that's what needed to be looked at and you could tell that that was declining over the last two years specifically. I agree thank you thank you Mr chair. Yes Sir this senator Chesterfield. Thank you Mr chair in good morning I'm over here. All right. I notice that they will both over statements an understatement. Could you explain to me the impact of the overstatement. to the to the fund balance organization as it's called on the well the allowance for doubtful accounts went the it of course it was understated which overstated the net accounts receivable. So that would over stated your fund balance or net position is the then the affected that I guess I'm particularly interested in when you were talking about the retirement peace the retirement yes What impact did that have on the retirement Of those individuals who rely on that when they leave the positions well it that have a deleterious impact on the employees or they didn't have any effect on the employees that's an amount that's required by gays B. standards or government Cannings standards board that was adopted in two thousand fifteen to record these liabilities from these retirement system such as teacher retirement in public employees so that that information is given to the university colleges from those retirement system's and that was just an error in recording that liability for future payments they're projecting those payments by act actuaries are projecting those payments so all three of those that net pension liability deferred inflows and deferred outflows all relate to that and I just required by gas be standards in your experience in auditing higher education institutions who is responsible for the preparation of the statements that would need to either over or under statements of of finance. A yes that's different eight college and university normally there there's a controller and then of course you have a VP of finance as well as the the P. a finance their. I'm sorry was there VP of finance their yes during those are your doctor Bret powers there. He was the VP of finance and so that individual is responsible for putting together the statements I believe it Henderson the controller and I director of accounting was responsible for getting the initial preparation of the financial statements. And then they and I believe miss Franklin St last week that procedure was to A that she the and gave it to you the VP of finance for his review. And that person was a CPA is that correct I believe so and that is what your title is at this time a yes ma'am so if you founded wonder why that person didn't find. I rest my case thank you. Thank you senator. Richey leverage you have another question for lego to yes thank you Mr just quick follow up of. And I know I know that once once Henderson state with this comp skews me we once Arkansas state university system entered into a memorandum of understanding they probably did the kind of deep dive that I'm going to ask about but is there ever a trigger for lego audit to do of a forensic audit once they have discovered numerous problems where you actually. Dive deeper into the finances and into the. IBM miss reporting or mis characterizations on certain reporting items. What forensic okay auditing that's of course when you do there's fraud and evident so you're coming into. With your I. T. people and going and through the computers and we'll look at that documentation very thoroughly there was nothing that. That we discovered that be and I wish fraudulent during that time I think a issue they're calling it forensic accounting and I don't know if there's anybody here to do state that but friends it what what I understand is that they just brought in and they determine that as a forensic accountant just to look at their policies and procedures to see hal what improvements needed to be made on those okay and and I did didn't hear them characterize the forensic audit to me I'm just saying that they have done a deep dive and I wondered if there is a a mechanism where the state of Arkansas and doing audits or or trigger that we go deeper well if there's a that if there's any indication of possible fraud yes we will definitely deeper into into that okay in the did just quick follow up on senator Chesterfield question is there a person that as a signatory is ultimately of of responsible for the final report the financial report that legislative audit reviews I know you said it was prepared by a number of other people and then went for review to doctor pal but is there a person who is the final signatory of of of of authority over that the truthfulness or the accuracy of that report I don't know if Dr Glen Jones look at that report or not but there is in the law where the the border trustee has to review the audit report once it is released so they have they have the They are supposed to look at that as well one review any findings and state any corrective action that need to be taken care of. Okay well I I was referring to the actual financial statement that you review is there a person who signs off on it saying to the best of my knowledge under penalty of perjury whatever this is an accurate representation of our finances you I'm sorry you're talking about legislative audit signing off the no I'm talking about the university signing off there's not nothing that I'm aware of that tax on all four one okay alright thank you very much thank you Mr chair. Okay Senator hammer you're the last one we have a thank you Mr the do you call it the gas be standards is that what you call it yeah that's. Acronym for governmental accounting standards board are those are those special I know that supplied I've heard that applied in several different settings you know whether tire red or you know K. twelve in different places but. To the gas be standards have. A part that is applicable to strictly higher ed funding formulas and reporting processes in Arkansas no Sir. Okay. And with regards to and I don't know if you nation's questions can't that's okay but when you concluded your work as far as the audit report there wasn't anything in there that detected. that rose to the level that it appear to be fraud. Correct there was nothing indicating fraud when we perform the audit for those two years okay and then. Those findings were how did they make their way up to the board members of the university what was the you you gave it to who gave it to who who gave it to who well and I don't know what the process was there at that time but we have an exit conference with The VP of finance it if he's there normally some business office personnel are in there and then and I believe doctor Jones Dr Glyn Jones was there in our exit conferences as well and I don't know if he immediately shares that with the board of trustees but like I was telling Mr Representative Lowery there is a law that the board of trustee has to review the audit report when it's released there's a certain time frame that they have to review the report and any audit findings. Thank you to go back to determine you didn't go back to see if that it made it up to the board members correct I mean one hundred years and more out of there that if you would know that till the next time you order them correct subsequently when we come back for the next next audit when we review the board minutes we pay attention to see if that action has been taken do you know if they have a history of having findings in that area where the board members did not review the previous audit. I don't recall any findings on that in the previous years okay alright thank you thank you Mr. Yes Sir. It's needed I think that's all we have at this time of course we may have some additional questions as we go through this that we appreciate you. Thank you yes Sir alright members of the of course you you know that the board members and some of the past board members from ages you're here today do the extenuating. Health circumstances that are going own I have agreed to allow it to Two members to actually do this by video conference which is not the way I would like to do it but I am going to allow that today so you may have to hang with this just for a second as we get that going the first member that we're going to have is going to be miss Deborah Nolan. And then after we do this to will go to the in person members. It just kind of your body an idea of what my intentions are to days after everybody has a chance to come forward and give their statements in us to ask questions at the very end I am going to ask that there's anybody else here that wants to give any statements or if they want to come back if they thought of something else that will roll out that today. Yes Sir Senator Rapert. Simple question I just wondered I know that we have a list here that state's current former board of trustees do we have a an actual idea of how many of these folks are here I do not as of yet Is it then let me go a little bit for with that I did have quite a few members of course if this before the coveted situation started if you all remember you all it made a motion that we could you subpoena powers if we need to during this process. As far as the board members my initial Paul was is that we need to do an invite just to do an invitation and that is what we've we have done if there's a board member that's not here at one of our letter meetings will will either do a nother request as an invite or possibly issue that subpoena if that's what you all wanted to make sure. Miss knowing can you hear me. Okay. Mr Whipple us saying that you on the right. Okay what we're gonna do is we're gonna go with miss Nolan first so misspelling this is gonna be a little bit different a little bit odd but the way we do this is we do sworn testimony so what I'm going to have to do is ask you to stand and raise your right hand. And we can see you okay if you would would you please state your name employer in position. Your name if you'd state your name. And you if you have a number if you have an employer or position. Okay and are you a current to trustee at the border past trustee. Castro's two okay and 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. If you don't mind you just have a seat. Okay the way we're going to do this is much the same way as we did it last week I'm going to ask some just some standard questions and then what I'm gonna do is allow you to make a statement if you have one and then at that time will open it up to questions for the other board members and we'll we'll try to get through this as we go in again we appreciate you doing this today. So the first question that I'm gonna have as you said that you were a past board member do you remember what what years that you served. I do I started in April of twenty twelve. And my last meeting was November twenty eighteen and I would institutional let go off the board January twenty ninth two okay and could you just give us what your basic idea of what the duties and responsibilities of a trustee of the university was supposed to be. Well I felt like we did a lot of reading to be prepared for a meeting. And Tried to make all the meetings to Okay. In general how often did you communicate with the president of H. issue. And I know that's a hard question which is you know if you have to say estimate. Once a month twice a month once a quarter. Never whatever you need to say. Well. Probably frequently he was also a nine or but I saw him in meetings and under the ensign we had questions I ask okay so with multiple times a month would that be. I would also lines year okay and of course my out what I'm going to be asking you about the other members are are going to be as it relates to the dealings of a H. issue. In your conversations with the man in regards to that did you think that those work for many tap meetings that you had with them. For many conversations. Yes yes all I okay. And along the same lines did you ever communicate with the vice president permit for finance for ages you. Amend doctor pale. It matings only at meetings. Well when I was there are trusting okay. How often were those just so we can kind of go ahead and understand that how often was Joe's meetings. Well. See that side of the year in all ways Somers. Okay. Sorry. Always. We've made this summer okay. Let me ask you this as far as age issue did you ever have any discussions with any other factor the members or administrators about kini tapi issues that were happening in a issue. No I don't recall doing. Okay. Screams. A in this is going to be another broad question but do you think that your provided enough information to perform your duties as trustee. Through Mr Palin Mister Jones. Okay I said do you think that your provided enough with enough information to perform your duties as trustee. Yes okay. Okay minimal issue some questions about the student accounts you're aware of of those and what's what went on there. Yes when it when did you become aware that students were allowed to carry the forty eight hundred dollar balance. I'm not sure exactly. Okay do you believe it was before legislative audit's findings or after. I think it must have been after. Okay. But you're not for sure about that no I I learned a lot after I mean and you know I went off the board in twenty eighteen and and I'm not sure. Exactly where that time once okay. So. My next question they did you say you don't remember that the board itself during one of those meetings that you attended that they ever discuss this forty eight hundred dollar balance. I think we did okay I could be wrong but I think we did okay do you ever member voting on it as a board we've we've heard from a legislative audit that that was probably a practice but we're trying to see if it was discussed within the board meeting is for was for I'm going with this so do you have do you remember if that was actually voted on as a board policy. That I don't recall K.. And as you probably know that forty eight hundred dollars was also allowed to be exceeded did you know that that was also transpiring. No okay. Okay my next question is going to be in regards to these financial statement said that you've been hearing about. How often were financial statements presented to the board. Do you remember. I don't have a certain time I think we were aware of the many different meetings yes okay. So you don't ever remember like a a point in the meeting where you may have had an agenda item that just said financial statements and discussion there over anything like that. I'm sure there were times. Thank. Let those times that you possibly could remember the and as it relates to that do you remember who presented those financial statements to the board. It was not correct house. Okay. Did you did you or you in attendance at most board meetings or did you did you miss quite a few or. No I was I think I was there it every single one okay. But you don't you don't actually remember if doctor Patel was presented the financial statements to the board. I mean I know you said you assume it was I'm just try I mean it. I'm not this respectfully just seems like that either you did or you did. Well our way to send you do yet the I'm just trying to remember. Okay now we out a lot in all of the meetings thank her very long sometimes and I feel like we probably did. Okay he. I'm sorry go ahead. No that's all I was sacked okay. Well of course. As we've we have found out there was various misstatements over statement under statements which of course we know how that's affected the university. Did you all as a board ever talk about any type of misstatements on the financial statements. I don't recall and I think what we were given this what we were that's always packed. I don't remember talking about that. Okay. In them way she's a question about these unpaid bills you know that you for you heard the discussion that there was invoices that were being held or then sometimes possibly checks that were already cut with the neighbor put in the vault and healed there if you heard those conversations. I read in the newspaper okay were you aware that before reading it in the newspaper. I knew there were some as the money issues but I don't remember hearing all and J.. Could you tell us what you thought those Mundy money issues were. Well. I knew that probably you know students for not paying their accounts and that was very important to the school that we. No money was very tight. Okay. But as far as holding the. Checks and that type of stuff was that was that discussed with with the bowl with the board during a meeting that that was being. I don't remember hearing checks. Okay. So your answer to that is no. We just don't remember okay. All right at this time let me ask you to and it may help did you have any type of statement that you thought that you might give us or give us as a committee. Today I did you prepare anything or you thought about that that you would like to do at this time. I don't know I just wanted to say that you know it's trustees we were given information that we believe to be factual and that's all we had to go on we went to made. Thanks that's all I can sign means that we were just given a lot of information which we studied before going to the meetings. And that's what I think thanks to everything Okay. Will at this time what I'm gonna do is I'm a let the members. Asking questions so that's that's what we're going to do and the first one up is going to be senator rice. Thank you Mr known I think what we're their backup can you still hear us miss Nolan. Yes I can. Senator rice thank you Mr and miss no run thank you for appearing today I'll be as brief as possible during your tenure on the board you wear of any ethical or criminal violations regarding problems that it of cents appeared Henderson state. Not at all did you No of anyone that benefited financial outside of normal jobs otherwise with Henderson state spending. On the border otherwise. No thank you that's all right right and Mr. Okay miss Nolan center hammer's it next Senator hammer. Thank you miss no again thank you for being with us today and be in open with your thoughts. We were told in a previous meeting by some employees that they were instructed not to approach the board with regards to their concerns were you ever approached by any employees are just people in the general public that express to you their concerns or did you become knowledgeable that people were being told not to approach the board and bring their concerns to board members. No I'm not know that until I read in the news. Okay so you approach the board. Okay I will never approach me. Okay all right but you don't know if the reason they didn't approach you is because they didn't have anything to share with you or they had been instructed not to approach you. I don't know okay I don't have. Okay. And then With regards to things like contracts that were entered into between Henderson and contractors or others how much did you as a board member play a part in reviewing and approving any contracts between Henderson and individual contractors. Well I think you mentioned in trusting meetings yes. Okay did where those. Conversations in trustees meetings pretty in depth and as we would say down in the weeds or where they were you just taken the recommendations of of the leadership of a chest of Henderson. Well I think we had a lot of discussion about any. Okay alright thank you thank you Mr. Representative right. Just the yellow yellow. Okay okay thank you Mr chairman. Ma'am. Question for you at the last meeting that up we had a question some folks from Henderson state university on to the ten thousand dollar loan. Also it you know after was adjusted to forty seven forty eight hundred dollars loan from the college and we knew of no other university statewide and actually had that top of a. you know Fund that they could pull from from age you know the from the university for that type of a loan. did you ever think maybe that. Possibly. The college there was doing something that some other college statewide may not have been actually doing as far as loaning money to students. I can't. I I just. The accounts for. Getting really hot and students. And is that what your question is that we of that Henderson was allowed allowing them to. Or for their education yes ma'am what I was concerned we as is no one no other university that we knew of statewide it was actually having an account lacks it I mean you know each university has loans of federal state to go through but. Loaning money from that college. And no other college having that type of a loan program I just wonder if that kind of a red flag for you at any time. Thank you concern. Concern. Are you finished representing a. Representative Richmond. Thank you Mr chair just a question for the member. Johnny we talk about the forty eight hundred dollar. It was a it's not really a loan they just kinda. You know just waive the requirement on the state wasn't actually alone it was a student accounts if somebody. Old forty eight hundred dollars or less then they were allowed to apply for or go ahead register for the next semester and I think this what Mister right was was talking about it if I can if I can jump in yet yes I believe it was that he was actually referred to the student the student council they were allowed to carry the debt and if I could just go a little further I think his issue was is he was saying that's not a standard practice across the universities that we see and. Did you see the did that ever occur to you that that would be so outside of the normal normal practice that that would raise a red flag. Well it was a concern students for building so much debts and a concern that they might not be able to pay it all in still I wrote my own to keep. I don't think I yeah excuse me. You go continue ma'am. I think it was the concern that The student desks as it would be in any university. Okay and Representative Richmond did you want to continue on with that no I just want to be sure that the the clarification of of yes Sir I think that was prudent we appreciate that thank you. Representative Lowery. Thank you Mr chair just have one question At the time that you were on the on the board Henderson state to the board of trustees was it ever discussed in a board meeting or brought up that there had been two separate votes of no confidence in president Jones was at the appointed discussion at any point with the board. I think that it was that there we we were aware of it. But it was something was it something that was actually presented to the board or just something that you had picked up on from newspaper accounts. Or just discussions between board members. I think it was a discussion. An agenda item discussion. And the board members just did not place much credence in it to work what was the what is your recollection of the the level of concern or lack of concern that the board members had in the vote of no confidence. Well I think we were all concerned in and. All concerned. Okay thank you very much thank you Mr. Senator hammer at this time your the last one a thanks thank you Mr. When when the subject was brought up in the board meeting with trustees about the forty eight hundred dollar debt and. Was there pushed back by the trustees to the administration of Henderson and what was Henderson's justification for going forward with what we understand was more practice than a policy. What was the back and forth dialogue between the board members and the administration Henderson on that subject. I don't remember the exact conversation I thank I shouldn't speak for other board members that thank you it was concerning. that that all of that was going on in whether students. Good tight that back. Okay alright thank you. Okay so let me ask one one last question in regards to that so that was concerning. In the boards the boards in charge of this did they say let's stop that why why was why were those conversations not head. Or where they had. I don't remember. Anyone saying less stopping it I just remembered that you know student debt is an important. Part of the school and I don't remember I don't remember the exact conversations about it only that it was a concern. Okay. I think that I think that we've already ask use were gold let you get off as soon. But I think we have your cell number if it later on during the day if any other if some of the members want to ask some additional questions of you I believe you've agreed to to be available for that if we can call you had a time is that correct. Yes Sir all right well if we don't hear from you again we appreciate you answering these questions thank you ma'am. Okay Mister Whipple can you hear us. We came we came here you so hold on just a second. I apologize I had muted the folder and all that but like I say I I think you'll get to that into this deal because you get to see me and I don't get to see you. A bill will start with the we'll start with an oath if you don't mind the standing up I need you to do that. And if you would you already got your right hand raised if you would state your name and employer position thanks to that nature calls. Well with the the the main engine manager general partner of a rushing capp the rise the capital partners. Okay and 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 okay thank you and as you've already heard I'm way issue some standard questions and then let you do a statement in the other members are going to ask you some questions so Where the issue steel on. I think it's important that you should know that she is still on Jenny wants to missiles and readings that we might not want to say. Right miss knowing just so that you know you we still can't we can still see you also so I would like to see. Can you work at it that's okay not at this time because we've already started with the Mr Whipple. At all oh sure you can watch yes ma'am I thought you wanted to continue some conversations so no you're fine by stay in staying on. Okay Mister Weber you ugh our current member a pass member of the board of trustees. I'm a current member okay and can do you know what terms how longer term is me and can you give us those dates always. From probably nineteen ninety six to press. Okay the. And so since you've been there awhile I guess we'd like to hear from you about what you think that your duties and responsibilities as a trustee of Henderson state or. Well I think we have two primary duties what is to set policy for the university and the other one is tired are read. And no thank you it could. Go out from there but I think those are the two main roles we play okay and in general how often did you communicate with the president of H. issue. Probably of say the. Formerly known. Seven or eight times a year and in informally probably ten to twelve okay in with those conversations did you find him to be informative or not informative they were always informative okay and same top question the how did you communicate with the vice president FOR net for finance of H. issue. Formal AT all only at board meetings and hello and. Very little on an informal basis shall we might be at a bank or something like that sponsored by Henderson but I of the board may not brittle contact yes Sir and that's fair and did you ever speak with any other administrators or faculty members at a issue. Not concerning the business of the university okay. The let me ask you this in in regards to that the in did any other did any of those administrators are faculty members ever indicate that you that they were not supposed to speak to you about issues that the the university. No Sir okay thank you know which may I suggest this bill as it did that would rarely happen is if they felt that was a no no one ever approached me okay. Do you think that your that especially since you've been been there in the last few years do you think that you're given enough information perform your duties as a trustee of H. issue. Yes Sir do you know of apparently some of always been absolutely correct but no we always have the information that we thought we should have if not we can ask the question and it would be. Given to us okay. And I was going issues in the same questions about this student accounts. When do when do you remember becoming aware of That students are being allowed to carry the forty eight hundred dollar balance. Well. Maybe I just did a slow the ball this time but I don't remember hearing about that until it blew up and and I do want to reiterate this now or later A bill. There is there's there's no such thing as a non written policy and it also this was not a policy was not approved by the board it was the practice of currently that manage just. Look upon themselves and I will guarantee a with the all the things I've done in my life provided no we worked to the forty eight hundred dollars to pretty much anyone who asks I would of the not have real concerns questions things I I just a you know I'm I'm going to find out about it I has been you know did shoot you know did you run a credit did you make of signed and so made. Index of maybe I just wanna sleep but I was not aware okay. So thank the answer to this one with the was gonna be obvious then did to your never discuss that in any of the board meetings not to my knowledge. Kerry. The only thing I remember discussing is when we lowered it to over twenty eight twenty five I can't remember we did lower it after after we were aware of all this we did come back in Senate Paul's. Substantially lower than this and I can't recall the exact number. Yeah eight whenever you said that you heard about it when it all blew up. What are you in reference to you in reference to when you know when legislative auditor before prior to. Of them coming lauded and and and by the way I have you know at some point I have a question for that job. Of well you know if respectfully at this point if you don't mind will that's fine I will let you just a minute but no I will kill of can you can you restate question yes Sir I'll be happy to you that you had made the statement that whenever all of that blew up I believe or something along I'm a lawyer frenzy I guess the fiscal year end of two thousand and nineteen or you know whatever that was. A year ago you know when apparently we weren't gonna be able to you know. Bills X. said Riddick's Senate. Was that before or after. Arkansas legislative audit came in and out honestly I think it was pretty close to same time but I can honestly not say which which are by no. Okay missed with of. Since you've been on the board so long how often or or financial statements presented to the board. They are presented every board meeting to my knowledge. Do you think they're presented understandable manner. Yes Sir. Okay did ya ever talk about Omer question on no we I mean I think we would have billed discussion by the It is very vice presidential vote AS there was always some discussion board you know of about certain items I can't remember exactly but we we had a relatively good discussion about financial Hey who present in presented those to the board. Well of the last few years it was Brett helpful that was Bobby Joe. Your during my junior but it was always the. You be free of of of finance or whatever. K.. And was there any discussions that some of the items on the financial statements may not be correct. I mean there were questions about the financial statement I cannot honestly say for there was ever anything question about the correctness of the of the thoroughly stage hours question. Thank. Can you go any further and tell us what type of you know so and I understand there may have been many but is there something that sticks out in your mind nothing honestly senator nothing really sticks out in my mind you know I mean I think we all have our different expertise in these things and you know something's stuck out more than others I don't ever remember asking a question that there was not an answer to at the moment or follow up all. Your memory discussions about cash on hand or anything to that nature the way that that was that is kind of you know kind of toward the end of at the. Fiscal year I think you'll there was your you know there was some talk about seeking a line of credit from a by so the bill calls you know we may not be able to balance the books that you're in we'll see by of verses basically payables versus receivable from the state things like that it was discussed more in a timely difference that it was DO not you know not the ability. As it relates to that then with the timing difference man because. With that of any discussion at that time about the student accounts because of the balances that were being allowed in those accounts not being paid to to to my knowledge not at that time you know that didn't really come come out in in in a big way until nothing right after the. Close of the fiscal year over a lot about that that you'll never see that there was some discussions about you know we didn't have cash to pay a certain labels some at the end of the deferred. If things like that. A well that's going to be my next questions in can you tell us we've heard a lot about these whatever it may be the sound like it's two or three different ways but you know sometimes it Okay Mister will pull it appears like it's going to probably been in somewhere around December of two thousand eighteen. Okay well not they're not you know it if I remember the audit I don't think the reduced. So the findings that I can remember of. In the end in that particular audit service two thousand nineteen my apologies well okay December nineteen of. Well. By that time you know we're we're we're very aware of everything and anything going all of. The. December of nineteen of so if you repeat your question one more time Sir. My question is prior to legislative audit coming in in finding these discrepancies did you know that Henderson state was either not paying invoices are that they were holding checks and not mailing of. Yes Sir I think you know sometime around the end of the fiscal year of what would have been killed June of that year we were you know we're we're we're we're coming for you where pretty much every. Okay so the board was actually having discussions about your cash flow problems. And they knew they knew that checks were being held or invoices are not being paid no I I I I really can't. A number of like Deborah that may have heard I don't think we had a discussion at the board level about that at all I think we heard about it in the newspaper anecdotally or whatever but I don't think I can't remember the board having a discussion about checks not be. Okay. You know we will be back in the government I can't wait to make a comment or like you make it now that's fine want to just go ahead with your comments and we'll open it up to other mental health is as of our board meeting that may. Of. Thank you Ralph Nader seventeen. When the we we had a budget meeting before that in the end of the. We approve a budget. In own own own may seventeenth that has a surplus. May seventh of what year. that would be probably from nineteen and twenty and then they were before casting a slight surplus for a know what not excuse me eighteen nineteen a slight surplus for a nineteen and twenty of we we were concerned about the Drained of of cash but you know that the that it come about to some degree from you know a lot of. Deferred. Like this item budget but you know if you're carrying a ten million dollar receivable right close to it that you know that is a that is a Medicare age in gone into receivable which does again restrict your your her cash inability to pay bills of and A I think all of us were at least I was shocked at the level of. Extension of credit and and how it was done and in the inability to collect. You know I mean schools of higher education first of all they are good lenders and they're probably worse collectors. They just built in a if you take I don't know what's been collected out of that ten million I'm not saying that number lately but I would be surprised if it's twenty or twenty five percent. That does put a real cramped in your cash. Yes Sir yes Sir they will you know we spend a lot of money on. The deferred maintenance just like a lot of universities are doing now and will probably have to do the next few years and that's where I think most of the cash one. Okay up to it no Sir you go ahead. Well under the under I thought I think I'm done for the moment center go ahead yes no question artist Whipple of Senator hammer do you have a. Thank you Mr chair. Miss Whipple we were told in testimony last week when some employees were appear giving testimony that they were instructed not to approach the board members and share their concerns with them were you aware that that had been the instructions well there yes now that you know that I think. The press the. He didn't say I will go to the station but the preference if you need to talk to an employee that you go through the press. And I'm not saying that's all that I did because I do and that just keeps us all from your down the phone every day and and and trying to you know make it go around the president or just you know you I think it's not a. A bad policy he did not say that certain body we we would prefer that you go through him I can't get that. It wasn't that you couldn't talk to him at all but if you did you need to go through him. So none of the employees that testified last week. Roach use a board member with their concerns to try to get this above the radar screen. No Sir okay and we have heard testimony that checks were being held in the drawer than invoices were being paid were you approached by any the businesses or anyone that had contracts with the university and did they express you concerned that they had not received their money. Most. Okay and when it comes to the discussion of contracts in board meetings as far as the awarding of contracts and just the actual day to day business of who's doing business with the university what role did the board play in determination of who gets contracts and who gets to do business with the university. Well the the word what a what a programs every major contract I don't know down to what level but you know like to service things like that we always approve of now whether we approved sudden IT service thank you but every every major contract we pretty much ready. As we should. And what role do you see that the board played in Henderson ending up in the fifth financial situation that they're currently in and wow do you see that it could have been handled differently as a board member. Well. You know. If we had known. About the extension of credit to all the students I think we would have done something about that of you know it but but if you L. as a typical board member I think I'm not to be different but if you. If you present me a budget that that shows that we're going to have a slight surplus it ended up being four million dollars in the hole A I think you're been some numbers here they've been distribution they've been this represented. Someway somehow. Of but if. Maybe it's our our our job to go into a bill to the accounting office and and go through the books of the thanks so we rely on the on the annual joint legislative audit for that. And then last question to be what was your knowledge as a board member of the. Policy or the practice which word you want to use to increase the lending limit to the students up to forty eight hundred dollars and at what point were you made aware of that and what was your position you took on doing that I've been to my knowledge I was not aware of that like I say to repeal the in the of a few years so ago a. In I was I was honestly appalled at how it was handled of the you and that that should you know if we're if the schools going to do that that should be a board policy not. Not a practice by the administration. So that was never discussed in any the board meetings that you were in college I just you know and. I was I was taken back at the amount in the in the ease of how that could be accomplished by us through all right thank you thank certain thing Mr. Representative elements. Thank you thank you Mr chair yes Sir I understand how the the different how much difficult it must be to be a board member and you're trusting the numbers that you're giving knocking Preciado that I understand that there was quite a bit of dissension and tension in the board did anyone on the board to your knowledge ever go to anyone outside the university to express some of their concerns either with the legislature or the governor's office. To my knowledge that. Okay so no I did and so that you understand just asking and you know I I know in testimony last week they talked about it the university change the banks that they were working on with do you know who those banks were in and how that transition came about. You know I'm a little bit. I thought you meant. I think the operated at least a majority operating gal was at the back of the Ozarks. Of which I will devote you I am a shareholder and the director of and of it was it was I think that was the and all right please send out. A black rose large did your response to it to mine I I had no I had nothing to do with with the with the response and the. I think they responded I think so they're black responded and I'm not sure of. It is exactly if anyone else did but I think you all think so the bike route had to add but a bit sure just one last question whether other members of the board or the university that are of the school of age issue board or other members of the staff at age issue also board members at the bank where the money landed. Well I think we have to be honest the bill if you don't know you should know that uh then Jones is the chairman of that and but to be on the he made full disclosure of that I can't think of any other board members of. That are. Involved with that. AS two G. there is a shareholder or direct at five thank you thank you very much thank you Mr chair yes Sir center Dismang Europe. Thank you Mr chairman and really I guess I'm just trying to make sure I understand what we're or we've got going on a map so I guess my first kind of questions refer audit I just wanna make sure I understand the history of things a little bit better. Okay give us just a second let Mr new get down Is he going just a little background this was referred to JP or from lego to. No I mean I think it's the I think this is the right. Format yes service so it's my question is who did the audits prior to you know that that looks like to me from all I have is the eighteen and nineteen audit which will you know the eighteen was released in November of nineteen or started to be released at least in that point in time were there any other significant findings for instance let's say in the two thousand seventeen audit sixteen audit fifteen audit Mr with Mr Whipple if you'll hold he's asking that question of our staff so if you are just a minute yes if you to let you know that thank you. I just just a second Mr Whipple I don't recall any unit two thousand fifteen two thousand sixteen or two thousand seventeen attend we perform those audits as well okay that's in that's what I want to make sure that we were the actual that entity that you perform the audits because that when I'm trying to may not come being honest I'm trying to follow a little bit about. What it is exactly we're doing a special with the board of trustees. And so I guess my question little bit would be for the chair or whoever else is kind of. Doing this deal so you know we have a board of trustees. That you know are are put in place to generally over see what's happening at the college but they prior to president they fired that presents hired staff and they've had some input back and forth of you know that whole process but they're not involved in the day to day operations. You know. Up until November twentieth of two thousand nineteen they had never received any findings which you know in an audit performed by legislative audit I don't think any of us have taken a legislative audit they had no findings picked it apart and said you miss some things and I would anticipate a trustee member to do the same thing either so you know in their mind. You know they had an independent party reviewing the books thought everything was kind on schedule everything's going the way it was and would have no reason the end this is why I'm going to. Question what was going on the budgets whatever may be because there was nothing found in till November twentieth two thousand nineteen. So what what are we. What are we doing with these board of trustees I mean I hear I just making his example mean there's in this room right here we're we're trustees in some level right we see yourselves that that's what we're doing right at this very moment. Our overseeing things kinda you know we're not involved in the date eight operations per make sure everything was going okay or should be going the way that it was. the way it should be. But we don't have I don't have a complete understanding how university system works some of us have very level you know varying degrees of understanding how the budget work some of us understand one issue better than other in and it trustees at the universal ACT that is very very similar you we probably had individuals that had a very good understanding of the budgeting process in a very good understanding battery financial statements and I will guarantee and I don't know a single one of them went in and I do apologize. But someone probably never seen a financial statement for it wouldn't have no idea what they were looking at budget so we're we headed with the questioning it in my missing something was there some trustees that knew something and didn't disclose and we're just trying to. That on an out or or what we what we do and exactly with the questioning we're we're gathering information is I assume that you probably know there's been of multiple cases where those financial statements were misstated and what we're trying and I'm let me answer if you don't mind Sir I was so. So the thing is is we're we're trying to find out if the board knew that that was transpiring if that had been told to them that those financials were not correct we're also had found out through the employees and and through our audit that those checks were either being hailed or invoices or not paid so we're trying to convince to see if the board knew that that was going on and and what they did because this kind of that old adage at the book but stopped with that board and that's where we're at this point so there's just been multiple members that that's what they wanted to do and that's the course that the we're going down to trying to find this out and just so I understand the do we have any reason to believe that some of the board members were previewed information not releasing that information or we just again. Where an investigative mode just like what our what we've been what this committee does were investigating this. Okay. So if I can save say it that way that's the way I'm looking at what we're doing today. Okay thanks thank you Sir. Representative Lowery Europe Sir. Thank you Mr chair. This will thank you for appearing in thank you also for your disclosure of your relationship with bank of the Ozarks Represent Sullivan was asking about the decision to shift the banking the accounts from bank of the Ozarks which had had that of responsibility with Henderson for how many years do you do you remember or recall a bill also known a number of years I think you know like I say every few years is sent out for all right the I think we were probably the. Successful better many more times than not. Okay had their had there been times then we're it shifted to another bank and then back to bank of the Ozarks the newspaper account just says bank of the Ozarks had the account for a few years and and in years you're saying and number of years I I'm trying to see if we can be a little bit more precise I will let me give you full disclosure prior to made the fourteenth of two thousand and fourteen yeah I think you can't resided at the summit by which I will get your with the CEO and majority shareholder okay so you're not okay. Was always a bill process right and and I appreciate that in the spring of nineteen That contract to we shifted over the banking we shifted over to southern Bancorp which it's already been disclose that president Jones was chairman of the board southern Bancorp at that time correct. Right you mentioned awhile ago that you did not know of any other. Members if they had a relation but and there was one other person chairman of the foundation board that was CFO something that is but now I was I ask the no no I understand but I was just clarifying that was another relationship. You are correct a. Chris we resist the CFO at it southern is is president of of the foundation board of but I will speed up Hey I'm I'm I'm I was losing better you know so I will write it up but I have no axe to grind because I thought it was done early and of write and the best bit more okay in it and you fairly represented that also in the newspaper article that that is far she knew that there was no influence done by either southern Bancorp or bank of the Ozarks on that process Our where you where women with the ultimate decision was presented to the board that. The process of the review committee that there had been some members that went back and changed their scores so the southern bank court did he end up being the recipient of the contract. I can't say that I was aware that. stuff to restore I'm going to assume if if you think you have what yes I take that back I am I am familiar with yes okay I thank thank you I thank both parties had had the ability to. Restored reach for the day okay in terms of the the boards over side and and what's been reported to us by some of the employees is that the Henderson employees that they felt In that the board probably received limited information other words they was not there was maybe for the statement of what the for the financial standing the reserves were there was a big big picture view but not really a micro view of the finances it hinders and with that be do you think that would be a I think that's fairly well stated in that I feel I think that You know we we were aware that the. The. Reserve balances were shrinking and they've been they kinda but is aware of that of but it didn't seem to be eminent of or or I didn't think we would find ourselves where we found ourselves okay you months ago did you you had been on the Henderson board since ninety six had you seen during those previous. That this previous years I mean that's that's a pretty long tenure had you seen anything of the similar to the precipitous decline of the reserves that occurred from say two thousand fourteen to two thousand nineteen. Now I can say looking back now that that that is true so the bill up until recently we didn't know exactly how bad it really was there were times the especially during the Charles done to the strange which was twenty two years or so that that you know that that that that reserve did have been flown up you know and and you know some of each a lot of that can be directed willing to be driven about but a lot of things first state revenue. Which when I went on the board was a bat. Sixty some odd percent coming from the state about thirty eight coming from your tuition fees six cetera that has totally inverted itself in the last number of years so state funding is gone there on. Deferred maintenance at these universities is a really big problem an issue and that make sure. Hello and enrollment. A is is is the other main main driver and I think we all know that if you if you look at it to birth curves that you know we're going to be in for a sustained period of time with the. The smaller university we've been then with. Prior for twenty years so of those things that in my mind have a direct effect on your reserve and and your cash is of those bills three K. miss Whipple my last question. We're is related to there was a newspaper article that looked into the relationship between one of the board members say that Mister Barnes having previously held it could the contract for the bookstore which was then expanded to give control of the contract to run the post office in the article pointed out that it said the university turned over to the president the decision over contracts that the board did not specifically intervening contracts was that a decision made by the board to turn contract renewal in review over to the executive team of president Jones and doctor pal or was that just a policy that the president instituted. Well. I'm trying to recall of we we we were aware of this now I don't know that the I'm just trying to think I I know we gave them the authority to to review I can't recall if we gave them the authority to approve. Okay fair enough I'll I would I would hope not. Can't remember check thank you thank you very much thank you. Senator rice you should be up next. Thank you Mr Rhys willful thank you for appearing appreciate your candor touching on the the banking of thing that you covered not I brought it up last week is there any advantage that you know of four billion Jones to again you said it was done through of art the process whatever we have heard of restoring and our procurement contracts in the legislature that concern me after the fight but is there any advantage you know of a bank this particular one being southern my court and having the chairman of the board then president of thank you issue that they could be an advantage for the financial concerns they had. Honestly I don't think so like I say you know I mean I was at the bank that that that lost the account and a vote of thirty thing is gonna file I would certainly sense of but I believe both institutions that I was not involved in the in the bill it at all that's not part of my job director I think I think both institutions got to restore A bill that makes it very may. And and then Glenn Jones is. The German ship was bill was disclosed to the board we all knew it of. So you know I'm not going to see it is this word okay all right beyond that We also touched down last week and it was confirmed that multiple trips to China had been made by Glenn Jones and rent pilot brick pal even up to within a couple months when before he left do you know if they were soliciting money from the Chinese to help with their financial problems and H. issue. My understanding was that was they were. Soliciting but they were. So the students of embarrassment the money I'm not aware of. Money usually goes along with students would it not yet but financing to drive everything but yeah I mean you're you're you're correct on the there were thirty students and I've got to pay but I thought your bill W. server question maybe you know what. Was a reporter wire of it they've been made aware of those trips to and I was told last week the foundation paper property but you know who paid for the rest of it. I would where they were making the trips are I just assumed it was being paid out of the schools by. Okay thank you language with thank you Mr. Senator Rapert. Yes Mister chairman and this chairman's us mentioned earlier I'm about to have to leave unfortunately and is a citizen legislator all of us know that we've got duties outside of here and I'm at a point today where I absolutely have to tend to those but I want to ask this question of missed Whipple and I want to Ask a quick question gonna ask I would respectfully ask if it's possible that you would add the specific questions for anyone that would happen to testify appear today that I hope which it I hope it will be will be answered in some way because and I want to speak this I get to Spock speak to my colleague here little bit is chair of culture of audit spoke to one of our colleagues here that ask question will go but I just want to state the reason for my perspective that we're here today and continue in your committee is working is because this is been the worst fiscal failure of any college that I'm aware of in decades in this state and definitely since I've been here with the past ten years it's also the only college I know of to have their bond rating downgrade by moody's I've stated before without going into much more detail of some of the other problems that have happened in our state over the past ten years. This particular failure at age issue. Affected thousands of people that own bonds that they purchased that were backed by Henderson state university and they have personally in their own personal accounts have lost money and been affected as a result of the failures that led to the downgrade in addition it is the only university that I've ever been made aware of in which a meth lab was set up and run for over one year undetected. At a university which we now know his law enforcement is involved in and taking action on and that's the only university where I have personally received so many calls from students former H. issue students current age issue employees asking to police continue to investigate this matter and find out what's going on and so I want to put that on record again because I know months of past my questions to Mr Whipple and I would ask the B. ask of the others in the future of this then any board member. Or a H. H. S. U. executive benefit financially from any of the over spending it H. S. U. or any business interest associated with the university projects. Did you hear that made yes Sir I service I have no knowledge of that and by the way I I want to of. Do you have any specifics about these bonds because I I have with the holes Henderson bonds and the price of those bonds have not been negatively affected at all. We'll move nieces downgraded those by. And I understand but I'm just telling you I'm being well if you like to come sit down with me I'm a financial adviser myself will take a look at your statements over the past several months and take a look at that but it would be the first time in history that a bond ever had a downgrading was not negatively affected impasse with Republicans but also for another day not so that's what we'll call the store up those both stop if you don't mind we're going we're going to keep this meeting the way it's supposed to be I'm at least going to do that so if we would let's just have a question and then the next person whatever I recognize you can you can answer or we'll do it vice versa so Senator Rapert with that do you wanna have another question I thank you the stance from a at the only answer the question so is that did you have any knowledge of beforehand or sense then that there's somebody on the board that had any contracts and had any financial interest in which they benefited from the spending it H. issue Mr Whipple do you understand that question on that and I think my answer was no yes Sir okay okay as you know Mister chairman we've had people bring up in testimony before this body and others that have reached out in which absolutely there was at least one board member that was named that had contracts with the university there Henderson so again Mr Whipple do you have any knowledge of that you've been on the board since ninety six. Well the the only ones that the I think is we would was brought up your earlier was a Jamie Barnes who was on the board for a short period of time did have a contract A bill with the. The bookstore I believe that was fully disclosed of the you know that's that's the only one I can recall there may be more that I just can't recall were you aware of his business interests in companies that were doing work on the Henderson dorm. No. Well that has been stated before this body so you're aware of it now and Mr chairman up I yield back to you on this and would hopefully asked that in some fashion that you asked that question just so we know because apparently some of this information was not known to Mr Whipple and I'm sure there may be a few others and it it it puzzles me how that with all the disclosures and I've read through some of these conflicts of interest policy is given to us today and even the bylaws here today it's very clear that any interest that anybody had whatsoever should have been disclosed especially to their other board members okay thank you soon rob thank you Mr without owning just a date. I'm his board junior and the work that was done I don't know but I think that would you know that that's something you should be checked problem. Okay I'm not I'm not for sure we heard you can use that we can you restate what you said Mr with all right I'm I'm just saying that you know I was not aware of the JB barges relationship with the contractor to work on the dormitory I think we need to verify whether he was on the board at that time or not lan six. Thank you Sir repaired. Thank you very to him Senator Rapert do you mind putting those questions in writing. Senator Rapert. Excuse me do you mind putting those questions that you requested of us to ask in writing and I we don't mind given on the center rice last year you know that I sure will I'll incorporate human does not do that in and let me say and I would just communicating with a member as to Mister Whipple's bond prices. Your pay out on bonds do not change regardless of the price on the market but if you were to sell a bond that is been downgraded the price is negatively affected thank you Sir will. Mister with your in that area but we're gonna Mr Whipple we're gonna move on from that one I thank you sure thank you Sir. I appreciate that. Senator Chesterfield. Thank you Mr chair yes ma'am one of those difficult things I had to do was to have a full time job. Be a member of the board and make sure that the by do sherry responsibility with which I was charge was carried out. And so I appreciate people warning to serve on boards and giving of their time. A I would ask Mr Whipple did you have time did you receive monthly financial statements. No ma'am so your financial statements came to you want that in the bill will. With the board back. And you made quarterly and monthly how often do you meet is aboard thank you for about five I may not you don't hold me to this it's probably about I think required me quarterly I think we used in the eight but they about five times a year we would have a. Budgetary meeting and probably two or three special meetings to approve certain items that and they sound like was it basically approval of items are was a review of the budget itself those were just the special or may use would be too ill approve a bond issue to up approval asset disposition acquisition of that the to my knowledge did not of ever include financials Seri by is not a leader like I am and go to every nickel and dime of the budget but just basically to review what is there what you're being told is that correct. Yes by thank you yes ma'am thank you. Representative right you have a question. Okay Europe now missed weapon just have a couple questions for you Sir you know it was reported you know a couple weeks ago that you know that we weren't bad financial condition and Just wonder when was the actual time I thank you did mention it one time when you actually learned of the for the financial condition that you guys were in and. Did you all know this last year when it was reported that there were phrases that were given to the employees did you all know that the that the university was in bad financial condition at that point Sir. No Sir he'll we we approve that budget and thank you may and that I think that budget had raises in it and it's your surplus and we had the not given many races in the past and in really to keep our salaries competitive of of that would serve appropriate as long as we were going to have a surplus. Following. Yes Sir okay well it looks like the Mr weapon that actually you know this was in bad condition and this did occur but I just wonder from your insert D. if you were shown something that you are and and the black and actually you guys were in in the radiator would you all of given those employees at the college those cost of living adjustments or raises would you all done that I don't think we're going to. Which is apparent by what we did shortly thereafter by cutting salaries and cutting staff. What what what we were aware of this I think the board started taking appropriate action. Well yes Sir yes so Mr Whipple actually does cost of living raises or whatever we would want to call that that occurred before we knew that we were in bad financial conditions are yes Sir okay thank you Sir right thank you Representative a. Senator hammer. Thank you. Which will you know if I thank you said just a minute ago that Mister Barnes was on the board for only short period of time is that correct. Yes Sir I can't I really can't J. exactly hello but it is built short to meet okay do you do you know if it was during that time that he was on the board that the contract was awarded or discussed in a board meeting with regards to the bookstore. You know I really can't say that I can remember if it was discussed I was aware that that that he had it of as I think all the board members for a state but I really can't recall whether that specific contract had been discussed but I think we're all aware that you had gone to a okay and when it comes to receiving the financial statement whatever time that you receive it could you just kind of share the general atmosphere of the board in the discussions that went on as to how deep into the numbers for example you mentioned about not you know if it was in the black did you all just taken on face value or did any of the member and I don't think so but you we we did not go to the. Journal entries to check it out but dole I think we would have a of you know we had you know we have some people on the board we have a we have two CPA's on the board and others you have some of an initial expertise in we were done we will always discuss it. Who are the two C. P. age. Say again who are the two CPA's please. A crisp and Johnny Carson thank you I'm I'm sure that the they may be there today. Okay alright thank you. Okay Mister Whipple that's all we have at this time You have anything further you'd like to add now or I know you've agreed to I guess be on a call with the cell phone that's or not I'll I'll be I'll stand but no I think you've got a you've got most everything I know all right we appreciate you thank you Sir thank you yes Sir. Okay members we're gonna do one more before we go to lunch I've also had to a staff is brought in lunch for so whenever we break we will have that in the back because we're only going take a few minutes so that we get back on because obviously is going to be a long day. So also for our invitees we've we've also got you lunch so that you won't have to leave so that the we can get right back on this will figure out of time where we get there but this time. will have Mr eighty Arnold to come forward. Mr on are you Sir. We appreciate you being down here in a you've already seen what we're doing so if you don't mind if you would raise your right hand and if you'd state your name employer imposition. I'd say the Arnold I'm self employed I'm in the healthcare business and the school graduation this. Thank you Sir and use 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 Sir and you have a seat and again we're all stay on our standard course here will ask you those basic questions give you an opportunity to make in this make a statement and then we'll open it up so the other members can ask you some questions. So. Are you a current. Trustee of Henderson state or passed I'm a current okay and you know what years you've served approximately I think I came on and January of fifteen okay and what do you understand that you're duties and responsibilities as a Henderson state trustee board member would be. Well I think we have a fully that fully do sherry duty to make sure that the the school operates in a very hot financial of matter I think we're there to support of activities of the school and to see the disco can grow and that's because the students are receiving an adequate education and that we have the programs to meet the needs of the students of our area okay thank you Sir and in general how often do you communicate with the president of H. H. issue and I'm talking about Mr Jones. I live there in Arkadelphia. There's a couple of this it did low that live there. So quite frequently I would run into him at a lot of places and and I was also on several committees that he had asked me to lead so I did have frequent conversation with the okay as it relates to. Henderson state business would you say. Three times a month four times a month less more just a just a guess I would say at least three okay did you find that those in meetings were informative yes Sir okay and how about the vice president of finance would be Mister Britt pale how often did you communicate with them. Very very infrequently okay and when you did would you say those were informative or not informative. Informative okay and did you ever speak to any other administrator faculty members about H. H. issue issues yes okay and were you ever told that or were you ever told by any of them that they were not supposed to speak to you yes okay can you expand on that a little bit for us right now. When I first got on the board I I have course I taught it Henderson for a period of time years ago and being active in the community I run into a lot of the faculty members there and staff that work there. And several came to me and said we've been told not to talk to you anymore. And in the city creates a really difficult situation for us when we ran into you at a restaurant or we see the ball game room. Any other business in town so yes I would very much aware that okay did did they tell you what what the reason or or if they were communicated to reason that they're not supposed to talk to you. I was told that if. If they were so if they talk to me that they were supposed to report back to the president and tell them what the conversation consisted up day in at the time that president would have been who. Mister doctor doctor Glenn Jones our engines okay. Right as a trustee do you think that your provided enough information to do your job as a trustee. We were provided information. Where there was correct or not is a. Another matter. Hey. As for the amount of information do you believe that was adequate or do you believe that. The possibly should provided you more information. I thought the financial statements should have been presented. H. meeting instead I think if I recall those financial statements came by. Email. in a packet that we would receive. And I don't recall getting financial statements and going over those by the financial director at the meetings and I'm maybe I'm wrong on that but I I do not recall that or they actually financials or the budget or do you recall what were you do you know what you're actually receiving. In those emails well yes I I can look at it but Mr Powell he was we during during our meetings are for workshops every year he'd like to do graphs lot of. Lot of things that would be very confusing to somebody's got a CPA. Okay. I will go to the student accounts as you heard when when did you become aware that students were allowed to carry this forty eight hundred dollar balance. It was never made aware to me that I can recall in a board meeting. That those accounts were that high a. Outside of a board meeting was it a made did you know about it from outside a board meeting. Maybe one of those people that talk to you. I think there was at I got a lot of people saying a lot of stuff to me and it could have been that one one of the people said you know the accounts receivables were we're getting out of hand here but as far as knowing that from factual standpoint at a board meeting I never recall receiving that. Okay. to tell you that. Tell me what that the financials of that those accounts receivable may be getting out of hand all I think it was general knowledge across the campus that several people in the administration thought maybe that spending was getting out of hand a lot of things were not normal can you point to specific name for me. You know we've I under I understand their lot of people that still work at the school that was confiding in me and and others confidentially and. I think some of those people are going to be testifying here with you later as I understand So I would hope that they would could tell you some things without me getting somebody in trouble that has said stuff to us because we were receiving a lot of information and I understand this is to a and I understand that is whenever people talk to you in confidence however. Where we're at now is that one of our premier institutions of the state has got into this trouble and that is what the duties of this committee are is to try to get to the bottom of what happened and who knew and I'm not saying that it's easy today I'm not saying it's easy but even on some of us is members of this committee because we are you know represent represent. Those districts and represent you know the district were Henderson is and as we've already heard many of us have a parents who have went there and things to that nature so I know that the this is tough but I will have to ask you those names because again that is what we're doing and I don't want to mislead anybody we're looking to get to the bottom of why we're in the financial situation so that the state is having to plow money back in in the terms of a loan and then an additional eight hundred and some thousand other days so And I will do that with all the board members you know I'm not just I'm not just talking to you at this point Mister Arnold I know the ones that are out there listening I will expect the same abuse so can you tell me the names of who told you that statement. Well yesterday I received a phone call from the president secretary. She was also the board layout sign with the board yes Sir. And her statement was to me I know you're going to be probably ask who told you what. And your free to use my name that I was giving you some information about my concerns about what was going on it hinders J. and that's as floor this floor weeks Hey and I think she is looking forward to giving you testimony here okay and prior to that who else. You know a lot of lot of the people that would come date it would be second hand knowledge that they had received information and will some of people wouldn't come to me directly some of these people I don't even know their names but I can sure it was general talk everywhere I went in Arkadelphia of where there to be the coffee shops or whatever that there were problems. At Henderson. Okay I'll move on on the. This the forty eight hundred dollars we've also found out that. That those balances were allowed to be be exceeded do you remember the. On the student accounts do you remember that those were ever discussed in the board meeting at all. Never came up until we to the financial thank you Mr Whipple. Or somebody mentioned to it that it blew up that was last may that lot of this came out about the accounts receivables how do I do not recall having at time when they were there when when it was discussed at our meetings about the amount of money that students were allowed to get in debt to the university for. And as for these misstatements on the financial statements do you recall of any of those river discussed in the board meetings that there may be some incorrect information on financials. I thought there might be. I have a sense that something that the numbers weren't right did you question yourself in the board meeting about him or do you remember. I think there were times it there there were several questions ask about spending of. About numbers. I think we requesting a lot of numbers that were coming out. In. As far as these under statements in over statements. Do you ever remember any talk about those. That and I guess what I'm saying is did did you all ever ever talk about the problem with the retirement system and what have been misstated on the financial statement from that standpoint no I do not recall the board addressing that. And we've also had this the the thing about the unpaid bills you know again sometimes it checks are being held or invoices were not being paid what what knowledge do you have about that is a board member prior to leg audit coming in. I do not recall of any. Anybody saying that they had been paid other than some contractors it was discussed that it done contract work on projects there that it not been paid. On the building of the dorms. In some other improvements that happen on the campus. Okay. Do you do you remember who was discussing that who who mainly brought to. Mister brown Hartman one of the trustees was in contact with the gentleman that that he knew that was complaining about that he not been paid for services that he had provided to the school. Okay and. At this time do you have any other statements that you'd like to make before we can open it up to questions. I have about a thirteen minute. They will here if you want to hear it. Yes Sir if it's a if it's beneficial what we're doing here today than We're going to allow it because as I've said will stay as long as it takes to get to the bottom of this. Okay. Yes Sir you can you can start well sure Hickey I'd look I would like to thank you and the other committee members for you taking its time to examine a financial failure of Henderson state university. As you know my name's Eddy Arnold I've lived in Arkadelphia since nineteen seventy seven merry to don Arnold rage two daughters Lauren landers and Emily Tennyson of little rock. After graduating from Sparkman in nineteen seventy on road it Henderson graduating with a degree in business in nineteen seventy four. In the fall of nineteen seventy seven I enrolled as a grad assistant Arkansas state university in Jonesborough. Obtaining an MBA in the spring of seventy seven. I returned to Henderson in the fall of seventy seven as an instructor in the school of business teaching marketing and economics for three years. In nineteen seventy nine I started a graduation business Johnston's serving high school and college graduates in southwest Arkansas and northeast Texas. In nineteen ninety two I became president of colonial homes and pine view homes health care facilities which we operate in Arkadelphia and Prescott I continue to be involved with those businesses as of today. In January two thousand fifteen I was honored to be appointed by governor Aissa Hutchison as a member of the Henderson state board of trustees. Knowing business leaders in southwest Arkansas. Having years of working with school administrators and counselors. Knowing countless alarming nine many legislators. Current and former faculty members of Henderson I hoped that I would be an asset to the board. Providing graduation products to most of the schools in southwest Arkansas and northeast Texas I was a big cheerleader for recruiting students to Henderson always promoting what a great school that was available close by in Arkadelphia. The year before taking a seat on the board. I and many local residents along nine faculty were highly upset that the administration. With the approval of the board built apartments on the only green space available in the entire campus the area between the. OB you an H. issue football stadiums the green space was the Central Park of Arkadelphia. Locals and students both use this area. During the summer local residents hit golf balls area children played various sports. In the fall H. issue student use the area for inter mill sports and H. issue band practiced. The biggest event held on those grounds was the annual battle of the re being festival drawing thousands. The first year those apartments went up we had two undefeated teams in the final game of the year with possible E. S. P. N. game day coverage but with no grounds available. The festival came to an end. There never was a public hearing offered to the citizens of Arkadelphia by the administration or the board. Current board members of H. issue were denying they knew what was going on. This was a big slap in the face to our community. In my opinion the thirty four million dollar bond issue to build. These and other apartments were the beginning of the H. issue financial collapse. Losing the inter meal feels the administration not supporting a vibrant Greek system which led to a substantial loss of active fraternities and sororities contributed to the loss of ten percent of the student body. From two thousand fourteen to two thousand seventeen. Shortly after taking a seat on the board the board changed a practice of officer terms from one year terms to two year terms. And looking back. That was done in my opinion. To block Mister brown Hartman from ever being board chairman and possibly myself as well. After the first year Mister Johnny Hudson was appointed to fill the term of Carol actions. Mister Hudson had previously served a seven year term with one of those terms as chairman of the board. Mister Bruce for who had missed seven consecutive board meetings was elected chairman. Mr brought no one was elevated up from secretary to vice chairman and Mister Moore nominated Johnny Hudson to be secretary Bob passing Mister brown Hartman who had seniority. The following year the board elevated Mister James warrants to secretary immediately upon his coming on the board. By passing myself who had seniority. House leader was of eternity within the board whose goal was to deny Mr Hartman and myself from ever being chairman. Now the question needs to be asked to the other board members of why we were denied the opportunity to serve as chairman. Could it be that we just you too much as to what was going on since we both live in Arkadelphia where we are both very active in the community and consistently running into faculty and staff who know they can trust and confide in us. Shortly after my appointment to the board met doctor Jones in his office. And assured him he had my full support and I wanted him and H. issue to be successful. I immediately offered my assistance with problems with the local airport conditions in Arkadelphia because Henderson was the only university with an aviation degree plan. In addition I laid committees on marketing and housing and never turned him down with the requests were I could help or university. In may of my first year of appointment the yearly contract renewal for doctor Jones was to be reviewed. The board had given doctor Jones a five year contract at the time he was hard. I thought this was highly unusual since almost all other university presidents had one year contracts. Including the university of Arkansas system chancellor's. I presented that evidence to the board. Mr Harmon and I both voted against doctor Jones keeping a five year contract in the bag at all times. We both wanted to lower that to one year I stated that we were obligating taxpayers to possibly have to incur a one million two hundred and fifty thousand dollar buyout. Also said if he were to leave and the board were decide to hark Condoleezza Rice who is a sitting college president the Moshi would get from me is a three year contract that would go to zero. A comment made to us by the north another board member was. We will hurt his feelings. In board meetings Mr Hartman and I both commented about spending for new programmers. My test on a new program was that it had to be a cost benefit to the university. Mr Harmon and I both voted against a doctorate in education program which was going to cost thousands of dollars over years to get to a break even point. I was accused by another board member of voting against everything however I didn't vote against things that shown to benefit the school and students that were financially sound. It was obvious to Mr Harmon and me that spending was out of control. Consultants were being hired consistently. Trips to China were occurring often. Deficits were currying each year. Faculty and student morale had deteriorated. Not a day went by that I did not receive calls from concerned business leaders faculty stealth I wanna. High school administrators counselors and some administration officials concerned about the future of enters. In nineteen two thousand seventeen it came to a head when a vote of no confidence was taken by the professors and instructors of a tissue. In doing my research I learned that only an average annual average of five colleges and universities in the whole country have a vote of no confidence rendered. Mr harden and I asked the board to listen to concerned alumni and local faculty Senate members. No action they did not want to listen to anyone or take any action. Two thousand eighteen. Another vote of no confidence. Once again no one was allowed to come invoice opinions to the board over the objections of Mr Hartman and myself. In the spring of two thousand eighteen doctor Jones met individually with each board member ten days before a scheduled board meeting with plans to renovate. Smith the Newbery dorms which were over fifty years old. An obsolete Quinn built in the sixties. The plan for the past few years had been to tear down both dorms. Doctor Jones in bread power we're going to spend thirty for me. Re floating and maturing Bondeson. I strongly objected saying a comprehensive housing study needed to be done. At lunch that day auto doctor Jones in so many words. The board is going to get you fired. They rubber stamp everything you want. And if this project if it goes forward is going to be very controversial. The board get approved a housing study and tell this state. No one can find that maturing Bondeson. As you may recall there was a movement within the board members to get permission to come on the campus from the president in advance. Yes there is this was a result of Mr hard been in me going into the housing director and getting dorm occupancy record shortly before board meeting. We had been tipped off that the occupancy numbers might not be correct as they were going to be presented to the board. The proposed policy made state and national news. It upset several board members that Mr Hartman and I've made comments to news outlets as requested. I'm sure Mr harden will enlighten you to the words we were called. In two thousand eighteen an online petition was started asking for the entire board to be removed. Mr Hartman and I both sign the petition. I knew we were heading off a cliff financially and thought saving Henderson was more important than my position on the board. So what do I say is responsible. Financial mismanagement by the administration and a lack of financial oversight by a majority of the board. I hope both equally responsible. In closing all of this is said to under score all of the things that led to Henderson's financial problems. I believe without doubt all these past problems can be corrected and never repeated. It is simply too important to do otherwise. thousands of students in need of higher education in southwest Arkansas. The high quality of education from Henderson state has been delivered for over one hundred years and it can't stop now. Not the students. The alarm the devoted faculty and staff and the community of Arkadelphia in the heart of southwest Arkansas. Along with the private worst all bad this university Henderson state university has been the heart beat of our community. It is the largest economic engine that keeps us going. With our interstate location near hot springs and little rock the beautiful Ouachita encounter rivers the Great Lakes. How to the educators and successful marketing efforts we could become the most magnetic school in the state. We appreciate what all of you have done so for. And we certainly look forward to a productive union with Arkansas state university. Mr on we appreciate you preparing that and more S. have a request do you mind if I have a have that copy yes I have you a copy can I have that one do you do you need us to make a copy for your records I have one okay we appreciate that. So if one of the staff thank you. Okay Representative Payton. Europe Sir. Thank you Mr chair Mister Arnold you said that you were appointed to the board in two thousand fifteen by governor Huckabee is that right governor Hutchinson governor Hutchinson sorry but the and I say have not okay I think I just created that my mind some now. So you had the faculty and staff other members of the community you were hearing about your troubles and problems in can you put a time frame on when you became solidly aware that there was a financial problem that at the university. If you're asking me to go back to a certain date represent pay not specific right of. You know it it became pretty apparent to quickly after I got on the board I could see consultants and lot of spending was going on of and we had to the downturn in students when we lost the Greek organizations we didn't have an inter meal program we lost several Greek organizations I mean it was substantial number. And I think the losing the revenue from ten percent to students and there was a lot of deferred maintenance that was going on the campus. But I think I think it was. The train had cranked its engine by that time to just personally I mean. You had this information coming to you in bits and pieces. Can you say was it twenty fifteen or twenty sixteen when you decided okay we've got a problem with no this is real this is a real problem well I think it was it would be more in sixteen okay so at that point. Being appointed by the governor. Did you go to the executive branch and and and set and raise concerns that That the you are you are not being effectual on the board obviously from your testimony you aren't be ineffectual on the board of of changing things but are out on the business world know we have a chain of command whoever hired use the one you'd go to if you want if you had a problem did did you go the executive branch of the governor and and raise concerns that there was something going on there I ran into the governor Lincoln day dinner Arkadelphia at Henderson. And that was shortly after the first voted no confidence that might have been two thousand seventeen. And he was aware of vote of no confidence and we had a discussion brief discussion about that. And. I think the governor never newspaper reports out there that Henderson was incurring some financial problems. Did you ask for his advice or or what should be done or anything. Well at that time we were you know it was it was when the first US one first time I did this to the governor we we did add the conversation and I think the problem was will hopefully is going to work out so Run and I appreciate that did you ever I mean you talked about your testimony how you and one other board member was you know we're trying to. To block some of the things that were happening voting no okay on some things did you ever feel that there were outside influences that were Causing board members to vote the way they did. I don't think on that one I don't I will ensure that but I need to think on that I I don't right now I can't tell you yes or no okay thank you thank you Mr chair. Representative Lowery Europe. Thank you thank you Mr chair thank you Mr Arnold for not only the questions that you've already answered but also your statement that was very very directed I think very. compelling transparent I find myself very concerned I know we've only had two previous the board members before you but one of the questions that I ask miss Nolan was was the board. Aware of the two separate votes of no confidence in basically she said I you know there is maybe some discussion you seem to indicate that it actually was a significant point of discussion with the board is that correct that's correct at was it actually brought to it to some sort of a vote or request for a vote by by you or Mr Hartman. There's really not a voter may there's we have a vote of no confidence and we wanted to discuss it and we wanted to let other faculty members come in and present to the board and they they were blocked there was the votes were not there to allow that to happen okay so there there was an attempt to absolutely to do some kind of I absolutely thought that the faculty members and concerned citizens should have an opportunity to come and present that an open forum and it did not happen okay and I think that significant new especially with you as a former faculty member and also a resident of Arkadelphia that had interaction consistently with members of the community one of the Issues that we've had very. Frankly. Difficulty in connecting the dots of is trying to find out who is the ultimate arbiter or decider of presenting to the board these misrepresentations of the financials I assume that the presentation you've you reference that Mister pal would present using graphs that were somewhat confusing so I assume Mr pal would make the presentations. Well the first year I was on the board Mister Jones made Bobby Jones made presentations financial presentation to us he would have been chief financial officer to school and he was the acting in Rome president for it maybe close to two years if I recall of he was very enlightening on what he told us of but then when Mister Powell got there we were you know. We relied on him at that time but Here is a five budget workshop I'm holding it up here. May third two thousand nineteen shows a surplus five thousand dollars when actually we had a five point five million dollar deficit. So. You know I'm always question the numbers. And I remember. Being questioned about us getting numbers from the housing department because we didn't think you were going to be correct which was a year earlier they're not mention it to the board I said you didn't like is getting those numbers now you see why we didn't always put the. Faith in these numbers that were coming. From the administration. Okay so by that indication you felt like that there was an inflation of what the housing resin revenues were as well but that would be I that's not the housing revenue we had a we had a situation with two dorms of for some reason they were bent on spending thirty four million dollars to repair two of them I thought lot of people thought we could put. Put them all in one Dorman not one down and not have to do that okay wasn't revenue it was more or less are having to spend the money we we wanted to look at occupancy occupancy issues okay so. As I ask Mr Whipple. We've heard that the financial statements that were presented to the board. We're a broad overview that they really did not drill down into specific accounting and accounts payable and all of that is so did you see the trend in the declining fund balance or the the reserves and as recently as two five two thousand fifteen when you first went on the board did you see that as a. Cater a red flag of Henderson's financial issues that there was that the declining yes it's I could see the cash balances going down I'd ask Mister Powell about reserve funds at this may meeting may when we had it on may third nineteen to the last may two thousand nineteen. I became concerned we all of a sudden needed a line of credit. And I made the statement to anyone so why don't you just have your reserve funds. I mean that that was a real red flag to me but he said our reserve funds are fine we just we just want to have this if we can't get a hold of you all or something it really made a big flag only and I did mention it in for in front of the board on that. Okay the last thing I want to ask you is that the and you've not been shy about giving is your opinion your perspective of what you saw as a board member and I think that that's perfectly in line. Do you assign any more. Can you use the word blame anymore blame to either president Jones or doctor pal in terms of the route the presenting of or the miss representation of the financial. The financial statements this is why I asked would actually present the financials that I would assume that was doctor pal but did you perceive that. That was directed the misrepresentation was directed by the president. I would be speculating if I answered that well that's what I'm asking you to do a lock out I don't know I just don't know I know doctor Powell had a master's degree in taxation you that person there was CPA that would been over the part in higher ed at one time. Hello. I don't know who. Who did what I can't okay I mean I just could not give you an instructor that's where that's fair enough thank you very much thank you Mr chair yes Sir. Senator rice. Thank you of. Mr appreciate you as the other ones being here today During that I'm on I ask mine first and then is been directed I will last send right Bruce chair of audit excuse question of. Do you feel let President Jones contract my understanding it did not have a for calls or call is. Clause in the contract which would to have allowed. Termination immediately. Do you feel like that is the boards of by your in requesting that. Who is when they when they okay contracts. Doctor Jones was hard. By members who are here today. They were sitting on the board when that contract was written. I find it highly unusual that there wasn't a clause in that contract. That if you did something financial mismanagement or other things unbecoming the president that there would be a. Way that the university would not be liable. In not having that. Far calls clause in the contract gave the position of president a lot of power did not. In order to not receive compensation is that what you're asking I'm saying it when you know you don't have a penalty in your contract it gives you a lot of leeway to do things that you might think I would agree with that. would you call some of the so called numbers areas that we discussed this morning. That were. Re done after. Audit found them. Do you consider that is fraud. Not trying all I'm saying some anytime numbers or minute another populated to the benefit the person. Whether it was my late belated today benefit Henderson so they could receive more money if that was a deliberate act that would be a definition of fraud. The line of credit that you just mentioned a few minutes ago. That they said with the really didn't need but they just want to have who would that line of credit been with. That would have been was southern bank core I think and I think this when that it already transferred me we're we're right here to time they were moving from from and and bank of the Ozarks to southern who who is the who is the chairman of border southern Michael. I understand that's doctor Jones. And my question to Mr Whipple made and we all have our own opinions. Whether there was any financial advantage. Again we know banks are audited federal altered with there's there's as many restriction they came to. But I cannot see how there is not some financial advantage. Even if it's been disclosed four eight chairman of the board to have some influence. To help the university. Maybe obtain Alaina courage not that they have the final say would would that be something you'd consider could happen. Well if you're chairman of the board you have a lot of power that others that are not chairman fours being able to get on the inside and find out what's going on inside your worst thank you let me ask Senator Rapert question to your knowledge did any current or former board member R. H. issue executive benefit financially from the spending it H. issue are did anyone benefit financially from business entrance interest associated with university projects. Well I think it's common knowledge that of Mister Barnes on the bookstore. And he had done that many years before he became on the board. And then I found out later that he was involved in the with the partnership on the company that built the dorms and made renovations to the football stadium we also turf the baseball did a lot of work on our athletic not all that thirty four million was spent on dorms we did a lot of very much needed. Work needed to be done at our at our athletic complexes and in I thought that was a good a really good thing that we had that done do you know if the board wish for mayor with that person are any other persons that that had business interest with those renovation projects no Sir. Thank it's our announced year. Thank you and I will to get Justin you may have said this but on this get it on record prepared the contract. The senator rice was talking about for Mister Jones do you know that are you are you referring his exit contract separation contract or the contract when he came on as president no closed contracted he was in reference to okay the first one when you yes Sir. I was in on the board at that time. Okay so I can't tell you who prepared it I'm sure the legal department they're it Henderson and probably the chairman of the board at that time That's good enough and since you brought up the exit contract are you familiar with the who but a prepared it. I'm assuming that's the the doctor Jones of the chief legal counsel ms Kneebone who's the interim. Acting president right now. And possibly noticed it was signed by the chairman of the board Mister hatch. Did the board review that. I did not review that. Okay. What do you think it's because you missed a meeting or do you just think it was a I do not recall it being presented to the board for. Us to sign off on that out now I would like to say my comment is Sometimes you win by losing. When he was terminated. When he was terminated. We were looking at a five year pay out. One point one million two hundred fifty thousand dollars because we had five years which we missed our men I've been trying to lower. To keep the state from incurring a liability of something like this were to happen. I didn't have a problem with him saying I'll take a year and will have to avoid any. So that's where sometimes you win by losing I hope you understand that no I and I understand that my my comment was and I think you answered it I wanted to know if the if the board reviewed that exit contract and you stated you to you don't remember it. Correct I knew what was going to be involved in the exit contract with the contract excel. I do not recall reviewing and I'm speaking for me I do I do do not recall that okay I would just assume something like that would be an action item of the board but. Possibly not think will happen we didn't have a board meeting I think it this we met we decided what they were going to do there was and separation agreement and I think we had copies of okay thank you Sir. In hammer you're up thank you Mr chair Mister all I'm a mist at your opening comments but what your occupation your your line of profession. For forty one years I have served schools in southwest Arkansas and northeast Texas selling graduation products. Class rings diplomas awards capping gallons. Which had been pretty tough business right now. I can only think of one other business harder and that's nursing homes that and I've got Philly A. would to nursing homes and one assisted living so somebody call me today says are you still alive because we think the two worst businesses are. Graduation sales and nursing homes so. I've had a lot of sleepless nights what do you what do you do. In the nursing home business. And and where will it question how involved are you in the books of the nursing home business or the books of your company I get that company is owned by you personally right. Will the and some other investors. Okay me and other investors or are you just. Are you just trying to get his knowledge of financials here's one go Mr on a of move on if you want me move on possibly as a board member of Henderson. How involved were you that when the financials were given to you with your business background A getting down in the weeds to see how quickly a problem was developing with regard to the numbers that were given in that financial statement. You know I don't think they were peering that much other than some cash balances getting lower but You know I didn't know that when I got a call one morning from the provost saying that you got a call the governor. He's he said we we can't meet payroll on Friday and this was on like a ninety. Okay because we the party we had a banker I'm not sure what the first up missed Nolan's background was but we had a banker party we've got a business person now and is board members want to try to get my mind around is how could he get as bad as it got as quick as it did if you all were not paying attention to the numbers or asking questions about the financial statements that we're giving to you most of the statements that were being given you know look pretty good like this one shows of five thousand dollar surplus but we're actually. We're actually five and a half million down so lot of stuff we got was you know look favorable even though read questions that maybe it was our. All right M. when you had those questions would you do with those questions and health four did you pursue those questions as a board member to you found satisfaction or do they just get left hanging out there. Mr Harmon both express interest that we were concerned about the spending that was going on. First the numbers we we couldn't just go in and say they're wrong and it's a we're somebody would have gotten hammered back there if we had said so and so said this or that somebody back there that back in the administration that was possibly working in the business office okay somebody in the trenches yes because one of the traditional as we heard the other day was that individuals that work within the administration and others were encouraged told not to approach board members with any concerns than that which that and that's true in a lot of these people got other people to come talk to me throughout ET I don't know their name. And when I recognize someone on the other night okay when did that begin to occur what give me a rough time that's been occurring over the last two to three years pretty frequently. Okay. We were not in a position. We were just not in a position of. We were too outspoken board members we were not in a position to convince the board otherwise so would be your testimony today that you could confirm that individuals at the university as well as. At a I mean maybe members of the community that university in having authority over but whatever reason is it your testimony today that you know for a fact that people did not approach you because they were told by administration at the university not to approach you with these problems is that your testimony today absolutely okay with regards to Were you receiving information from community I think maybe you said this businesses in the community that they were not being paid you did you mention a contractor well go I mention a contractor that was did not live in Arkadelphia I think Mr Hartman knew that contractor I think he lived in hope would you do with that information when you got it. Mr Harmon expressed it to the board that there were contractors not being paid was that prior to the legislative audit coming out. I think Mr Harmon did that. No we get legislative auditor every year but uh this may have been at least two years ago that he had concerns about a contract or not being paid so the board was aware that there were. Contractors not getting paid Prior to you having. Knowledge of the big audit this being discussed today I mean is Mr Hartman made it known to the board that there was contractor had not been paid and what was Mr Jones or the other German Mister Powell Dr Paul's reaction to that are explanation for that in those board meetings when that information was brought out. I don't recall their I don't recall that what they're. Okay home was on that and one and you alluded to awhile ago and I think it was with regards to the numbers that were in the dorms That some intentional information was withheld was that your testimony awhile ago yes is that the only situation you know of that information was withheld from anybody board members or anybody else was it just that one incident or you wear of other times when information was intentionally withheld. I need the comment was I didn't say they were going to intent they they were the it was brought to us that the numbers that we would receive that the board might not equal what was actually occupancy in those storms and who was the point person for controlling that information well you had a director of housing. The lady that's director of housing okay what I'd like to issue to do issue of responded to represent paid while goes if you think of any other situations other than that because to me that's kinda disturbing that somebody would control manipulate withhold information that would give a true financial accurate picture of the direction specially if there was decisions in as I hear the conversation day the oppression I get was there is a big discussion about building a dorm and part of the justification for that decision would be are you keeping the ones you've got full now and if those numbers were falsely inflated to where the board made a decision on the basis of what appeared to be numbers that were real to me that's in my books that's called fraud or at least misrepresentation of the facts so anything you can give to support that turn into the chair for the chair would allow I think that be important specially if you have other areas where you know that that occurred on related to the dorm situation of us said anything in that statement that you disagree or want to respond to. You know I agree with you you'd think that so trail that Is a concern. Okay this body this body will take any relevant information so you or anybody else that wants to give it than we were we're taking it in and then Mr my last one is this of what role do you see the board played in Henderson ended up in the financial situation that they're in now realizing that you may have station uncomfortable things but this is a. this is the time for the truth come out so what do you what do you feel the board played in Henderson ended up in the financial situation there and now. I think I stated while ago I think there was financial mismanagement by the administration. And a lack of financial oversight by a majority of the board. Mr can make requests to the chair. Yes Sir. I would like to know if maybe staff could look us either staff working with like audit to get the time frame of which the bank the line of credit that was being discussed. And being sought who was the controlling bank at the time that that decision was being made and align who the responsible parties were that may be might potentially be conflict of interest on that I just like know who what bank was going to be given the line of credit when it was sought for and asked for by the board game. We'll we'll see what we can find out when we already have part of that information but we'll we'll look into it for you thank thank you. Senator Chesterfield I can't tell if you're owner off your lot had believed to little bit. Sometimes I'm not sure myself. Zero. Would you tell me specifically what. I hear the anecdotal information you're giving me could you tell me specifically what in the budgetary presentations struck your attention. Was there something in the financials that were presented to you and the other members of the board other than your having been a part of that community here the anecdotes and all of that could you tell me what specifically in the financials that to let you to believe that something was on toward. I can't. What one specific thing on that senator. In the audits leading up to this and I assume the state conducted those audits is that correct missed you. Yes ma'am that's correct and we conducted at an audit in seventeen eighteen as well. Yes ma'am it's my understanding that laid out it is been looking at this for quite a few years and you're you're saying to us that because you being a part of the community knew that there was a loss of revenue due to the lack of Greek activity on campus that what you were somehow losing money is that correct. Yes we we knew we were incurring deficits. Get that show in the audit. Yes. Mr new. With a material findings in the arts. Your if you don't mind let me get let him get to a Mike I thank you so much if it we might as well do it that way I see no issues with that if you want to Mr note if you want to go down there and. See if you can answer that question. And you can start whenever you will. This gentleman. I'm sorry this gentleman has alluded to anecdotally knowing that there was some. There was some financial difficulty did the audit show that were there any material findings in two thousand seventeen FOR the fiscal year two thousand seventeen we did not have any material findings or reportable findings come on Sir it just three yes or no answer so when you come on the board fifteen. Fifteen I did but there were no material findings in seventeen. Is that correct I know there was a and you found out that there was a deficit in eighteen right five and have me okay let me just wanted this time if yes ma'am yes ma'am all right Mister knew what you find in seventeen. S. me find the numbers here So that in the seventeen the unrestricted or the total net position was forty point seven and I'm I'm going to. Go to the on restrict in that position one point two million dollars positive on that. so they were not in the red. No. Before we get to fiscal distress in the public schools you look at the declining balance did you look at that. Yes there was a trend A. did not happen until the fiscal year two thousand eighteen all right we were doing the two thousand eighteen in two thousand nineteen audit that that's when the the the decrease significantly xcelerated I guess is the correct term because into at the end of two thousand seventeen the unrestricted net position was like I said one point two million in a positive but at six thirty eighteen it had dropped to eight point nine million negative. Was that a tribute in your audit findings to a change from one bank to another. No ma'am Sir that let me that I would note are you finished with Mr new because I don't want to leave them both down or to same time one I just don't like. We're gonna have to have a conversation. At this year's for run okay so if you're for Mister new double no I'm not at my finish witnessed and. Because I'm trying to get to the heart of the difference between anecdotal information. Any information that's in black and white in homage. I thank the gentleman say this is twenty fifteen when he came on he had great concerns rate alarm anyone on that board come to audit to your to your knowledge I know you're relatively new in the audit department but in any of your record does it indicate anybody from interest and saying we are concerned about the financial Going on a motion and against it Henderson state university no one from the board came to our Came to us to inform us of anything like that and we normally are standard procedures is to interview in ministration during the audit concerning fraught fraud. But since the board of trustees has the UP I do Shiri responsibility. to make sure that everything goes well at the university why are they not being interviewed as well. Well I A just depend I mean it depends on the situation at that time we did not see any need to interview board of trustees at that time. Thank you and through the mist into an answer and I'd like to ask one more question this gentleman this with them that you don't wanna miss to notice that sat thank you senator I appreciate that Mr nude you can to stay with us of course in case there's another question and senator Chesterfield yes one more quick yes ma'am Sir could you explain to me is there a connection Between the change in banks in the changing financial condition of the institution in your view no ma'am I don't think so thank you very much. Representative Richmond. Thank you Mr chair yes thank you Mr aren't for being here and your directness I just couple quick questions hopefully short answers I did you ever speak to anybody. State government or anybody that about the make up of the board whether or not the possibility of getting some new members that would be more favorable to your concerns. Yes. Would you like to elaborate on who that was. Well I talked to Mister Campbell boards and commissions. It was obvious that I will say that FOR other CPAC tion of the board there was uh. I got to me that they were betting. Board members. That would vote the way they want to be voted like thank like they did. I did find out about that. And then I said with they can play that game so many Mr Hartman to play the game so we got somebody that we've. The lady that had gone off I think it was miss Nolan and we thought well it probably needs to be a lady probably needs to be a Republican probably needs to be somebody with education background so yes When I found out that the board was recruiting people to vote like they wanted to vote then we started it our prices night thanks Sir also next question very quickly and concerning the future moving forward now. Is there any unity of purpose within the board because it sounds like you guys have really been divided in half lot of disagreements and and no rightfully so but is there any unity of purpose of a of a business plan. To get Henderson state where it needs to be to be able to be a successful institution again. We have relied on doctor well choose done an outstanding job of trying to get the numbers to us and to you about trying to get Henderson on the right track. I will say now that we we've added some new board members. Mr span miss tall at. There's a lot more unity on the board now of we're all right now we're all in a on the page trying to save Henderson. All right Sir I appreciate your your comments in thank you Mr chair. Thank you. Representative rye. And then after you we have one two three four five more if nobody else A ads. Chairman yes Sir okay Mister Arnold you know we leave her yet speak about the financial condition that you know you were speaking about all through and through and in two thousand seventeen that's the year I thank that keys is saying from that point forward it was really and and bad check the center line now what I am asking Mister Arnold if this thing was in bad condition. When was the cost of living adjustment applied to the employees there at the college and it makes you wonder if your and financial can you know condition that's not good how can you give a cost of living adjustment on on the. Well I think there was I think there was a lot of people that you know felt sorry for our teachers and faculty and staff that it not had a raise in a long time and the numbers that were presented to show that you'd be able to do that that was Presented by the. By Dr Powell and and doctor Jones that they would be sufficient funds to do it but As you know that the budget. Workshop those numbers weren't correct at all. Our. Yes Sir okay Mister Arnold DO you think that there's a possibility here there were two sets of books out there the the actual books that people were seen that. They really had an inside track on what was going on there in the in the actual books that that the public and maybe some of the board members actually may not you know may not they may have known. Something that actually would not there. You know you got you got something like five million dollar deficit and then the other one you got a five million dollar policy. Well it is it's is amazing to me that somebody with the financial background could present to me a budget. That show that I think it was twenty thousand dollar surplus maybe that had a five and half million dollar does. Managed that's right but you don't have any knowledge of I don't have any knowledge of okay either set of books and let your question okay I want to make get that clarified. Senate all represented round that yes Sir thank you Representative bringer. Thank you Mr chair. Staro I am a Henderson graduate. Good. Nice to meet you. Thank you for being here and you seem to have a lot of knowledge so I have this dying questions I've been trying to get insert are you familiar with the student accounts that are delinquent. The total almost ten million dollars that we've been told here yes ma'am okay what what those present it before the board of trustees I don't ever recall them being presented to us so just like it was hidden so what is it what is your knowledge about that how to you know that that that exists. The end is I'm sorry specific. I would like to know how many students are on there as well and who and basically we've got ask for this information we will know who they are and let it I think that would be a question for the administration to answer I didn't know we were had ten million dollars. Of. Counts receivable that it not been collected in those balances were led to run that I didn't didn't catch it if it was in the financial statements I didn't catch it and they were you aware that they date back to the nineteen eighties. I am now I'm I just wanted to see if you knew were aware of that. I am now I am yes all right came out here. Senator Johnson. Thank you Mr chairman of. Mister Arnold. We're we're big round here on disclaimers and conflicts of interest and knowledge once and things for the record I just wanna state have you agree or disagree that to you not been friends for some time and that you are currently the chairman of the Clark County Republican committee and I am a former chairman of the Pulaski County Republican committee and still president of the Republican county chairman dissociation is all those keys all six correct yes Sir okay have one get that clear of. I had this question about to this is something that ms Kneebone stated in her testimony here at the Legislative Council meeting I believe it was or maybe we've we've had about three these now sometimes they run together my my that she was asked about conflict of interest and she stated that Mister Barnes. Became a member of the board after. He. Head. Already been for some time owner or part owner of the bookstore on campus Do you agree with her she she she stated that that was not a conflict because he was already in had that contract and then came on the board however if he had been a board member and then receive the contract that that would be a conflict do you agree with her analysis or do you believe that any time a board member has a financial arrangement of some kind with university that that is a conflict. Could you. Well the mist Kneebone about that I'd. He he he already had the contract running the bookstore before he became a board member and I'm sure in the disclosure that you have to. Submit. For boards in appointments. You have to disclose that and. I'm I'm assuming he did. Would that be a perpetual contract it's never up for renewal or is it one that guys would come up for renewal and in that instance could that possibly be a contract A conflict in that then it wouldn't he would act at that point of course be sitting board member. I could see where that of being on the board and having the bookstore could could possibly be a conflict okay and you already alluded earlier to the of potential of ownership in a contractor that was doing work on the dormitory either renovation or new construction that that you see that is also potential conflict well I think that those were done before you became board member okay hi and in my last question Mister chairman of mistrial. The doctor pal and for doctor Jones a state to the board that there was of the syfy about a five thousand dollar surplus when there was actually a seven figure deficit and and when that occurred. When did you know that I'm just trying to to narrow the time table down to win that revelation which obviously was quite a revelation happened okay may the third we were presented I've got it right here. We presented this workshop show the surplus that's in twenty nineteen twenty nineteen okay. I got a call. From. The provost at the school he says Eddie I can the the president is in the care being on a cruise. And says you we we don't have enough money to meet payroll on Friday. He says we're. We got to do something. And I said well why don't you hit hit the reserve fund. The shock may sit there are no reserve funds. Had you been led to believe can the okay Sir Wilson's who who called you could you give me some names I will it sorry Sir I hope is the Steve that concern provost okay that's I just wanted the name on record thank you for like Senator John thank you Mr chairman for clarifying that of at that time until that time you had been led to believe there were reserves do you keep member approximately what you thought they were purported to be. No I just. I know most universities have reserves you just seem to be in the air assume that That we had the reserves he said we did and that everything was fine. And then suddenly found that well that they were. When he told me that adds I was shocked in my response to him was that he should call the chairman of the board. Mr hats okay that Mister Hudson should go to the governor and tell him that we have a problem here. Okay thank you Mr chairman thank you Mr chair. Members I was going to try to get. Finished with you Mister Arnold however up we've got at least three more in the queue so at this time unless I will break for lunch we'll come back at one o'clock I think that it gives plan enough time again we will have a we do have some lunch for you all out there so We'll continue with you like I say at one o'clock thank you. But. Okay if everybody doesn't mind find their seats is one o'clock and we're gonna try to get it started. Okay Sir right back in receipts will. Representative of you're going to be the first. So Mister Arnold. I will remind you you're still under oath. As a courtesy. Any law of torts Sir thank you Mr chair yes Sir Mister Arnold I have a couple questions now I've been doing a little research since since we've been out so I won't ask you about in the audit per se because I I found out that legislative audit is the only auditor I guess that that Henderson state would have hello four I'm going to go into this vote of no confidence that you have to that she mentioned earlier. In so. With the with the the whole issue the vote of no confidence. If I were to go back to any of the minutes of the meetings that you all had what I find that you all making you of you may have to take this mess out you may have raised a motion to say you know we need to hear about the issue of the vote of no confidence. Would you have made a motion which you have I mean because it was apparent that you you you talk about another board member that you all had support I mean this support this same motions that you and so would you have maybe raise the issue made a motion. I don't know if it was a motion I don't know if that's in the minutes or not I can tell you it was a very heated debate about. I and I know Mr Hartman we both thought people should be heard. We had large benefactors that we're not allowed to speak. And. There were a lot of concerned alumni and do it long lines and and yet you had faculty there we had staff we had a lot of people that were raising a lot of concern about the future of Henderson and where it was going. And this the board did not take action and letting them have their say in a public forum there was no public meeting it was like just ignore it hope it goes away okay and interlinks as it relates to the finances because I know that you mentioned a lot about the finances. Did you did you ever call for some sort of I would say a forensic audit of anything on the books or anything like that now okay. So is it relates to the financial news. Because you ET you know in a change in the city you know Mr palace make in the the presentations and then doctor Jones. I'm assuming that you discuss your financial concerns with doctor Jones would it be a true statement yes. In those conversations what was what was his response to the. Well I'm gonna have to think about that one I don't to I know over time I talked to me about spending. That I thought we were spending too much. I thought spending was out of control of we were hiring a lot of consultants there were a lot of things going on that we're spending money course a lot of it was deferred maintenance and I got that but I was concerned and so were a lot of other people there that we're concerned that we're going to run out of money. And guess what we ran out of money. Did you ever think about bringing in a private CPA firm. To do yet to CPA's on our board. And I would have had of gotten board approval for that and I don't think I would have got. Okay and then This my last question is this the you mention the for costs clause that the you status should have been in the president's contract. Did in in doctor Jones contract I guess and making a contractor or how was created. Was this contract one that was previously used by by the previous administrations or is this do you would you think this was a special day this they took this clause on a doctor Jones contract. Well I'm a is let me say again I don't I'm not is is is a sweetheart deal this isn't a sweetheart deal or is it just coming. How do you see that. Absent I was not on the board at the time the contract was issued. I was just a citizen of Arkadelphia. And I heard he had five year contract we've heard the board hired a person that was at no experience as a college president. I thought it was very unusual and then each year to attack a year on so we kept five years in the bag. That's not good steward of your money. And I that's probably the reason probably one of the reasons they may tell you the reason that. One of the things that you want me to be an officer in the board. Okay alright thank you. Thank you Representative of Senator sample. You have a question. We're having some trouble with this thing so some of these latter blinking. No I've I've got you. Your after. You're not going to get a Representative Lowery. Thank you Mr chair and I I do have a question for Mr newt If the Mr Mr chairman. Yes Sir I used to have the only thing that I I will I want to just athletic audit their questions. And then have them to go back and so I don't want to this back and forth but yeah it's just one one question okay that's great I think yes Sir I know how you'll or I've never seen one from anybody. Will it will depend on how how well I ask this first question. Hello my understood euro thank you Sir okay the question four was presented earlier I believe by senator Chesterfield about Declining declining reserves and that it appeared that. That finding only happened in looking at the seventeen eighteen eighteen nineteen reports. Is it true that declining revenue reserves could have happened in previous years but not to a point where it would have triggered an audit finding. Yes I'm in not have explained this before date had declining fund balance or net position sense and I went back to June thirtieth two thousand fifteen for the fiscal year two thousand fifteen. It was just in those last two years where we audited the eighteen fiscal year eighteen and nineteen or Twitter it declined significantly were we were questioning they're going concern as the university at that point. Okay but the decline had been happening just maybe not at such a precipitous fashion right it was not as a significant in that two thousand fifteen to two thousand seventeen years okay alright thank you that sticks to my questions there but I do have questions also yes Sir your continued Mister new to. It back. You can head back up there Mr new. Absent Larry do you still have a question. You should be on okay I am now thank you Mr Arnold of you referenced earlier in. You know typically I would I would say if I were that year your roomie out of order on this because it doesn't seem to be germane but it is germane to a statement that you made about some of the discord that was happening on the board and how a board policy change took place that you believe was specific to keeping you and Mr Harmon from being able to service board chairman and you referenced that when this change a change in policy was made. That Mister Moore Bruce Moore was appointed chair even though he had missed the previous seven meetings is that correct that's what the records reflect records reflect that okay you were also asked by someone else if you had ever reported some of these concerns of the board make up and you said that you had talked to Bruce Campbell I'm looking at the bylaws in these are provided by Mr span. Looking at the board bylaws and it makes a reference to removal of a board member. And it says that the governor camera remove them but it would have to be done by majority petition of the board of trustees to remove a member was there ever any attempt. Two eight and I'm I'm even talking about an unsuccessful attempt an attempt to have that but the petition presented on any board member that occur that serves on the board of trustees with you. Not that I'm aware of okay we've also had several questions about Mister Barnes and whether there was conflict of interest of course it's been established that. There's a I believe that because his contracts with the bookstore in whatever relationship he had with the construction company. Receded he is being appointed to the board. Are you familiar in this is a contracted a Kerr to my knowledge when he was on the board are you familiar with the contract with a company called of. Or product called portfolio there was a student portfolio software package no Sir you you never heard any discussion of that before the board no okay the reason I reference that I'm looking at the bylaws again. It states under the duties of the board that the board would review and approve the university's academic programs curriculum course credits emission standards and other educational practices and with the. Occurred to me if that this portfolio which was a student resource of is an ability for students to be able to upload their portfolio so that they could refer back to them later on in their ten year or if they went on to graduate school of their within the career that this is a product. That should have been reviewed not only review that we hear about review here legislatively and usually unfortunately it just. Appears to be many times a rubber stamp. But this says review and approve. To your your testimony is that to your recollection. The board did not approve the contract for portfolio. This is the correct that's first I've heard of it okay thank you very much thank you Mr chair yes Sir. Senator Chesterfield Europe ma'am. Thank you Mr chair in good afternoon. See everybody or while it in one of the things it is of concern to me as we talk about the China issue. It is my understanding that Mr pallid work but the China thing while he was at Washita is that what you understood. I have heard I've heard that said but I can't bear their fight I can't either but I've heard it from from from different sources he is now at Baylor is that correct yes. You know in what capacity. You know just well I I think you're right he's in their finance department. Financial operations but it was my understanding that is C. P. a license that expired is that what you understood. No I was aware that that was what we learned at some previous meeting I'm looking at the conflict of interest policy all conflicts of interest are not necessarily prohibited or harmful to the university however full disclosure about actual and potential conflicts and a determination by the dis interested members with the interested members recuse from participating in debates and voting on the matter are required to your knowledge did Mister Barnes ever vote on anything that. Would have a crew to his business. I can't recall where there was uh an incident where Mister Barnes would have voted on a matter that concern the bookstore in all fairness to Mister Barnes You know he had the bookstore before he got appointed. And I don't think we ever had a situation were of he he had to vote on something I would assume he would recuse himself if he had that is rather like us if we are. Of an employee of the state before we become a legislator or we can run. But we cannot become a member of the state agency if we A get that does it get the position of legislative powers so I guess that that would be similar to what is happening with you now the question is about the board of trustees and foundation. Is it true that there were members of both the foundation and the board of trustees yes. And if that is the case with that not make the foundations records during that period open to the freedom of information act. I would assume possibly. Mr chair I would like to find out okay if during that period because I understand as many as three members served on both the board and the foundation that may not be true now but during that particular period is my understanding that the possibility of a freedom of information act because of that might be available to us would you please check and see if that's possible yes ma'am that's a good point and we will We'll have a our staff please statues case law whatever needs on that thank you I would certainly appreciate it thank you Sir for being here is is not easy having a business even if it's in remission to some extent because of the pandemic and Sir on the board of trustees thank you for your service thank you ma'am. Mr are that's all I see for at this time and I know that was a long time to sit there one three I appreciate you also appreciate your statement and you allowing us to have that your openness during this all appreciate what only you're doing we got it we got it hopefully get this solved and get Henderson back on a safe financial footing but I appreciate I as a taxpayer I appreciate you looking into this thank you Sir we appreciate you. Okay the next one I have on the list was Mister James Bond I'm not sure the Mister Barnes was is here or not but I wanted to at least give that opportunity. Okay if you would please let the record reflect that Mister James Barnes he was invited to attend and he is not here today staff did have some conversations with them and at that time he did to. Allude to the fact that he would not be here and that an attorney advised me didn't have to be now that's not in writing those were a Just said orally so but I did want to committee to to know that so after that we have the. Yes Sir. You'll do that now are at the end I'd like to do it now okay. I'd Mr chair I know that you you have been extremely cordial and in a way that you handled asking these board members to attend and we appreciate the cooperation that we've received so far I think it's probably going a little bit too far to say that you're going to make another. For a request for anyone that has already previously been asked to attend gonna ask them again. I don't want very long to go without us being able to authorize you and and it does take a vote of the of the full committee to authorize you to issue subpoenas. For anyone who does not attend who's already been requested already have that you already have the approval for yes before before cold but it started this body had actually give the approval to do that so we do have the approach okay to the only thing is that it will also require the yes sign off of the Senate pro tem and the Speaker of the house and it's just been my the Avenue that even though you already given us that authority I thought the appropriate thing to do would be to do in that so okay yeah I I don't know whether that was a motion that was passed by the audit joint audit or whether it has actually been passed but this it has it has already been passed and approved unanimously what I remember that the ark and your alright thank you yes Sir thank you. Okay the next one is Mister Myers. Mr Myers are you today Sir. Well good we appreciate you being here. You've seen the way we do this so if you don't mind If you will raise your right hand in state your name employer and position Mike Myers I'm senior vice president and chief financial officer with one rock international eight and you saw on what will I'm also in the spirit of transparency a member of the southern bank or board of directors okay and I do appreciate you given that disclosure thank you Sir and 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 all thank you Sir. All right and I will start the same way with these questions so are you a current or past board member of H. issue past board member from two thousand eleven until January two thousand eighteen my last meeting was December seventeen. Yours was in December of two thousand seventeen with your last yes Sir meeting okay and what do you understand that you're duties as a trustee of the university would be. Governments which covers everything. And Support for the school. But basically to ensure that we are providing a quality education to students who attend there okay and. During that time did you press did you communicate with the president Mr Glenn Jones I did okay and you think those were informative top conversations or very much so okay and how about Mister Britt pile who which was the vice president for finance very seldom only at board meetings when he would present okay so really never outside of the board meetings okay. I did you ever speak to other administrators are faculty members about any H. H. issue issues often okay I spoke to classes hi Engage with a lot of faculty people in fact couple of one biology professor he and his wife went out with my wife and me a couple times Just social. But Okay not really to discuss Henderson matters okay so in the issues that we're here discussing today any conversations is that right relate to. Do any of that type stuff no Sir okay. Okay during your time on the board you thank you provided with enough information to perform your duties as trustee sometimes too much okay additionally the financial statements the financial presentations were so luminous. I'm a CPA. And I had to sort through them to try to connect the dots. I attributed that to an accounting system that was very old. That was dos based not even windows based and they're very limited as to what they could provide us. what they could provide us was what they always provided the board and. It wasn't clear. Okay and was that doctor pile that was providing that information at that time no that was Bobby Jones okay but in fairness to Bobby a given the tools that he had. It's probably the best that could be done he did to a an adequate job but more than adequate job of describing the story that the numbers painted. It's. Money was always tight. At like at all university state universities. And we needed a new accounting system a new ERP. And where do you find three to five million dollars to do that with state support shrinking. You can't throw that back into tuition you know our the demographics of our students are not wealthy people. And of people who are going to donate three to five million dollars to school want their name on something. It's not an accounting system. So they held along with what they had. Okay. And again some of this information and I understand you wrote off on seventeen but I also understand that sometimes if you're a past trustee of a. Even up public school or a or the specially the university that you may have heard thing so sure even if there's some things that you've heard in January eighteen that's fine with me but as far as the student accounts and. As I assume that you know that those were allowed to go up to forty eight hundred at the beginning. Do you have any knowledge of that. None whatsoever and I would like to clarify. My understanding based what I've heard this morning. The board was responsible for approving policy. Practice if they violate policy. With the practice the boards never gonna hear it until it's audited and found. So even if they made a practice of letting the debt grow to forty eight hundred dollars per head. The board would inferred that. And apparently. They didn't follow their practice either if the debt level for some students exceeded forty eight hundred dollars. I can't I can't disagree with you on that is just with the amount of the debt being upwards to you know I've heard I think it was the last thing I'd say aye those nine point seven million so right under ten million dollars. With it being of that it without that there's potential that the board could possibly have conversations or would have had conversations in regards to that so I understand what you're saying about the policy into practice but that's what I'm after right there so when Bobby Jones was CFO whatever's title wash We received income statements and balance sheets they were very convoluted. But shortly thereafter we didn't receive basic financial statements we were given graphs and charts and things that. As a CPA I'm also CPA. We didn't get balance sheets and income statement we got other things. So We could probably seen the growth in receivables that within a ballot sheet. Like we had for years but. We didn't or. Possibly even declining account balances I mean you would you would have seen that from the information that you're given while you were there not at the end would have a nationally yes when we were getting the financial statements right not toward the end. And again I can only speak through December seventeen. Yes Sir and I do understand that and I think the rest of the committee will too so. As far as and it just want to know make sure do you have any knowledge or have heard about the bills in the are the invoices in the checks that I referred to here today how the invoices may not have been paid or checks were being held do you have any knowledge of that whatsoever no Sir that was well after my time okay. at an always well somebody do you have any type of statement that you want to say before I open this up to. Questions. There is a special bond of trust that has to be maintained between the CFO and the CEO the president. The president doesn't keep books. Trust me to do that. And if I do my job. I can make you look really good. But don't do my job he can look good and the company can go under. That trust is important. I can't tell you how much clean Jones new or how much he didn't know or when he knew it or didn't know what. But I can tell you that CFO. If I'm doing my job as a CFO. I raise flags. If my C. E. O. doesn't listen I talked to the board chair. Just that clear. Okay thank you Sir. Senator Chesterfield. Thank you so much A I guess I'm I'm wondering since the. The system changed so dramatically from. Mr Was Jones. The doctor pal the doctor pass A was it is read a Dr new. Yes. Change so dramatically from Mister Jones to doctor pal why did you all raise the issue as to where the because I remember when we went from a basic financial statement to this This new system that was supposed to tell us all this wonderful grandiose death but didn't give us any any information I demanded to have the same basic information so I could kill what happened between years why was it not raised one of the things that I ask for the last year or two don't remember exactly when it once was a set of ten. Indicators okay and you give us these ten indicators you tell us what they are what's important for university. I'm just no broken down bookkeeper from south Arkansas okay. You run the university you tell me what I need to know what are the ten indicators that the tell us the schools on course. Next board meeting doctor pal came back with I don't know maybe twenty or twenty five and they were so confusing and so analytical and so. Nezalezhnosti all that which is kind of their hands up and so okay go back to what we've been doing And then shortly thereafter my term ended so. I'll be honestly I ask because I didn't like the basic financial statements that we got because it was spaghetti. And as a CPA I could go through and connect all the dots. But who wants to spend three four hours and doing that and I knew people on the board who were not CPA's couldn't do it so we ask for something simplified. And we didn't get that either. So shortly there after I left and it's their fault the. Do you think they counted on the fact that you are lame duck and that they get they could just don't well you I don't know. Are you aware of the. The fact that you had both members of the board of trustees and members of your foundation serving at the same time yes ma'am. Do you know who those individuals were. Also Ross Whipple was on both. You'll be talking with Johnny doesn't but I think he was on both. Deborah Nolan may have been on both. But quite honestly I don't see a conflict there if you have good people on both. I'm just wondering if that opens to the board the foundation up I'm not saying that the conflict it is that and Sam up the into being subject to for you that's my concern well but I do think it's important that we understand that you had members of both serving yes ma'am and that those decisions that were made as to whom would pay for the my out of Mister Jones is contract. Could have been yes on both of them and I think there is some overlap as we look at it that way yes ma'am and as an officer and chief financial officer of a five oh one C. three. The foundation as I understand it is a five oh one C. three at one rock international our financials are open I don't know others up for you or some other mechanism but it's public so I would assume that the foundation financials are as well jointly preparing the letter I keep hearing from other other people that know the foundation because it just a private entity does not have to reveal certain sources so I'm not sure maybe it's very is ones and they operate differently I would be surprised if that were the case if it's a five oh one C. three okay thank you thank you Mr yes ma'am Representative Lowery you have a question. Yes Mr chair thank you. You of you forever you referenced several times. That the time frame from wind and and I I know that. Well. How came on August of two thousand seventeen you went off the board in December of seventeen so you would have actually only heard reports from him maybe two three times actually okay of you referenced the previous accounting system was done on the dos system in. Did that change at all with doctor pal coming on was or an actual should change over to a different accounting system or computer system no Sir there simply weren't funds to purchase an accounting system and. By maybe using that same dos system today I don't know. Okay but you were getting. Or S. unknowing I don't know if this is the same terminology that's with the counting as it is with computers but I know that there's a saying garbage in garbage out How would you explain getting a totally different just speak Getty as you described it a totally different compilation of the same type of data that had preceded doctor pal coming on I mean the controller had not changed correct correct the the accounting folks did not change the only change was doctor pal correct what I'd ask for was for them to interpret the financial information and give us indicators. Now if you would come out of the same accounting system but it's a balance sheet and income statement that. Was pages and pages long Does not information that's data. And what I was looking for was something that was translated so that everyone on the board could understand. What was in them without the CPA spending hours going through trying to understand. Okay well maybe I maybe I didn't hear correctly I thought that you would also said that when Mister Jones was CFO the reports also were voluminous they were they were and one brit king and Brett pal came in A said looking you do something to make this a little easier. Can't rather than giving us this luminous report that comes out of the machine automatically every month can you synthesize it down to something that's understandable for every board member. And so. That was attempted once it didn't work and about that time I left so I can't speak to what happened sense okay but the accounting system was the same okay just how are you going to report the information that comes out of the accounting system right on a lot of the the things that. Were you precipitous decline all happened after you left the board but let let me ask about something that I think would have occurred when you were on the board and that would have been the selection of Glen Jones is president of Henderson I think that occurred around two thousand twelve does that sound right. Our I came in and A two thousand eleven and Chuck Welch was president and he left like a year later okay where were you on the screening committee of for the selection of the next president no wasn't there was a committee of faculty and staff and. a couple of independent people outside businesspeople who screened all of the candidates and basically submitted to names to the board we interviewed those two individuals and doctor Jones was in my opinion head and shoulders above the other person. Okay so the screening committee was not made up of a subcommittee of trustees that maybe the board chair was on that screening committee of. I'm speculating Kewley I wouldn't swear to it is but that way. But he would have been the only person on the screening committee. Okay not heard of it that the time. Clean Jones was selected president he did not have an earned doctorate at that point is that correct you do remember he'd ask after he came if any in academia supposedly a JD juris doctorate a law degree. In academia allows an individual to be considered Dr. And the board. I know we talked about it I don't know that we voted on it. But there was a discussion should he be addressed as doctor Jones and we said yes but that was without a PhD or an E. D. I was with the JD. Okay that and that was just in terms of referring to how he would be called not necessarily whether he had met a minimum qualifications to be president university correct alright thank you thank you Mr chair yes Sir Senator rice. Thank you. A home less because you said you are also on the border southern by court are you aware of anything after. Of the counts were changed over to southern Bancorp that there was any influence to A secure line to created to shore up any these shortfalls I can I was thinking this morning I can't recall when. With that Henderson change from of bank of the Ozarks to southern I don't know if that was during my time or afterwards and the line of credit it certainly after I was gone. as a CFO I have a ten million dollar line of credit that I tap into from time to time for working capital to fund some of our projects until were paid I think it's a reasonable thing to do in the normal course of business I appreciate my ten million dollar question Right now I think I have two point two million out on it but I have people that are was but it five million so I'm not worried. But I know at the I'm not aware of how the decision was made I don't know who has the line of credit right now don't know if it's southern or someone else and and that was my and I'm not saying anything wrong with the line of credit our reserve there there are good to have and manage properly they are but we know sometimes when people get in a tight or their institutions or their businesses get that thought they do sometimes the things that that are not of the top business sense as I would want to use in that that's where I was going with that so we'll we'll see if anything comes out on that if anybody knows we ask again for Senator Rapert as he had to leave to your knowledge did any current or former board member H. issue executive benefit financially from the spending an H. it H. issue or did any one benefit financially from business interests associated with of university projects James Barnes but he had the contract with the bookstore prior to becoming a board member he went through the vetting process of the governor being appointed. And Henderson was one of. I don't know a hundred schools we had a. I books court of bookstores so it wasn't a significant impact on on his revenue and a hundred on may that number up it could be two hundred. Ross Whipple testified this morning that he Was. Basically owner of southern Southern bank yes and he had the account so he. Made some money there but the process for bidding that job that the count out was as I understand it above board and everything I'm not aware of anyone else okay thanks for testimony thank for being here today thank you Mr. Myers us all we have appreciate you come and before's in doing that if the. We may have some more questions here in a little bit so if you don't mind sticking around I'm I wouldn't think so call me I'm going to go to Sam's club there were thank you. Mister Johnny hurts and Europe mixer. And how are you Sir I'm doing fine how bout you thank you Sir doing good. Share that with you what's the procedure if you don't mind standing will yes Sir you choose warning and. All right if you would please state your name employer in position Johnny how it's a retired CPA all right and get your right hand raised you solemnly swear affirm 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 Sir are you a current or past board member. current chairman the board Henderson K. and can I was a voted in January first two thousand nineteen was contrary to what Mr arm said there was no ploy to put me in as chairman my name got nominated and it was you voted for maybe chairman unanimous so that whole store there all right I would like to give by background if you don't mind if you don't mind we'll finish this and I'm gonna let you do that that's why I stay consistent you that all right and what would you understand that you're duties as a trustee is an in one step forward as chairman. As trustee we're really policy people dislike role Flippo said this morning. And we have the ability to file the president is not doing its job but we're overseers. And we will allow information this given us and we're supposed to respond to that and act accordingly did have it right. Okay any anything further is being a chairman. You know. Being the chairman care same responsibilities any other board members or as I'm concerned. We'll have a duty AS fiduciary duty to carry it out now a lot of things go through me so and is displayed it out to the other board members but far as a decision making or that they all have the same decision processes do all right. And I will did you communicate with president of H. issue and I'm in reference to Mr Glyn Jones. Yes of the you know and how often prior to the board meeting maybe discussion what was going to be on the board the week of very little contact other than that you know had more contact with them in nineteen because what was happening there and I did spend some time with him and the. But just normal you know just really bore me is when I really got spent I was and as far as those conversations that you did have informative non informative informative and uninformed it to this partial bases you know what was going was family my family to time. But he or at as it relates to the touring at something the institution you know what was going on maybe of provost was doing some new things from new programs would look developing their initial come up in board may exist I'm with the okay and same questions others as far as the vice president Dr pal conversations with whom did you have a conversation with him was at board meetings Tended one business school function. And he sit at the table asset that we had a conversation within and strict the business. The board meetings okay. Did you ever speak to any of the other administrators are fact remembers about any age H. issue issues no the only thing I did I've given several talks to the business school over the years I've tried to go back because on the sixty seven graduate from there. And I would meet with our doctor Miller who is chairman business school and have a discussion here about programs and things just you know fill in that says it. Okay. Thank you and I know you're aware of this forty eight hundred dollar thing that we keep talking about on the student accounts can you tell me if that was ever discussed in a board meeting notes rivers not discussing the board meeting found out about the same time with the board members did when we found out the cash sure you had all this popped up that that created this is partly creation cash flow because of our cancer sebum students as first I'd heard of it you about the approximate time of that if you remember. I've got a time line here probably so maybe I can tell you. It will be in in of nineteen. First day's secondhand first second third welding within First half of nineteen probably may of nineteen all right. I'm using as a guideline here all right so you had no knowledge about that the university was allowing. Students to carry a balance. No Sir okay now we never discussion board meeting so I guess from that standpoint I could assume that you didn't know that they were allowed to exceed the forty eight hundred either not until all this blew up that's correct all right. Financial statements that we've been discussing the over statements in the under statements. Did you have any knowledge of that prior to. Finding out from lego legislative audit no there may be some errors did not okay nothing was ever discussed in a board meeting about that okay. And then these bills in these invoices you've heard the thing that I've said as far as checks being held or invoices not being paid no selling a broken record with a more keep going. Did you have any knowledge of that prior to the lake audit coming no I tell you exactly when I found out about it some June twentieth two thousand nineteen. Approx two twelve thirty Jennifer Boyd Elaine the will call chairman John cuts in two days advising the concerned about cash flow. John has struck two lane the bone to contact Larry wall to direct the state department of finance administration about getting money to cover this. And that was the only June twentieth two thousand nineteen that's when I found that we had a lot of accounts payable. The board to take any action in regards to that after you all found out about it well then the next position would do is doctor Jones is on vacation this time and I had the lane to call Lehrer Walter directed for administration talk about getting the money to cover this induction Jones came back on June the twenty third two thousand nineteen from annual leave. And that's when he got with me to requested a meeting with the governor depart finest ministration to get the six million dollar loan. And that would been on June twenty fifth and we met with the governor on June the twenty sixth okay what a doctor Jones I guess you so as soon as you heard about it you talked to doctor Jones I was flabbergasted that so that cannot believe this happened to us what a doctor Jones said he said well I can't believe it either. That was the extent of that. That was the extent of it but you I want a local election I will let year just seconds are. AS really alone will have on that so at this time you can go ahead and give that statement thank you Sir. My history is a billion of CPA public accounting for over forty years. And I've done audits on all size companies have dealt with a lot of CFO's over my time and I'm me some good ones. And I never had a sea of other than the one we had it Henderson they gave me a bogus budget. First time a lot this ever happen to me. And he presented this budget to us to the budget workshop in which six board members are creeds planted time was not there because he was out on the board that so he you know unfortunately he could hear our conversation. We have detailed conversations about the budget and. Dr Alex plan to this one we will have a positive flow the at all the stats here what I would make it work. Doing all that. So with that statement in doctor Jones made a comment and our budget workshops to John we may need a million dollar line of credit just for temporary cash flow you know you statement may not come in. Last four so this is so million dollars so we didn't voting today ABS budget you know we talked about all those issues with and board ask a lot of questions about that budget okay. He satisfied us here we got to see a photo that CPA a PH the with years of experience is no reason world he wouldn't have the facts on this. No doubt in my mind I've never been around anybody that did that kind of a job. I am very unhappy about that because it makes the board look bad. Because we relied own comp with people to do their job that it didn't do their job. And I am not happy campers you keep up to my voice and have testified here before but. Well actually my career I never had I work love CFO's they do not a PhD Dever CPA's had a lot of experience and did a really good job and I never found a bogus budget goes now I was doing audit on those companies okay. So if I hadn't found something of putem measure letter together and presented to the management team there of what happened in as CFO would been fired more than likely out of town so okay but I didn't find it because the qualified people doing their job. And the manager that company relying on the C. opposed to do his job and they were doing their job. So are sealed voted do its job. That's what it boils down to. You don't bill CPA the PhD and tell me that we got a good budget here and we're four million dollars down in accounts payable and I didn't know that and he had to know that. Is no way on god's earth he would have known those facts. And I'm sorry be that local about evidences with Felix just all right nope no problem whatsoever I promise you there's a lot of people yes in this room that I also state so and so as soon as they're saying to the board and the board was blindsided bill this not a board member knew all these facts until it blew up for us and that's why a complete document in June we went through the process thank goodness doctor Wilson a issue. We had a discussion with them I thank doctor Jones million by the contact to get them down there and get them involved and bring in qualified people now if we we've got a CFO now this made extremely qualified. It with hard after doctor pal left in interesting doc pal was it bore me on may the nineteenth resent this budget and lease. May thirty one. To go to Baylor no of Baylor known this fax I don't think they'd a hearty. The ice we. But anyway It's just it's just a sad situation and the board feels bad about it and yes you know you can read and write it down. Anything in the future they'll be some numbers are we can allow with the CFO we got now you have to worry about having the right numbers we have look at on a monthly basis those are going provide multi finish statements and deftly on a quarterly basis we have a board may we'll have the exact facts of where we are at all times in est member we've we've got the right CFO thank goodness. All right let me ask you something you've got a statement of time line is that something that you'd mind sharing with this body no of okay do you need a copy of it yes I do this only copy I've got okay well if you don't mind we will sell with through January twenty one. Okay. If you don't if you don't mind just if your initial the bottom pages there and then the staff will will bring you back a copy that's fine. Thank you thank you Sir we appreciate that problem representational of in Europe. Thank you Mr chair yes we are in state government I've had a few people we trusted that did things they shouldn't do too so we'll get that the yeah I think that the thing that comes to my mind is there seems to A been some indications all along the way that that there were things going on purchases being made actions that were happening that were ignored are or not he did you when you have for example you had a couple of those a no confidence those don't come out of no where that builds over a couple of years. And while I would agree with you that all board members have one vote in the president the board has a different obligation to the board and the other members to. Did you see any of these things building that led up to the vote of no confidence you had quite a bit of contention on the board and it seems that some of those things would have indicated. And we've got some problems that we need to really look into those those heated discussions really occurred in eighteen and nineteen though not seventeen because I had audited financial statements provided by the legislative audit which I've got in my file here that shows a very positive outlook on it there was no management comments. The whole nine yards with a good deal there okay eighteenth when it went by so that way I will there's no problems with the staff people didn't see excessive spending back prior to that not not to my knowledge to June of seventeen we got these ought to find saves no November of two thousand eighteen okay. There's no measure letter no negative comments at all about those sure now then there's a voter comes in eighteen and nineteen they go back and re state seventeen. Because accounts receivable were overstated now in. I am so that was great okay I get that I understand what you're saying you you haven't had we are called on June seventeen on it. I understand you haven't had any bad on it all right of I know this is my my fault let's I know it's tough we're all used to just talking back and forth with us if you go back to try to do and you to allow him to. Ask his question out appreciated. Representative elements yes so I understand that you were given false information yes and I understand that that. In hindsight they found that out I understand that there is all always things we can look back on and say I should have. But it was my understanding and maybe I'm wrong that there were. Concerns brought up in previous years even in seventeen that the spending one was beyond what we could afford and that there were some concerns among other staff about leadership and my wrong there that was not discussed to me it was brought up in bore me by Mr RO talked we talked about it. And it had several discussions about it but when it came down to voting. There's nothing to be done there we you know we were assured by the CFO and the president that these things will be taken care of okay thank you Mr. Yes Sir thank you represent so Senator rice. Appreciate your statements of some background on on the date with in your line of work for. Forty years or so. In you already. Related that to. A brick pile. I'm I'm using my own words got a snookered you. Of the say the least you do you see any way. And I keep hearing an audit these things have been restated now do you see any thing other than. Things were done for fraudulent. Purposes at I would just say fraudulent purposes because I'm not attorney to define fraudulent but. We had gross misstatements done okay and legislative audit call to those and they're eighteen and nineteen audits okay now the at the pharmacy up in charge of his operation. I should know about those things before the legislative audit got there I should be able to give legislative audit's finance state for them to audit. And they shouldn't find gross errors in the financial statement if I'm home if I'm doing what I should do is a CFO. There's a voter they cleaned it up they should be cleaned up for the got their. And I'm using terms that the common man those of us in business if we did something in our business that I thank somebody would say you committed brought. In even though they may not have received additional financial Benefit out of it they were doing it keep their job and I'll go back and some people think I've got against a wall theory is they were reaching out happy a lot of defining why did you do that when you get desperate and and I hop into the sector state might Pompeii you know as may public statement to the governor's association with all the governor sitting there the China influence. Of our universities and and and other. Institutions of education that they're trying to get a toehold in and I'm I'm I'm wondering it again the board may not go to stop it in the board is said to mom said there were these trips it it concerns me that we had an institution that was going to China that we're going to say let us educate some your students there had to be a financial deal they're in they were desperate and I I thank you had a couple people doctor Jones in and. Right now were over there seeking Financial. I'll tell you exactly what doctor Jones told me why we're going to channel. He said what we're looking for getting quality students for students in a year that will back here successful because they will be good students we can develop a core people here in the year to increase our. Officer revenue but also bring in quality people that will under the new four wheel for graduation you know in in the state funding is not based on how many numbers two as you and rolled is based on the numbers did you graduate. And if you don't graduate then your state funding drops in that you said I'm trying to avoid the state funding dropping but getting more quality students in here so the graduate were you is a board member aware of the the Chinese influence in universities by putting money into programs and now we're running into work does it have a some critical information that was being passed not say and eight years you that it but there they were looking for including universities. Were you were not aware of what you're saying I'm just dealing with Henderson and and what they were trying to build up there so far as anything else and other universities in the Chinese influence or whatever I'm not a. it's come come come out there were like it is a field hockey and as I've done with others on Senator representing beer to your knowledge did any current or former board member H. issue exactly benefit financially from spending an H. issue or did anyone benefit financially from been dissenters associated with the university projects and I'll within that we are we've already been told about the the bookstore things that aren't where there's anything that is the only thing I'm aware of no we we've topic doctor Jones being chair of the board of the bank you know the. That's already disclosed a James Barnes was there for shorter time but the there correct the contracts were signed a long time ago before rearing thought about being a board member and I talked the governor about him being on the board the sale and governor really wanted him to be on the board and as you you don't know of anything in the in the thirty four million or so construction projects it was ever in question no I'm not aware of that at all I didn't know that to we start having these hearings okay thank you for being here David I do appreciate that your candor thank you Mr. I do want to just to with that could you explain this buyout contract with doctor Jones who who is involved in preparing that and his original contract no Sir yes Sir. It was I was involved in it it was passed round and board members draft of it to look at and. Decision was made you know he likes that five year contract missed arms are spoken to that. But. We know and hand let Mr said you know you do something wrong but we tried to do it so it would easy on out of there and not get into a huge lawsuit. And cost us a hundred fifty thousand or with a legal fees or guessing do just to get to fight that contract if we lost the contract or he won we had a million two on the table so one year sabbatical was easy way to ease him out of there and I'm the one that met with him in July. Because you want to stay on the December thirty one. Now may with him as we've got a board may July nineteenth and agent resignation on the table the board may July nineteen so he did that. That contract that's an actionable item of the board is it or is it not what you vote on that yes okay you said it was passed around the of the does drove to realize it voted on yes it by and everybody had a copy of it well that's fine all up all I'm saying it was voted on and what was what was the voters AT and something that was an executive I have to look at I don't have that you don't remember if it was unanimous or not don't have a clue right now okay alright thank you Sir even Representative Lowery. Thank you Mr chairman. Mr Hansen you referenced that in all your years of dealing with the CFO's or the this is the first time that you had received a bogus budget are you referring to the nineteen twenty budget that in nineteen nineteen twenty yes so we Sir you're even referring to the eighteen nineteen budget is big focus because we had that budget workshop may the third to go overall that he presented this to us in detail yeah did you think it was bogus at the time no did not we voting you menace on this thing manifest became the board may or may the nineteenth and with voting unanimous on this because you made a presentation to us the same thing and we voting unanimous for this budget with thinking that was exactly what we were okay we had no deal that we were five million dollars in the hole when he had to know that. What was you you referred to and I can't remember if it was an answer to a question from the chairman or just in your statement of but you. DO referenced asking of president Jones a ballot. The the findings the fact that the the university was not in a positive basis but actually was for five million dollars you asked about he is what he felt about it in you I keep member what you characterized his gun I don't know the whole story behind that what happened but I wish you were spending way too much money but he didn't have the details to tell me what happened. Trouble you troubles me but brit but read pal should give him all that information that's his job and he did fail down on the job I didn't do that. Well several several things that I've if this is been enlightening today is is as we have heard different board members testify including yourself that there to really have been a number of board members who are CPA's yes so as a CPA that did you not have it at least some curiosity some red flag about. Henderson spending practices even before some of these bogus budgets that there had been declining we fund balances to it was getting the end but he presented the the reason we would get out of that in those budgets and he had it well documented how he was going to do that the presented to us and here again you know you got qualified people to fill to do their job and doctor Jones was there spoke to monitor him getting that done and we realize that now. Great in the future that will ever happen again. But. In my years experience in the CPA. If you got qualified people you turn it over to a trust him and make sure you do they do their job. Well I'm to be perfectly honest and hope that in the future when there is a changeover in there's a board of visitors that there's a clean sweep. Because I I find a great deal of lack of intellectual curiosity or financial curiosity or fiduciary curiosity whatever by the board members there is there obviously was involved and I mean you reference and I just want to make sure I understood what you said did you recommend Mister Barnes as a board appointee to governor Hutchinson the governor asked me about. David Barnes and I said all I know is a good businessman smart businessman he said I like putting on the board Henderson. Okay that was just asking for your and then also the the Mr Myers reference the selection of Glen Jones is president and that when it got to the board level there were only two candidates that were referred that's correct did you chair the search that actually got to that point of recommending to candidates to the board yes I had eighteen people on that committee. Okay eighteen people nineteen people over from local community professors all the way through the students we had a really a great mixture of people they interviewed all the people and they came down a recommended these final to I didn't have the decision I laid out they would put a point system down in ranked everybody as went through and if you didn't meet a certain criteria you would drop down the hole. Get one of the list one of those two people that the eighteen people agreed on not just Johnny hasn't but the entire eighteen people. When I was at a minimum criteria Lister was at a point system the point system trying to trying to so everybody have the set on be on the same page of what we're trying to accomplish what our needs are there at university trying to cover everything that want to present should do we try to put points on that so they can all look at the resumes and interview to people and see if they met the criteria that we all that the committee had put together okay do you recall if on that point system because we've run into this before on the of selection of the governor's school locations that high and low point totals per individual we're not dropped out in it actually ended up adversely affecting it do you remember if that process was taking where any individual member of their say there's eighteen that their high and low point totals were eliminated no we went strictly up the letter of the the point system and making you know we wanna make sure we got the highest score of individuals okay so it it's possible if you don't drop high and low that that fits several individuals could adversely weight against the superior candidate. And Representative Lowery or we. I'll I'll withdraw the question thank you Sir I really appreciate that okay thank you thing Mr chair. By Representative Richmond. Thank you Mr chair. In your testimony so far today it sell it you know and you're very frustrated and I understand that because it looks like you're misled that all of the work but I'd like to hear you say is that in your testimony today that. You were deliberately misled by the CFO in the budget that he presented to you yes Sir was there any other officer or former officer. Of the universe the that conspired with them to mislead you not to my knowledge all right. The other thing I would like to ask is. I know that the board is in flux now and you really don't have a lot of influence on what's going to happen going for for Ford so much but in your opinion have you seen or do you have an opinion as for as. The business plan for the future of Henderson state university how that is shaping up in order to move the university for. Bring in Arkansas state in with to appropriate people inversion look positions it's been a great asset for Henderson. And they're going from top to bottom look at it every department every program we have everything to make certain that we have in line for the future what we need to be teaching for the future and the the programs that are not performing bill have to perform or they'll have to do something else because it's a big business to run there but you've got to teach students and we try they will figure out what should be teaching for the future for the students not just in the past you know that looked future to with Arkansas state there and very confident we're Henderson is going to wind up and it's a positive thing and it's just going to make a major change in here State University and the southern part of the state of what we can do for some students there that need Henderson bad. Because you've heard speaking today. At low income section okay. We need to have Henderson there to cover those students. And the. If I have very optimistic about what's going on in the pro should Arkansas state is doing they've done a phenomenal job to get us to a point where we are. And they've they're put in the budgets together proper budgets. By department functions whatever and there's a whole story right there and we got the right CFO there to do those things now all right Sir I appreciate your answers in your candor thank you Mr chair. Yes Sir thank you Representative Hillman. Europe Sir. Thank you Mr chair disappoint question Mister that's not maybe I missed it when you started your introduction but what you're do you come on the board. First time was governor Huckabee on boarding two thousand six I stayed. Two thousand thirteen hours all three years of one of the foundation board and did a lot of work foundation board FOR. Several years of still on the board there. And then of. Which isn't dog the bill has put me on two thousand sixteen put me back on one the backbone and asked me to stay on this year to finish out a merger with Arkansas state okay A thank you and and thank you for the house my next questions on they were on or Jana foundation at that time but so you answer that thank you thank you Mr there was a question came up today that the math answer concerning. Conflict of interest on that do you do you want to ask a question but the foundation Mister Herman. Someone asked that question data. Not I would the next question I was gonna ask was did he serve on the foundation at the same time as he was served on the board rector he asked that question answered that question without me asking okay and then you want to say something that yes Sir you go ahead it was Mrs Warren conflict of interest you know remove the nation act if you have two board members. Own foundation that triggers apple So we only have one at a time and you can't serve as an officer in the foundation if your board trustee Sanders. Okay eight your question at that answered one get a thumbs up on that side of the room yes Sir it did. Okay I don't have any other thing anybody else yes I do I'm sorry Mr A represents bring or did you have a question. Never go green. May ship ever to. Thank your own okay I'm on thank you very much I was just wanting of Mister Hudson to respond to the question about the of the four way in the conflict of interest so he would hit and absent that and Mister Hudson thank you very much for being here joy Charles for your I am a Henderson graduate a proud assertion that thank you so much. And before you leave I'm all I'm all I ask you to do so you may not like it you think about it but. And I'm not saying this is. Amend the whole board is is here but you are the chairman and you speak for the for this board. And. I guess so you're the chairman of Henderson state university which is basically an institution that's failed without state support and of course we have other institutions across the state with trustees at all of them. What would you say to them and what would you say to them that would help them to make sure that this never happens at their university. Don't rely on you see of both the president. Dig in there if you have to have some more detailed questions that's where we. Yeah we should have done that but we relying on clause when you've got quality people acted not good news you know I mean I'm institutions have a CFO this a CPA in a PhD with a lot of years of experience. I mean it's amazing well he had what he didn't give us. And I and I do agree with you a like I say I think that's a a lesson that all of us need to know that's happened up here unfortunately at this institution there's been individuals that we've trust we trusted and you know it's just something that even if your best friends there if your best friend is they're doing it you do have a fiduciary responsibility as a board member and we have got to get back to the fact that board members and trustees are not just for a position they're not just for a title that there's a duty that comes along with that so I do appreciate you saying it and like I say if anything you know we're all this goes I don't know but if anything comes out of it in addition to other legislation that we will prepare I hope that the other trustees wake up even if they've been Frances somebody for thirty years I don't hear and just get in there and do your job and make sure that nothing's being pulled over your eyes so thank you Sir thank you I appreciate you being here Sir. Mr create Spaniard your neck Sir. Yes Sir you know I I don't know if any of the other members are going to want to recall but I wouldn't see it thank you Sir. Mr span thank you for being here today thank you. Okay if you would. Raise your right hand and state your name employer in your position I think it's creed by and I'm self employed as the VA. And I'm on the board currently all board of trustees and FOR state university okay and 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 Sir. All right quickly all do these. Are you a current Tricity yes I am okay and could you give me a. When your term started or if you remember approximately yes Sir may the ninth of twenty nineteen. started my tenure on the board okay it was a for an unexpired term of James Barnes who had resigned and I was appointed in may of twenty ninety okay it's and what do you understand that the duties of you as a trustee or. FOR the surest possibility to Henderson state university and to those people state of Arkansas to the governor to a full field the the obligations to of oversee the operations of here's a state university to the best by bill thank you Sir. Let's see you were there in nineteen so did you have any communications with the doctor Jones while you're there yes Sir Outside of the normal trustee meetings are only tended of what to where he was the president. But the the first of first one being may seventeenth at the The the meeting where the budget was passed but before that he called me the day after I was appointed to the board and asked to meet with me you know rock before the budget meeting so he could provide me with information about the budget. Okay and have any conversations with the doctor Britt pale any there are no Sir I never had any conversation repel all he was at that meeting but did not speak we just of small talking reduced our sales and. And conversations with notice okay. Did you ever speak to any other administrators are faculty. Members about any issues that the age issue. A yes Sir after the things really got heated in June as is Mister Howard Zinn and yes referred to and the I guess June and July the I spoke with the controller. On a more than one occasion about information but. I didn't who would part A would that be in your meta name would have been leashes Lisa Franklin I thought so I just wanted to get it a record yes Sir all right. But not not other prior to that okay do you remember what those conversations were about with miss Franklin about getting current financial statements in about what she had been doing. Prior to that import she would be doing going forward that is getting financial information. And then also about the accounts receivable I ask her about that at that same time again little vague on the time frame but I think it was late June early July. And that's what I'm about to hit on the accounts receivable you're talking about with the student was a student debt yes Sir okay. And you give me whatever information you have on that forty eight hundred dollar number or. If what and I don't care if it's somebody told you that somebody else. Told them I don't care about that in here I just want to know who when I say I don't care I mean I want to know who they are the only information I had on Mr Cochin call me the right after he learned it and to let me know when of course was saying that the board members each spoken to were very much upset about it and wanted to get to the bottom of it and he was going to go over there personally look at it and I said that's great I'm glad that you are and I said I may call the leash Franklin myself I had only met her at the one time. At that to the initial board meeting that I attended but the point is that of being both of us being CPAC agreed that we should and that he would report back what he found and I should work back what I think. Okay. Any information about these financial statements that you've heard or anybody mention anything that they knew anything about these misstatements or understatement over statements that they knew was out there or knew this was probably coming anything of that nature well yes Sir I think you would be a part and parcel of my statement that I read to you if if that's possible that it really goes to the very core of the situation. That. What I have heard heard at these hearings the last two days that I've been in attendance. Of was all about budgets it's just been budget this budget that budget misrepresentations and the core of the issue is one of what's happened actually what has transpired I'm a custom in mob business to to look at financial statements as a guide as you're going through the year. And what I was was. What I found most appalling was simply that we were not getting. Correct financial information. On any basis throughout the year so no one I think Mister Joe up Mister Hodgman the right we weren't getting any information. And the information that was was provided was very of convoluted in was not in a form that we could understand. And I'm just of of sort of planes open person I will see what's happening in real terms what are our operating profit or loss if you will and that's why we have not been able to get it I'll have that a little more my statement yes Sir and a promise you will be any more plain spoken in may so I welcome that how about these a. Checks and again I know that you've come on just in nineteen but holding of checks not paying invoices what what have you talked to any board members about or heard about. What I heard about was a relative. Following that of announcement that are student counter C. bore out of hand we had ten million dollars. In accounts receivable on the books. I was making those inquires in miss Lisa fraction Franklin told me that we clearly had the. Several million dollars in unpaid bills that needed to get paid and that was the desperate need for this six billion dollars. And of course again must label will amplify a little bit of that but. One is that there was a substantial amount of on paid bills some of which were being held. I heard it that day from ms Franklin that there was something on the order of a million two in invoices that had not been presented to her department so they weren't on the books. Now. I don't know much about that except she did report that and I reported that back. Did she say anything about whether or not doctor pallor doctor Jones would have known that also during those conversations. No Sir she didn't say that they should have known but clearly or that they did know maybe that's the didn't say that they did okay she's she's a she simply said to me that they furnished me up doctor Jones provided her with those invoices. Sometime in early July. And that he told her that that Brett powers holding both invoices. Now. These were some wrought large invoices and so they were something that it that everyone by when you said July July of early July of nineteen nineteen yes I did in that it that that the situation though had been going on for some time maybe a year or more that there were invoice is being held or payments being held accounts payable were high in that vendors had gone on paid that this had been going on for a long time because we were so so short of cash in course again my state mobile app phone that'll be well that's really all I have so if you want to go ahead and continue with that statement that we good Mr band okay I think it will be helpful yes Sir all right Sir and I will have a copy of this for you my name is created by an hour appointed by the governor to fill the unexpired term of James Barnes to the age issue board of trustees. On may the night twenty nineteen I received a telephone call from Glenn Jones the next day welcoming me to the board and requested a meeting the next week I met with Glenn Jones and reptile on may the fourteenth my first meeting of both men. In little rock. A provided me with a copy of the proposed budget for the year ending six thirty twenty which was to be the budget that we would be. Deliberating on of. The following Friday at our first at my first meeting may seventeenth. And I explained to both of them that while the budget was helpful I was primarily interested in finding out exactly how the university was doing financially at this point. And now I have to admit I did a little bit of research prior to meeting with them and I had gone online in scene the last audit that was in there for the year ending June thirtieth seventeen legislative audit. And it reflected a modest surplus of a million two. Our could you could certainly look at that and see that it wasn't a great surplus but a surplus none the less. So it gave me a little bit of east but my pork to them was I want to know exactly have the university is doing at this point that this was my a so certainly they should have had financial statements through April thirtieth ten months into the year seems logical to me. And I specifically wanted to know if the reserves were adequate. And I just wanted to hear that. Of from the president in if our operating results through ten months as I said of ended April thirtieth would reflect a surplus or deficit that would be paramount if if you had a million two. Surplus and you had a million two lost you're not in good shape but if you had a million dollar profit you you might be doing okay my point was that I just need to know that Jones quickly responded with yes we have more than adequate reserves in our cash position is good. I quickly looked it pal and he was on the other side of the room and he rolled his eyes but made no comment he was not allowed to talk during that meeting. I repeated my question that I wanted to know our actual results through our most recent month in. Jones replied by saying that we might not have a surplus if we do we will have if we do have a deficit he said we will have only a minor amount. Now that's reserve. And deficit we're talking about and he says if it we do have one it would be reminder map. And he spoke as though he knew exactly what he was talking about right on top of the situation. He then went on to explain handle alone to tell you all of the many wonderful things he'd done Henderson and how he had altered the culture and it brought it from a long period of stagnation to grope one of growth and prosperity. In spite decrease funding from the state. And I had no reason to believe otherwise but left that meeting somewhat confused by the edge of that receipt I would hope for receiving a better understanding of the first meeting of the board. On Thursday at the meeting on Thursday may seventeenth I asked the same question and receive the same answer with no support from the other board members for any further explanation. So I I didn't pursue it couldn't pursuant this meeting was also the meeting of for the purpose of receiving approval for a one million dollar line of credit. And. I didn't think really too much about that the reason that was given for that additional line of credit or that line of credit was the only even cash flows. Not unusual perhaps. And I didn't think too much about it and the rest of the meeting was fairly uneventful passing that budget which I didn't vote on because I was asked not to vote on. As a new board member I didn't have enough information to to be a vote on it and others had participated in its preparation. Up but none the less I didn't object to it either in there was no record of that. two weeks later Jones call me to say that. we may need as much as three million dollars this one million dollar credits probably not going to get it we need an three men dollars. And he will know of that gave me heartburn his words. I said well it does. In perhaps we'll know a little bit more about that when we have our meeting whenever that is by telephone or any other purpose any other way that we might. And none he assured me that he would get more well obviously special called meeting on July seventh resulted in the six million dollar advance being approved by the board and borrow that money from the state of Arkansas to be replaced by the end of this fiscal year. And over the course of the next to. The bill would hail or skews me numerous meetings and heated discussions both with and concerning Jones over the course of the next two weeks. And that's where all these other things were talked about and discussed but a lot of different of meetings in that regard in that ended in his resignation on July the nineteenth. And not some members of the board board of trustees were very much opposed to the termination. Of of Jones believing read the entire shortfall was a result of actions taken by Brett Powell. And there was a pretty strong feelings about that and I'm not saying that that brick pile was not at fault perhaps he was and I don't have enough information to make that determination. But he had left in it seemed rather convenient to me. The person that had left and taken another job at pretty prestigious university. Of. Perhaps there was more to it than just that that just that what was being alleged. And it was of course referred to AS is these student accounts receivable that were the real problem and that was all called by brit Powell that nobody else knew anything about it. And I would agree with Mr Hutchinson that nobody on board to anything by but Perhaps they should at I don't know. All wines some others clearly solve the problem. If one calls by years of operating loss in gross mismanagement. There were those that believed otherwise in fault vigorously to maintain the status quo. Absolutely Jones resigned under this pressure and particularly after the vote of no confidence for two consecutive years. And a large amount of time and effort. After skews me only after a large amount of time and effort in the release in November. Of the audit report for the year ending June thirty eighteen. By the legislative joint committee and the release of the audit report for the year ending June thirty twenty nineteen. It occurred to much later January twenty. At at that point all of the members of the board of trustees began to see what they had been told was in fact true. And there had been several years under the leadership of Mister Jones that had resulted in poor management. And poor management decisions I'm not saying that. I know anything about what Jones is did in those times but what I have alone later is that there were some pretty poor management decisions made by some and he was the CEO. So that's really what I'm saying and the. The. management decisions being made that left many unanswered questions and without a doubt had resulted in the net deficit in the university's net position of some fifteen million dollars and that is very serious thought fourteen six I believe to be exact. But I would go back there. And point out that in. June on June thirtieth of seventeen it's been report reported here but the legislative joint all committee they had a million two positive. Of net position. And that figure. Was subsequently changed. In the next audit which came out as I reported in November of eighteen of nineteen excuse me nineteen. That audits figure was changed as a result of the student accounts receivable issue old accounts receivable being written off back million in so it left us with a net deficit at that point of about three million dollars we were had a net deficit instead of a net. Positive position back in June of seventeen. And yet the V. eighteen and nineteen budgets both reflected positive figures. Net gains if you will operating and those prior years. We're showing losses everything was losses in what actually happened. In eighteen and in nineteen in yet. A budget was prepared in past that we sure want to surplus it just didn't make sense and it does not make sense to me that this day. How that could happen. And I see it clearly that and certainly it's been testified to your nobody knew anything about it will but nobody went back and actually looked. At what happened granted we didn't know until June of nineteen. That the dumbing to November of nineteen that the deficit at June thirtieth of seventeen was a net deficit and honest positive surplus but it was. Certainly clear that we were losing money yet nobody was able to point that out to anyone on the board. And. Yes I can look back and say bill why didn't somebody ask and I think that's a fair question for you all to ask but. They didn't. And perhaps if they did they were told things by the CFO or by Mister Jones that might have made sense at the time but I'm just one that always wants to see it on paper I want to see what the operating results are in some summarized fashion again mid year quarterly report something that shows what the operating results are for that year so you can say well we had a budget of twenty five thousand dollar surplus and we've already lost two million dollars how can how can we reconcile that but you can in the middle of the year you can't actor's happened that's where we found ourselves now let me go on the bill Alright I mentioned about the financial of the most crucial piece financial information is in from financial statements in as I have stated many times in the last twelve months. The absence of good sound interim financial reporting of current conditions is much again to spearing ship without a rudder. It might get there but it probably will involve a lot will look. Also prior to the involvement of a issue. N. H. issues funding of financial reporting there was never any evidence presented to me. And never any evidence that I have found in the in looking at all of the board of trustee meetings was there ever any Friesen Tatian of actual results of operations that's what I'm saying to you today if you buy confinement I'd love for them to. To show it to me. FOR in fact I'm alluded to that question is the first one that I asked Jones in our initial meeting and subsequently at the may seventeenth board meeting and the answer provided of course proved to be incorrect. In fact some might say grossly incorrect being a part of this board since last may I have witnessed a great transformation in the financial reporting systems and the transparency introduced by a S. U. administrative staff particularly CEO Charles Welch and CFO Judy banks. While I believe strongly that nothing of this nature. Would ever be allowed to happen again at age issue. I am not nearly so confident of that fact if the merger with a if a issue were to fail. Since August of last year I have called to be prepared and presented to for approval to the HST you board of trustees a meaningful conflict of interest policy which was totally absent. In anything that we had we had no policies it hinders. I have also prepared in calls to be prepared a set of bylaws that was adopted. these words adopted in the in November of this the issue of nineteen. But they were presented couple months before. And both of these items were sorely needed in prior years by those these boards of trustees but yet some of this board opposed the passage of those items. As basic as they are to the successful operation of the institutions both of these items were ultimately approved and are now matter of record and I furnish those to you senator Hickey and I'm assuming you've patent along to others I think that conflict of interest policy which addresses. But not only transactional conflicts but relationship conflicts in in it's much tougher if you will then then up then most conflict of interest statements and certainly what the state of Arkansas requires is disclosure to sector state. And in that's not to say that's not important but it's to say that we need that institutions of this type need a very tough conflict of interest policy that clearly were points out that not all conflicts or bad is has been talked about here today but. conflicts or it's all about disclosure and if you can disclosed to the other board of trustee members that I have a conflict with this situation and I'm therefore recusing myself and I'll leave the meeting. Then. That's fine not all conflicts or by ad but certainly conflicts that are not disclosed are very by and can result in some very very bad things and often times in conflicts of interest perception is more important than reality and that's why it is always important to to adhere to a policy set forth and we do have wanted Henderson they on I want to point that out in the bylaws as have been referred to here today we're not in effect before of they were introduced and passed last the. Last fall. In summary I would just like to say that in my opinion simple oversight by the board of trustees. And with proper management communication of results by the staff charged with performance. This financial debacle might have been avoided. All positive note however I do believe that under the leadership of Dr Welsh and of those individual leaders that he will oversee. Henderson state university. Will lead Henderson state university into a position of strength and respect that it so richly deserve. Thank you. Thank you Mr span and. Do you need a copy of that no Sir okay sure if you don't mind and some of our staff will pick that up and as far as the stuff that you presented meet all the members here today do have a copy okay that's great yes Sir we do appreciate that. Eighty. Representative rye I think your first yes Sir. Thank you Mr chairman Mister Spence yes or no you went over some things that that is really true I mean it's actual the things that you said is true and and I'm sure that now that you went through all the years you can save it for all the problems probably worry at First of all you you are getting statements correct H. month you know and help can you really know where you are Mr span and lands you know what you started out with the budget if it was a yearly budget if it was done on a quarterly basis when you guys made it. I mean you know you think well you know we started off with the one point two million or five million or I heard two different things that you you probably know but you know you start out with say five million and in the black and and you know we actually two million and the whole way on you know once you go through all those things you you you you need to find out what cost yes Sir and thank you that you probably are normal going here well first of all you had these accounts that the student today and that you guys don't even know where correct right and then also the commission man you got the holding of these checks now we never have got the total picture of what was actually be inhaled but let's just say that. Yet bookkeepers there and they said well if you can't your number we will handle this the banks so you gonna hold on to a maybe. Three or four hundred thousand dollars checks the time okay now the auditors let's just say you know one year you said to come out and and they were you know a couple million and the and the black. Well you know there's a possibility there that you know when when they checked the folks to work in an office they may of said well here's the checks you know this is been paid well it's may have been paid but it had been cashed at the bank. So you know there's gonna be a big deficit right there. So on. I don't know you live in alarmist but but it bill that's tough to to learn as waited ET is in when you're looking at it. Held checks for example. If the auditors are coming in there for a full thirteen months after the end of the year how can you possibly say that it's the auditors fault I mean I don't think you'd K. and and I'm just saying that it's very difficult to look at something thirteen months after the fact and really make a lot of the decisions about that now again. A little more frequent in a little more timely audits would have probably been appropriate. But more than that. Monthly or quarterly actual financial statements would have helped greatly that's right follow up Sir please you know Mr span one more thing yes Sir just because we see checks that are made out to certain places for certain amounts that does not mean that that check is a good check and that the balance of that account is a true account balance right well as you on top of that you're not even getting a statement each month so how can you know Sir great. Thanks Sir yes Sir Senator rice. Appreciate you being here today I know you work on the board that long for this will go up so I appreciate your presentation is very understandable You made some statements that are in addition to what we heard previously not just today but other ones too some of it about the finance but you also said doctor Jones. stated that H. issues growth and prosperity. was under his tutelage. And I find it ironic I guess before you came out I'm guessing it was the summer indices vacation out of the little little anybody for taking her personal vacation when he's cruising down and Caribbean you had a financial person or two universities saying we can't make pyro right and. Yet you still got somebody after you came out on that is boasting of growth and prosperity when when the students are allowed some to go over ten thousand dollars debt and we had to a Representative of the sitting here today I believe total at a number of years ago that he couldn't get the in role because he had a three dollar parking tickets quite a change yes the ask you this it's been mentioned here today that poor presentation not a good format from doctor pile but yeah it's been touted about his credentials do you see any way this was just. All all lack of anything are was it actual intent to deceive which to me means for all. Of the trustees. From doctor Pat sent rice I would have a very difficult time mention that question for I do not know and I I'm just saying it would strictly be a matter of conjecture I've never had any conversation with Mr pal and I just think based on what you've said there it certainly does bag a little further investigation by those of persons that might be better equipped to analyze but not I don't know but I just don't know thank you miss him from your background please proceed to me I mean I'm not I ask you what Senator Rapert asked are you familiar scent your time there is or any concerns been brought up to you that you feel worthy that there's been any financial gain from anybody that you've seen or heard of that that we need to know about today no Sir I none that I know of thank you thank you Mr thank you. Representative Lowery. Thank you Mr chair and up the spent thank you for providing to us the bylaws in the minutes I I did make reference to it I did not realize the the context the context of it of when it was passed of so I thank you for. Bringing this to the board and I'm very concerned in light of the all the issues that the Bakul whether it is a financial debacle it is but it's certainly a management Depok old on top of that that there was not unanimity by the board. In supporting these minutes in these by laws I I've looked so that I wouldn't have to ask this question for the minutes of the board meetings I could not find them can you enlighten us as to which board members were most adamantly opposed to the adoption of the the the minutes or the I mean the by laws or the conflict of interest statement. Well. It is certainly in the minutes reflect that it was a six to one vote on the conflict of interest and I believe the. A vote was seven to on the or it may have been six to with with no other folks having taken place on the bylaws but I would simply say that there was. it was difficult for me to get them on the agenda. And what's on the agenda there was difficulty in getting them past simply because of. Of questions we didn't need this we didn't need it and we have a state policy and. Nobody needs us conflict of interest statement and I argued with that and we finally got it passed but I would rather not say that the two individuals that are the hardest against but okay the but in terms of placing it on the. If you don't mind and I think I made this statement to another board member. I know it's hard but at this point with this financial situation and the state dollars is putting in we want to know who those are so I want that of record please Sir. Of Bruce Mohl okay was one post to the are casting the no vote on the conflict of interest statement and is a. Of Ross Whipple was read the other one on the. And he didn't necessarily vote against it I don't believe but he did speak against the okay and that's why I want to every board member and the ones on either side you know that were there at this meeting and that's why I've said at the end that anybody that's already testified I'm what if they have something they want to say about that at that time a more allow them to so that not that they need to defend their sale but it I wanna make a comment I'm going allowed so. Anyway again I'd put you on the spot but that's where we're at with this thank you thank you Sir thank you and I'm sorry jumping like bill that's okay thank you Mr chair forgetting that clarity and as far as the resistance to putting on the agenda I I assume that it is typically up to the chairman of the board to decide what would be allowed on the agenda or not yes Sir okay and at that at that point the chairman of was Mister Hudson correct okay the other question I want to ask you about it I I find it you know it at first I was thinking that you might not be able to provide us a lot of perspective because you just gone on the board in may of two thousand nine but I I think sometimes it helps us in getting fresh eyes on a situation to get an unvarnished perception of that you've given us in one of the things that I find very interesting is your perception of In the question that you asked doctor Jones in the presence of doctor pal president Jones in the presence of doctor pal about the standing the financial standing of Henderson and Dr Jones answer the question that the that we are in excellent shape Reserve if positive positive reserves and you looked over Brett Palin you say he rolled his eyes yes Sir and I assume that your perception that you said he also did not say anything was it your perception that he he was possibly instructed to not say much. That would be my perception based upon that meeting yes Sir okay you know that I'm just so sure I understand and the the other element that that I find very interesting also it you know we can we can look at something and say you know two plus two equals four but it's not entirely clear. you said the doctor Jones presented. Explain to you that these unpaid invoices and remembering trying to remember that these were unpaid invoices that have been held by doctor pal that's correct that's what I was told my doctor Jones but by Lisa Franklin okay you were not told by president Jones that these were held she said that he brought them to her. And to help told her that that he found them in Brett powers desk. Now that's again that's hearsay and that's just with the whole car yes Sir it certainly is a hearsay and doctor pal did not have the ability to be able to say that now they were not in his desk they were in someone else's desk correct okay alright thank you for that clarity thank you Mr chair yes Sir. Representative bring her. Thank you Mr chair I'm Joyce Springer Henderson graduate in the college of business. you made some statements about what your findings were with respect to what was going on and you made of some collisions conclusions about there was you found that there was some mismanagement and poor management decisions. Do you mind giving me examples of a. Those two items and then who was the person that you. The whole responsible for those the mismanagement and then the poor management decisions the mismanagement and poor masters seasons were those referred to us by of. doctor Welsh after he had in his staff had gotten in there and it had advised us of those things and I don't have them on top by he had he gave us a laundry list of things the number of things over more than one meeting. That were simply he couldn't explain why that was done or why this was done but clearly. Poor decisions no no referring as to whether it was made by Mister Jones or or doctor pal but the point is that they were they were made by senior management I'll put it that way okay but no examples of what those things were no Sir no ma'am I don't have that thank you. Yes ma'am of Representative Richmond. Thank you Mr chair. Based on what I'm over here on the side look to your right you your record this. Represent Lowery is talking about you know you observing the the rolling of the eyes and everything. When you were having that conversation with the Mr Jones. Do you believe in or is it your opinion that Mister Jones was more fully aware of the financial situation real financial situation of the universe the than. Then what maybe some other board members have testified to. Well it's hard for me to speculate on what his thought process was were knowledge was. But in his answering questions to to me of questions that I had asked him of he seems pretty clear on on the answers in yet when confronted with the fact and I will go back to that point of of. How are you doing this year how does the university stacking up and he says pretty good they're they're doing well but may not be a big surplus but there will be is only a small deficit of anything. And then to to find out at that meeting and I believe it was July the this field or the twelfth I can't recall but a July meeting. We're. Lisa Franklin the controller pointed out that the deficit for the year ending June thirtieth of of of nineteen should be approximately four million dollars. He said to the board I am totally shocked I had no idea that anything like that existed and yet she had told me that she furnishes seal the financial statements every month and that's what the financial statements were showing with boarded never sing of. That's why I concluded that. Do you believe that the Mister Jones was an active participant in trying to deceive the board just like it was Alan leads that Mister Powell done earlier. I would say that he was either actively participating or was Acting be on his scope in be on his charge as CEO. The CEO of the organization should know. If they don't know that's another problem. Yes Sir that's My when did you become a board member are in may of nineteen are you sure picked a bad time the I really the answer all right thanks Sir thank you Mister. Senator hammer. Thank you Mr chair. We're we're do you look at live misspent and a little rock Sir. If I'm a member of the general public and I want to get hold of you as a board member what processor how would I go about getting hold of you. I would assume you go through the Henderson of. Of for weeks the administrative person there and she would have my contact information okay I think that's part of the point my understanding is that the way to get to the board members you have to go through the presence office at Henderson is that your understanding yes for that's my understanding so if a member of the general public wanted to get to you and they didn't know your personal information there be no way that I could get to you and express my concerns if I knew something without going through the president's office is that a fair statement I think it's for state money and FOR okay and then secondly did you come along were you on the did you get on the board after the severance package had already been worked out with doctor Jones no Sir I was on the board when that was being worked out okay what was the communication between the board of Henderson and the foundation board. As far as the conversations that went on between the two because part of his salary is part of his salary compensated by the foundation now as part of the severance agreement that's my understanding yes Sir okay so what to do you know what the split is as far as what the foundation pays and what the university is paying it was my understanding that the of university would be responsible of for the his salary up through December thirty first and that the foundation would pick it up there after. No that was that was again orally communicated maybe the document itself does not say that it just says he's to be on salary through to the. Of July thirty first I believe is the number and I have a look at that document lately but I do have a copy of it but I've I've seen assault at that meeting and I really didn't have a chance to review it but we did vote on at that meeting. And was told that this was what they had worked out they being the chairman and that that was the best they could do okay impart reason Mashimo done is We had a meeting this week you know where we we loaned use money and that's basically what it is is it money loan to that if things turn up we're going to get that money back but do you know what to foundations non discretionary balance was at the time the agreement was worked out with I've and Senator I'm not for sure about asking these questions about the foundation okay well I'm just a I'm a little bit leery of that part if we if we want to just do what the university is done somebody knows that might be where we need to stay okay well I'll back off I appreciate it resides ash note Mr chairman was we just gave an enormous amount of money and if the foundation could picked up the tab because now we got other universities are claiming the same reason code nineteen and thank you for comes up again a precedence has been set that that's part of my concern yes I'll back off thing I think it's a good point I just to I think we. We're going to be a little bit careful since foundations involved over there thank you. I'm done thank. Yes Sir thank you Senator hammer Senator sample. Thank you Mr chair and I won't be long misprint we when did you find out about student debt. The student debt issue yes it would have been in June of twenty nineteen Mister Hudson advised us of that a few moments ago and I think that was the day okay all right. Our just I would nibble around at all day long and I just wanna know when that when that was made that the. Yes Sir it was in June of twenty nineteen of just before the end of the fiscal year and as I said at that sort of brought about a focus on that. And I think regrettably a focus on that and I think it was a vote. Significant problem. But it sort of masks. I think the real problem which is I. says it is just financial reporting in losses in operating losses because the problem and not of this mysterious a. Five billion or ten million or whatever it was in accounts receivable that certainly that's of bad management decision of bad those thing that happened. But it wasn't the calls it was the result. Of a. Of those other things and the two years or three years of losses is what caused the financial crisis if you will thank you thank sure. Senator Chesterfield are you owner all. Do you want to be on. I don't think your own and I'm on. A thank you so much Sir for your service because it's sometimes a thankless job isn't yes my many of but we appreciate you because coming from southwest Arkansas I know the the importance of Henderson state university two are part of the state did not matriculated at I want to cross the road to the. To be with the Jesus people at Washita but to have a great fondness for Henderson state university. I we continue to try to determine who is most at fault. But what is happen but the fact of the matter is it has happened. And I don't I know act as far as I'm concerned this couple ability on both doctor Jones is part. In the spouse part. Tell me Sir as a business person do you rely solely on your own. Cancel or do you depend on those under you to give you good advice. Well since I also proprietor I have to depend on you have to depend on you in most businesses and you've been a part of the business world for a long time you're only as good as the information you get are you not yes yes ma'am. So what we have here is the fact that we had to individuals who are in positions. Authority who let us now. Would you agree I would very. And I'm wondering too much is been made of the buyout of doctor Jones is contract and the amount of the buyout is how much. A I believe it was one year salary when your salary but it could have been five years could not I think that is correct and so in essence the state say four years of salary by by him out is that correct. That is certainly one way of looking at it yes up well I'm one of those persons who was personally offended by buying out bread bill was contract after he destroyed the university of Arkansas football program. And I can understand the angst of many of these individuals in here who feel that that person has destroyed the Henderson state university but we continue to have these by house across the cut across this state is that correct that seems to be the. Way things are going to it does and maybe we need to look at how that goes what do you think I think that might be worthwhile alright thank you so much. Repeat represented Springer or you own to ask a question yes Sir okay we your up the in thank you Mr chairman follow up from senator Chesterfield you mentioned that there were certain financial reports that you wanted to see once you came on board as a member of the. Henderson trustee board. Who is the person that had that responsibility to produce those reports was a doctor Jones of what the doctor Powell. Well since doctor pal had already left when I got to a point where I can AS then I I only had one person action that was doctor Jones and he was that's that that's not my question my question was who had the responsibility of creating those reports. That you wanted to see once you came on board that's the question not who'd you should have gotten from but who was responsible for creating mills that would have been docked pal thank you. Thank you ma'am Representative Evans Europe Sir. Thank you Mr chair. When a question missed creed when asked by practically every room by several members of this body to practice everyone is said that you're that you're that you're in and it seems like a very difficult question to answer so chair to give me just a moment of leniency I want to try to help Mr span. get us to the answer we've been trying to look for. Your CPA and you've been a CPA for how long. Over forty years for over forty years as a CPA do you take any type of close when you receive your license. Yes Sir take a note with and I believe that says that under oath. that you would do what. Well that I will be objective and unbiased in my opinions going into the and I believe it also state something along the lines that when you put your name is a CPA or financial document. That you're under oath that that document is accurate and correct is. True and correct to the best of your ability as Vester build okay. So with that being said Dr Powell was he is was he a CPA I remember right he will us so to get his license and he probably took that same month. I would assume so the same so okay are you a member of any topic trade association yes Sir okay in in that trade association do you have any top of standards of ethics that that that trade association expects you to abide by yes okay so not only do you as a member trade association you have ethics and morals to abide by it also that by your oath of a CPA you have ethics and morals and values to to to uphold. So would you say is a CPA that when you sign your name to a document that you're signing it that those documents are one hundred percent accurate to the best your ability yes Sir okay so and if those documents are not correct. And your signing that. Then are you fraudulently presenting financial documents to some person of interest. For the benefit of yourself or someone else well there's actually a lot said about that in the literature and this is for CPA's that are in private practice in public practices post a private practice that is they have an employer. Of those in public practice have the public is their client whereas those that are employed have their boss and they have to consider that in what they do yes to go back to the your main point is that clearly when they sign off on something or they present something they got an ethical obligation to to maintain that that's true and correct best their knowledge of I would just add that there's lots and lots of things a lot of twists and turns in getting to financial information and they can be presented one way by one person and another by another person that is their new not different result but there there's different scenarios that can be The bottom so I would just I would always encourage people to be very very careful and again the the adage that we have is err on the side of caution. That that's the best recognition that so is a CPA. One that took an oath. Could you as a forty year veteran of being a CPA presented financial documents to. The board of trustees of Henderson state university which is a stack state tax pay your state tax payer. Funded university could you have signed your name of those documents that they were accurate and true or and ethical. No Sir I could not thank you. Mr span that was the last question for you and I do appreciate your openness and being here today and now and your comments so thank you Sir members we have four more trustees and then I've got at least one trustee that wants to. Have a. Make a statement at the end so again I didn't buy supper but will stay that long and passed so. At this time will have Mister Bruce more. Mister Moore are you Sir. Yes Sir thanks for being here with us today. All right if you don't mind raising your right hand and if you'd state your name employer imposition. More city manager little rock. Arkansas. Okay and you solemnly swear 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 Sir you have a seat and we'll start. With the standard questions that I have maybe you have a memorized. Okay are you a current board member or pass board member what. Okay and you know when your term began. Two thousand K.. We have a sorry Joe probably have to. You just have to push the button to turn it on. All right do you did you say two thousand correct okay. And if you would what do you understand your duties as a trustee to be tea set and approved policy items and to adopt the annual budget. Okay and as far as Kim communications with the doctor Glenn Jones did you have communications with them I would say every other month and then right before board meeting he would call the trustees is to see if there's any items on the agenda that need to be addressed okay and as far as those conversations were the final to be informative or not informative I did okay about conversations with the doctor or with Brett pale I just said to correlate board meetings okay so really never outside of of that correct all right did you speak to any other ministrations or faculty members about issues that H. issue I did not okay. Whatever you say you did not yours St since two thousand that you've never done that are just during this time period or are you asking if I interacted with them or well I just I guess did you ever have any conversations about any any issues no Sir okay. Well jump to the student accounts can you tell me what you know about the student accounts and those being allowed to. To go up to the forty eight hundred so I would just echo of my colleagues is said it was June twenty nineteen when we were made aware okay as for you personally did you have any knowledge of that. Prior to that date not at all okay. So five I believe that the number you're not going to know about him exceeding forty eight hundred either that are you right. Okay how about these financial statements the misstatements that were on there winded when did you learn of that. whatever it was sometime during the summer of twenty nineteen is probably at one of our meetings at we after a issued command this are working with this I can't pinpoint the date that that we were told around at ten today you never been a board meeting were somebody set our financials may not be right or there may be some issues or some problems see I think it's important to note we talk about financials verses what we received and are courting meetings was just a budget at bay how do we compare twenty eighteen to twenty nineteen and I'm revenue and expenditures and that's not a financial statement by far then I definitely understand that is an excellent point which will lead me to another question I appreciate you state saying that Did anybody. During that time the time this in question did they ask why they were just getting budget information and they were not getting actual financial statement says an income statement balance sheets I'm sorry now I know I know one of my colleagues testified that that thing was Mike Myers that it that sort of a major shift but really the format stayed the same insisted brick pow we would bring another set of graphs so the format really was the same as that Bobby Jones is or is revenue and expenditures and so forth maybe a bit more detail but it was really more of the graphic type of power point that we received when he came on board did you find those support understand. Yes. Okay but mainly it effected echoed it mainly dealt with those metrics that to Mike talked about how we were we doing compared to what we said we were going to do. Okay. And then on these. Checks invoices. Checks being held invoices not being paid can you tell me what you know about that you harm prior to prior to legislative audit sure again is is testimony previously may seventeenth we pass a budget that included faculty and staff raises putting money back into the various departments and projected a surplus And so around when we found out in June the bills just weren't in paid it was we were all very surprised. June of twenty nineteen twenty nineteen okay so you'd ever hear any. Mister eight is our doctor pile or doctor Jones or anybody saying our financial situation is such that we're not it not able to pay you we've got a hold checks until some other funds coming in or anything to that nature not at all right thank you Sir. I did you have any type of statement that you'd like to make before we open it up to your questions I would like to just clarify and trustees and and noted as a result of a question about my vote on the conflict of interest so I like to dress that because everyone in this room has two bags January thirty first fill out a conflict of interest statement so I felt it was a kind of duplicating stepped in that's already in place so it is it what is it that yes the concept of a conflict of interest it was more that we already backed state law states that you maybe have to fill out one so I just thought it was to creating efforts okay all right that's all. Do you have any other comment or anything else all right. Representative Lowery Europe certain. Thank you Mr chair Mister Moore a I think your testimony so far as the first one that I think we've really heard that the of with specificity of what the financial reporting was to the board it your testimony was that it really was just a year to date. Budget forecasting the the most that you buy get is far as the previous year would be to compare where Henderson was proof that at the same time the previous year in terms of revenue and X. expenditures is that correct correct. Was there any part of the statement that out of that budget forecasting that also contributed or provided information about the university's financial standing in terms of their overall net position I mean we would talk about this again more comparison year year that nothing that in death as far as overall financial condition it I do remember it to C. span mentioning the reserve finding where we were and the reply was we were in pretty good shape and from doctor pal so I think the the financial statements that we use out of the budget update was just a comparison and a year to year okay the reason I ask that question is because fairly or unfairly we've been. I know I have been asking of former and present board members whether there were red flags in terms of looking at the declining net position of of the university which I know had been declining for at least. I think from two thousand fifteen sixteen to present now there was a precipitous decline of but it seems to be your testimony that that would not have been information that would have been routinely provided to the board is that correct. Okay alright thank you thank you Mr chair. Yes Sir Senator rice. Laura sorry I missed your occupation. And the city manager little rock okay You heard pretty much questions today one do you know any body it benefited financial will say from the players been discussed here today. Just the one that we and we were made aware that and again that this we're going call it disclosure for what we know to this bill correct okay and Do you feel like. the finance person right now was read. Was less than forthright our wish. More than that to present. In a format that was not what do you should read even though I understand you're going back to the other Mr Jones I and that's why it was done for somebody with his qualifications and with CPA's on the board do you feel like he misled the purposely. So that the true figures were not known I date thank you. Senator hammer. Thank you miss more you've said here pretty much all they have in your you've heard conversations pretty much all day. Anything that you've heard from me anything that anybody has said off the board that you disagree with her everything you heard today so far you would concur with their thanks man said. Pretty much there might be some misinterpretation particular issue but pretty much okay and with regards to okay what leave it that thank you. Thank you senator. Senator Chesterfield are you owner all. I'm not trying to get you alone I just this prop having trouble Thomas you you make a term I left my stuff off and then you come a name anyway Mister Moore how are you offense and thank you for your service to Henderson state university I think you're Henderson state graduate is that right right and your major was it was more the social work field and then graduate school was more in the city manager master's program. At at at a she AS so you've just been a part of the system throughout I guess what is of concern to me is as has been alluded to earlier we had several C. P. eighties. You I certainly want to motion or any persons I know was or is budgets are concerned. And I'm trying to understand why. More questions one asking of the Jones regime or the how reaching to get to the bottom of. The financial statements School boards are required will superintendents are required to provide to the school board and to city boards. The findings of audits. Am I right. All right I did hear earlier that and that there's a requirement by state laws that and universities have to approve the audit S. first I was made aware that I can't remember time it's been since two thousand and that there was an audit presented and the ultimate proof by the boards of trustees and I guess that's where we're falling down to some extent because it is very clear A in state law that if school boards are not provided the information city board disposed to be provided the information at their material findings in audits. And we're not we're not seeming to be doing that at the college level of the university level because I'm hearing from all of you that you really were not aware the previous audits with that be correct we were we were where that again they never came before us in any type of presentation it to make us aware of our fine overall financial health. Would that not be helpful it would thank you. Representative Lowery the yes thank thank you Mr chair sorry to buzz back in but I wanted to get. Additional clarity it seem like the answer. That you gave to my question the answer that you gave to Senator rice is question didn't quite jive. So I just wanna make sure I want to see where the disconnect is for me I asked you know the reports that the board of trustees were presented were just year to date. Budget projections. Of senator rice ask if you felt like that there had been person purpose full miss representations of the financial the financials presented to the board by Dr pal who started in August of seventeen so is it your testimony that you feel like that there were mis representations from from early on or just that final budget report in may of nineteen that's what I'm referred to the budget report that trustee are also presented that that's this is a dock we I'm referring to okay you're just referring to the may you're in or the two thousand nineteen two thousand twenty budget that was presented not the financials that were presented to you on a quarterly basis correct in the previous years right okay well that's that's what I want to get clarity on alright thank you very much. Cochair Gazaway. Thank you Mr chairman and thank you Mr more for being here today we we certainly appreciate you. I also want to focus on the statement that I heard you make in response to senator rice is question I think I understood you to say that you believe that Mr pal intentionally. miss represented the financial condition of the university to the board trustees is that correct correct okay and you're one of the few people who. At least that seems to me that have testified thus far who've been willing to go that far to say that. And so I'd just like to know why do you think that he did that. I I can't speak to the why his reasoning but there's no way that myself and my colleagues would have pass this budget in may of twenty nineteen with raises and it and again budgets restored to departments. And then find out that we're we and we can pay our bills we five million dollars six million dollars and so that's why I say that I mean I I think that and I don't I think I can I speak to it if it was intentional. but I do believe that and it was we were misled. Follow up. Okay I think I actually think I asked you wrong question. the question I asked was why do you think he did that which is really not what I intended to ask. What I intended to ask was why do you. why do you believe that. Again I don't think we would have pass this budget with with with the raises any if we're six million dollars in the hole we should be looking at reducing the budget and that when the case. Yes I still I'm not understanding why you believe. That he intentionally misled the board just because the rays is included in the budget. And I'll go back to my previous I did. We're we're given a document with numbers with enrollment numbers and other revenue that's coming in and it was not accurate. Okay but just because something is not accurate I mean maybe he made a mistake may be I mean there could be any number of explanations as to why it was inaccurate but but you said you believe that he intentionally misrepresented and I wanna know why you think that again I did not say intentionally ice it could be nine intensively I mean that the numbers in this document or not correct. If the I don't know where you got the numbers but he's the one is presenting this to us. Let me ask you a question. And I appreciate what you said but do you think doctor Jones. Equally new. I can't I don't know. Because I heard earlier someone saying he was shot that we were here that we have that type of deficit but I can't I can't speak directly to the. Thank you Sir By Malick. Europe Sir. Thank you Mr chair the I'm not officially a member I will hear more about officially member this committee and so I've allowed the the members to ask most of the questions all day and they've they've asked most of the ones that I would have but I do have this question. Board members certainly have a fiduciary responsibility and of course you can only act on the information is given to you but one of the witnesses earlier today age stated that you had missed and I don't know if I should seven meetings or it will anyway it was a number of meetings I don't know if they were consecutive or not who would you address the issue of. You you can't over you can't property over see if you can't if you're not in attendance at meetings so would you address that issue sure Actually remember that time frame my mother again ill there is a lot of things going on just in my day job in some of those meetings were actually phone meetings where it was one item to approve moving for it are refinancing of mind this year sentence so and so I I did miss those meetings it wasn't intentional actually there were just things going on it and would allow me to be there. Thank you. Representative Sullivan. Yes Sir of with Chuck talked several times but conflict of interested did Mister Jones ever give out tickets to events for things to members of the board. Like a final for some basketball tournaments. Are you asking to be given out our. Did you do board members receive them from him If we did in that said Khloe act I did but I paid for the tickets there was no okay the tickets aren't giving to anybody and I don't think I was only one okay yeah just for you you compensate you paid for those tickets definitely there's no money spent by Henderson at all all right thank you thank you Mr chair yes Sir. Senator hammer. Mission thank you miss more how long you been on the board. This two thousand sorry okay when did you become aware of the student that issue. June of twenty nineteen. Okay SO previous to that you all had no indication that you all were carrying such a large debt load that might have cost you'd be concerned that you couldn't make the budget that was proposed in may of nineteen correct. Okay thank you. Revenue Springer you are you owner all. Okay so you don't have a question correct. Okay. You we are for it we are finished I would run while I get a chance I wish you. May we all yes Sir we appreciate you being here Mister Moore. Thank you Sir. Okay Mister Hartman. Mr Harmon Matt my pronouncing that right okay are you today we appreciate you being here and waiting all this time if you don't mind would you raise your right hand. And state your name important position brown hardened I'm self employed as a real estate broker and if you don't mind push that button right there. Our. Okay and 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 thank you Sir. Are you currently a board member a pass board member. January fifteenth of this year so. Is that. You might we may have to move you over to the other one. I know it's working the. Now it's working okay. Does that we need to be turned off the other one. That may be part of our problem I'm not for sure. Is it off okay. All right so. January of two thousand is when you. That's when you went off no I'm sorry I'm I was I went owned in January are in. Two thousand thirteen okay. And then you went off when the January fifteenth two thousand twenty okay. All right what do you understand the duties of the trustee to be when you ask that after my first board meeting senator Hickey. I had what I call the did purchase look in my eyes I had I had been prepared for this at all and I called Lee Kneebone she was our turn at that time and I said can you get me a little manual or something that tells me number one what my responsibilities are number two what not authority is in about five minutes later doctor Jones Collins and lane said you're looking for something to to and I said yes Sir and he's a motor you book about two months later that book came in it was a small book I read it three times didn't take thirty ministry and basically all it said was I'm to see that the policies and procedures of the university are carried out so a call back in a citizen university have any policies and procedures I never heard back from that so I just over wing when I went on the board. Fair enough I appreciate you letting us know that. Did you a and I just heard you say that you talked to Mr Jones of obviously you've had a little bit of conversation but how often do you believe that you talk talk talk heard regularly with the right first gay. Just. Two times a month probably. Two or three anyway yes Sir okay you think the conversations were informative for not informative. In four to be meet me then I'm asking him questions that he's answering and they didn't really help me that much the answer's yes Sir okay. And how about the vice president Brett pal very seldom saw in okay just in the board meeting sister any conversations outside of the board that you remember okay how about the other administrator faculty members did you ever talk to any of them about any of the issues that a lot of okay. There's a lot of my don't know that we can hear on Wall but thank I've been text to name that I can tell you have use their names okay legal voters making Hickerson and I am sure for you said I could use their names okay I promised everybody else Senator that I wouldn't give out their names that I need to know everything they were willing to tell me okay what I'm afraid of promises may not hold up today specially with what you've already seen subtle due to two names how can you. I will ask you those names we get there but conversations that the conversations that you've had that relate to these issues at hand. That really stand out to you can you kind of expand on those force well I had heard different different kinds thing one of the things I heard that might help you all don't know that this is true this is hearsay a lot of times when I tell you something I'm going to say in my opinion because that's what I think but I'm I keep proofed yeah that's part of the problem I've had all along one of the things that could happen I know that we had a contract with marked the error Martin built our cafeteria. And when was this you know approximately. I received years ago okay injected eight are in in marketed paid for that and we fired Aramark and we civics came in and took over in my understanding just by the great band I guess was that so the XO had paid off our debt with their mark and synnex though no net cafeteria in what I've been told by one of my little chief scouts is that that's not the case that we Henderson Brett palpate off that debt with interest money. I think the be worth looking into because it was a million dollars or more that we were talking about a do you ever remember that transaction coming before the board okay. Okay who's that chief scout. Maybe. Okay. I and the. Any other conversations I mean that's we appreciate here and stuff like that we of course we don't get in a lot of rumor mill here but I'm not will get in the rumor mill but I went to doctor Jones several different times I told doctor Jones several times that I looked that I felt like I was making history was the first African American to be the president of Henderson state university and I wanted to exceed just as bad as he wanted to succeed but then when I would end up later on going back to my building is board was going getting fired because we were not Leding we were not leadership want but what so ever all we were doing rubber stamp and everything he wanted this. Okay. And you already. I thank you already answered that answer this question and it would do you think you revised enough information before me duties as a trustee it sounded like you try to get something so I'm will be answer that for you and so I don't know I would say no that's correct all right and. Who. The student campus of the forty eight hundred when we when did you or the board become aware of those. That those that that forty eight hundred was being allowed to be carried. Carried on the books is debt for the students I'm going to show you my ignorance right now but I got told by several of my little scouts that I needed look into the financial situation and I didn't know what they were talking about and and when all this occurred I found that one time everybody else found that and I had no idea that people notice ten million dollars Hey I know what never been mission to. And those financial scout some I want to talk to or this this committee may want to talk to. Who are they all I need to know the names. I know you give us to it and I know you said you didn't want to I am by field is one of them okay Megan Hickerson is another okay no Megan was the president of the so the tenured faculty one and and she wrote us a letter talking about how we were three million dollars in debt I think she'd be a good person to talk to okay and that's what I'm after today I tell you what another good person for you to talk to the Johnny Campbell. The police department all right there it in there Henderson yes Sir okay and eighties or the mission for a. Weeks. Okay hold will keep on coming most likely it okay no more sketch. But as far as the student debt as far as a student did it say of you'd be you didn't really know you didn't know that those students were being allowed to continue to come back to school because they no Sir okay first I found out about it I called Bobby Jones who is retired now you said when he was the CFO that he had a seven hundred and fifty dollar with you seven hundred fifty one dollars you could get in there I don't know when they started skyrocketed. Yes Sir and I think that was the old policy because I'd looked into that here a few weeks ago myself let god so senator we had practices attention that's our major policy your your keep going back towards major problem we didn't have any policies procedures we had a lot of practices you will be be it be a chairman two years in a row each year seven of us own their that means of three we're going to be chairman for two years and rest I'm gonna be left out of the the mix. Yes Sir it was a practice. Okay now we're on those financial statements the over statements an understatement yes Sir. Anything ever come up in any board meetings that and again we've heard whatever I say financials up I'm thinking a true financials I've heard that you may have just had budget so I'm not even for sure what you may have seen or not seen but as far as any conversation in regards to our stuff not not correct anything like that no Sir I'm not in my mission statement I should've said and I'm not a CPA because I'm not yes Sir. And the bills and unpaid invoices checks that I keep keep referring to heard rumors about that of. Probably three four months before I turned out. Indicate that we were unable to up missed Arnold got he is still in pretty bad trouble want one of the meetings he mentioned it to we might not he had mission to somebody that we might not be able to open up next semester and he got chest Tosh pretty pretty badly I got called deplorable and despicable. We got pretty used to that okay. I think it was eighty they really talking to with the included me in that. You should hear was in the member save them. Anyway. All right at this time do you do you have a statement did you think about like before you come down here thing will if you just asked me to say something whenever I get up there what I'm what I'm until this body idea do you mind doing that do not I was born he interest in radio grew up on Henderson's campus then the quills my close friend coach Wilson's my coach when I played football and baseball they're. everybody in my family on either side Hartman Pilkington side this graduated college graduated interest when I played twelve year old football I would go out and I got my first page in uniform this that no the net mama didn't that the reading red how it will play in I had to have it hello Henderson very much I thank you and I'll say this I blame the board of trustees and I blame the administration we've got some great faculty they're great factor that they worked their tails off in the seven years I was on that we we gave them one two point five percent right that was it one and they were about forty six percent in forty six percent out with all purpose the college faculty you a red cross United States that's why we gave in that. Cost of living raise that window because we kept promising and we never had enough money to do it. We had enough money to pay all those consultants that we don't follow anything those consultant said. We've seen things like that before. Senator hammer Sir you're up thank you I just want to drill down one thing real quick miss hard on so there's three three page there's a policy the procedures and then there's the practices yes Sir. And with regard to the student debt that was neither policy nor procedure you're saying that was practice that was not the practice yes you think that was possibly to keep you as a board member from an on what the real situation once I never felt like I knew what all the real situation was as correct Kay and you became aware of the practice when. About the second meeting attended which was two thousand thirteen. Okay and what about where the practice on the board of trustees when I tried to nominate eighty Arnold is is is a secretary and and what I what I will do that escrow starting with the secretary first in what we didn't start with the chairman of the board and vice chairman and the secretary and I was told that their practice was it we serve two terms each time as a is the. Okay let me back up when you first came on the board what is the practice regarding student debt when you for the model number one student it Sir. And you don't become aware of student debt until when. Six months ago OS six must what turned off which is pretty consistent with what everybody else that in this room today okay and that's why I want to stand wishes that all the all seem to consist you make very little bit here and there but the one thing you're consistent on is nobody knew on the board or the trustees about the student debt into you all found out at the same time yes Sir and whose responsibility do you think it would been to have told you about that I would have guessed it would be Glenn Jones okay. And with regard your in real state right yes Sir with regards to the. Building of the dorm we heard testimony I think was this morning about the building of the dorm in the green space were you in here when that discussion was gonna Sir do you know if the dorms what the capacity was of the dorms how full they were when that was brought up before you all the bill have the slightest idea I can tell you though I had just gone on the board and we voted to build in the I didn't understand where we were built in I think these called it to ban field and that was the in a mere field is what I wish coated I gradually radiate mention in nineteen sixty one so it's been quite awhile and and I had would be jolly whose professional their call means a brand they're they're tearing up our enemy refills I said no way that any easy yes they are they able to put up of of our fence as the couldn't have so I got out my office and drove out there and he was right. And I didn't know that they will start bill did you inquire as to the justification to do it I absolutely what the what were you told what we made a decision we're gonna mobile. So the place we could build it I was to let. What what what's the capacities of the up for the capacities at the beginning of this year's farce the dorms where they've ACT past year do you know I'm the one that got in trouble with AT on or when we stopped by the housing authority to find out what the capacities were I couldn't a. I can tell you that we thought our whole thought process was that which we built those new don't have to is we're gonna implode the two H. tore down the towers and use it for something else and that never and haven't yet. Okay alright thank you technician. Representative Sullivan. Thank you Mr chair and you ever get the final four tickets no Sir do you know if those were the general practices those are paid for by the school and see double a offers that to all the schools in the bottom and do you know if those were purchased by the school do not. Mister chair could I make a request that like audit look into how those are purchased Mister Moore testified that he paid for those I just kind of like to know who paid yes Sir I'll refer that to grow our for that to the cheers of like alright for them to have to have the have to have their approval thank you thank you committee thank you Sir. Representative Lowery. Thank you Mr chair of Mr Hartman the Mr all Mister Arnold referenced earlier in me asking about the two votes of no confidence in president Jones that That he and and you were the only two members of the board that seem to be interested in hearing as far as the board members hearing input from faculty of the faculty Senate in other interested parties on those votes of down confidence is that correct yes Sir of. Did you think it would be appropriate for the board to hear for a. I feel like we like ET told you we had a. Overflow crowd that particular meeting and and a gentleman friend of mine from long long time ago don wrote Lynch texture cannot driven all the way up there to talk to the board he wanted to address the board for for five minutes of. We'll move I don't know whether I can tell what happened can I tell what happened in the executive session. No Sir I wouldn't think so okay well that Senate KTV because it happened in executive session but I can tell you that I said we're ignoring the elephant big elephant quite open this room and and the question was what quite ill but now said this letter of cut and non confidential we're not addressing the doll and I was told yes we do. Should we praise that five percent back to ten percent on what we've been I said that's the I. there to snow flake on the top of the iceberg I'm worried about the iceberg not that snow flake that was the only thing we have we addressed don Rickles never got to talk to us to either a circuit it to five percent back to two ten percent when action we were matching their retirement with five percent and with ten percent and we as a board I think we're talking about cutting it to five. And that was part of what they were fussing about so with that it that meeting we raised it back to the ten percent matching their retirement okay so that the the vote of no confidence was done by the faculty census but by this by the senior of the the tenured faculty the first time in by the whole school the second. Okay so as far as testimony before the board the the only relevant testimony as far as the no confidence vote would have been from faculty Senate Representative yes but but you're saying that there were also alumni other interested parties of Henderson that wanted to give some testimony there was standing room only okay they were they were there they were actually present the and it is not board Paul and I'm asking this question because I've I have been a faculty member at the university of central Arkansas I know their board meetings five remember correctly I remember one time into in testimony about the concealed carry bill that Representative Collins and I hit co sponsored that there was input from the crowd Henderson state does not have a policy of allowing Period of time for comments from members of the audience so we had to practice until creeds plan came onboard increase band entered used our by laws in our policies before the end we had passed one policy. We we had passed one policy in that one policy said the any trustee that was going to come on the campus had to get let the president know that we were on campus. Now. If you want to anybody AT nag nor that pops. We didn't do that but that's what we were told and of. That was the only policy that was the only policy we had all the rest we had was practice until create it insisted on we passed this policies procedures is just a start okay well and that and I'm glad that you read for I'm glad that you reference that that that was the only policy in the seven years at that that you were on the board years because the seventh years when creating reduced policies we've got right now okay it and the re some interest in that is because in a newspaper article that referenced Mister Barnes coming up on. Coming on the board even though he had already had a contract to run a bookstore and then it was renewed the article said in there was a Henderson spokesperson that said that. Contracts are not. Reviewed by the board that the university had I can't remember the word policy or or whatever Practice was mentioned I think it said policy university policy was that the president approved all contracts so you're saying that there was no policy in the ten year that you had on the board that the president exclusively reviewed and approved contract that is correct now he did make us aware. A didn't say James barks he said he would if he was going to an out source the bookstore and it was going to be the UPS or FedEx or somebody like that any one of our meetings he said what we made our decisions can be fed ex. Okay sourcing that outsourcing was done previous to Mister Barnes coming on the board correct yes Sir okay are you familiar with a contract also by a company that Mister Barnes had control of called Josh gravel the. Called. Portfolio in. Some numbers program no Sir okay. and that that would have occurred. In the. Conflict of interest disclosure form did not get introduced until two thousand nineteen by Mister span that's correct correct so there would not have been any reporting to the board by Mister Barnes are required reporting that he had a ownership in the portfolio with the university adopted that software program my understanding that Mister Barnes also and I don't know he had but maybe we was on board I'm not trying to I don't want to go after our for anybody I would be for Henderson state university and made that promise for ever took this thing in in Mister Barnes was never going to vote against doctor Jones. That just doesn't that injured doctor Jones at his vote the fact that doing that because he was supposed to be one of the major stockholders in this up and travel that built out to doctor partner twenty one column okay all right well thank you very much thank you Mr okay that last part you said what will what would you what was that about the dry wall and so maybe in a partner but my understanding is it James Bond was the the. Money man FOR Huffman drywall and health and drywall is the company that built back to the doctor spent about twenty something million dollars of our money to be a little too dumb. Whatever you say the money man. Was the legal partner do you know if you checked and any others is a legal partner yes Sir some rumors to so I think I'm pretty Paul I talked to one of the gas the the steel is owed eight hundred and fifty thousand dollars he's the guy that put in the air conditioning units for the to dump new down the towers and he maintains his name is John Odum from hope Arkansas in John under maintains that he's never been paid nor has he ever release the lean on those two Dahmer towards that he had he had some kind of A lien which he put that all that air conditioning stuff in there when Eminem lean Turman mechanics going A huh yes okay and he said if you signed by human somebody is forced is nine. A he actually filed that lean he's he has an attorney is working with him right now I'm not though doctor Jones about this over a year ago that John modem was going filed suit against Huffman dry wall against the Mart I think in against Henderson state university okay alright thank you Sir. Senator Clark Europe Sir. Thank you Mr chair. The Full disclosure I consider doctor going don't to be a friend I do too. And The nope until the last few days who was on the board and consider couple the board members to be friends. Of. Mr Harmon Have you. If you were contacted by the very people you name some were you contacted by any faculty members about problems. Percy problems. Of that Henderson. A I don't know of any faculty members at up to well I I guess the million hit Christians a faculty member yeah. So I guess I will. Okay. But Mr chair. The for the reasons that I mentioned been pretty quiet let there by an up appreciate committee doing the this job that needs to be done of. pulled up an email to respond to all I was sitting here just listening. And it turned out that the email was from a faculty member at Henderson who passionately. Of wants us to. Make somebody pay. House justice is part of the ward but I have forwarded this email to you along with the email address and phone number. I'm not going to give the name here but might lead to some other information but I don't. Of this. They say I am sure by now you've heard the financial meltdown that is a card or university I was part of the tenured faculty that attempted without success to warn the board of trustees eighteen months earlier about the coming financial collapse of our university the lack of accountability transparency in Mr stis appearance or surplus funds were all red flags that we tried to point out only to be accused of being disgruntled professors. And I will not deny that we were disgruntled because every salary comparison study that the administration did kannst system only showed Henderson with the lowest paid faculty of any state university and yet the universe to continue to grow more more top heavy with each additional ministry for that was hard. Don't know if this person will lead to any. Information but I have forwarded that to you okay thank you Senator Clark. Senator rice. Yes Sir thank you Mr Hartman appreciate you being here today I appreciate your testimony when we go back over I'm I'm a little slow sometimes everybody here knows that but. What you're saying is doctor Joan doctor Glenn Jones. Had our to the authority. To approve all contracts in the end use cursory reported that to the board is that what I'm hearing from you. I am not I think that he had the authority to do that I've never we we don't know that we got a bit we got ex number of dollars when we got forty we got to build those two apartment complexes and and is forced choosing who built it I don't think the board had anything to do with that whatsoever I just think that was done by a committee I don't know what it was for but we spending twenty or thirty million dollars as a whole lot of money to be spending with that and be responsible for okay could you clarify what you said you you may have been done by a committee. Well let's go back to the James marsh thing in the bookstore doctor Jones said that he was gonna make a decision between somebody like FedEx or UPS or somebody like that when he made the statement easily we've chosen fix. Well that exceeded it being James barks. And I I will let go so my colleagues Appreciation for people willing to serve on board but I stated that here before. And I think you did and I think many we've heard from do but clearly and you said it you know the board of trustees. and accountable enough said that in the newspaper is great because it we have got to change and it just the contract the way the contract did not have a. Four calls clause in it when I won woohoo net estate and but I mean it it just is something that we we need to correct for boards not to let this happen again I thank. You are open if if you need to be contacted to expound on any other information that we might could follow trails on ET ten thank you Sir thank you Mr. Senator Clark are you back owner yeah I send you all okay Europe Sir yes of I do Mr I just want to point out I have no doubt that. Of Mr Hartman believes what he said to be correct hope that he's not as a guy who builds. Of. Owned. House school projects in college projects and county projects on a regular basis of project of that size I think Maillol has to be built on the surely that should be looked into but of weather or who has to approve it I don't know where that would come to the board or not but but surely that was built on project of that size. Me well I agree with you on that one that I would I would certainly hope so can can someone with lego audit can we get. Do you have any information on that so we can go ahead and get that clarified at this time if not we can deal with that later but. The question the question is is. Contractor provable if it requires board approved. Especially. As it relates to multi million dollar contracts actually. Okay we'll we'll do some research on that I don't total they don't want to miss state anything so we'll get the idea right I mean that being said there ought to the denture today but we ought to get the answer that because I'm that had to been built on on. But right we didn't know the display that hanging I agree one percent Senator Clark thank you. Senator could I add to that yes Sir I can remember we have no more questions so if you want to do a closing that'd be great when we were at the need a meeting at lake degree in the corps of engineers little bill in that I guess they've given us to use of Mike Myers was chairman of the board at that time it was his last year I believe in my accent who got that contract in doctor Jones said it was health and travel. I don't think that the board ever voted on travel okay. We're gonna do some research okay on what the requirements are as far as bringing things before before the board in that type of nature just to make sure that we get a correct so. Anyway. We greatly appreciate you thank here with sorry about how long it's taken but again we're in a process here this just taking of higher on the we are to although that's fine thank you Sir. Okay miss Megan Taglit. Is she here. But we have some staff just to check out in the. Lobby just make a hundred percent sure. That if she's not here out of. Thank you would be Useful information to most of the members of JP are to know that. The she was not on the board for my understand she was not on the board until after doctor Pallin doctor Jones or present Jones had left. That that may I think that that's the case and she was appointed after that time but I would just. Make sure that that's understood right let me just tell the tell the members everything that I know because I want you to know staff it's in an email and tried to call we got no return contact on that as you know we've had members. That have been of your to outside because of the same way that we had asked the questions you know what to be heard that was the reason that we wanted her to want her to be here Representative Gazaway she did she has sent Representative Gazaway a text that just said that the she will not be able to ten but that you'd be happy to discuss any consensus and over the phone that we have and just also mention that should only been on the board for the short time so now you all have all the information that I have as far as anything that we decide in the future will will make those decisions so. Okay so. Misc cabe. Miss Kay bear you ma'am. Thank you we appreciate you being here just whatever you feel most comfortable with if you'll remain standing you're saying what we've done so If you would please state your name employer position I'm a native tribe I'm work with the cake foundation and timber business and I'm a newly appointed trustee Henderson state university all right do used will keep up yep nope that's fine 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. All right so you've had the benefit to watch in all of these in you're the last one in the somebody else wants to speak so Are you a current board member yes I was board member from. Nineteen ninety I don't believe it wants until twenty twenty on my term expired in January of twenty twelve and I was asked to stay on until the new president is hard so I actually went off before the April meeting In twenty twelve and then I just come back on January of this year okay so January twentieth is when you've actually is. So you haven't been on there is set up for one meeting one meeting okay one in your we're gonna be asking you what you what you heard and things that nature sales like I know nothing. That's probably not a bad thing so I'll be I'll be glad to answer any questions you hail there will. I apologize that you've been sitting out there this long but that's the process that worry and and I they were you know ideas if I didn't invite everybody some might say why they didn't invite me so that's why we're doing all these at one time so happy to be here okay the what sent you just come on what do you feel like the responsibilities or as you. As a trustee for Henderson well I feel like it's My name FOR policy and FOR oversight We need to be involved and know what's going on but I realize two would you know we kind micromanage because every board member transmit all day appear calling and asking questions so I think we have to be aware of. What what what what we observe if we hear in paying and to promote Anderson yes ma'am. Have you heard any. And I wanna get into the rumor mill type stuff but if you heard anything since you've been there as far as the student accounts other than what you've heard from these proceedings or in the newspaper or anything any Tanpa since you were on the board before I really haven't okay no. Employer anything is said miss Kay A.. This is what's happened to that okay and. So you're not going to anything about the forty eight hundred dollar balance or the increase of that or anything same thing with the financial statements anything. that you've heard on that from any friends or people that you may have no wonder on the board before question I realized that one back on everything's been pretty well shut down and I've really been isolated but even the last few years I really haven't had anybody come and say hi you know this is what's happening right. Thank. Unpaid bills or invoices I mean. I understand. But I'm I am going to pursue this the same way I've done with everybody so. Anyway so now I have same same way on the bit unpaid invoices and everything so and I apologize for this I just want. However in Clark County felt very lucky someone could have said something to me that because I talk to people about Henderson but not about that not about the business day little things like that right now my people you don't. The ad talk to or I have some things going on in the athletic department but nothing is ever been talked about as far as negative D. with the balances are unpaid bills or anything like that okay thank you ma'am okay do you have any type of statement that you wanted to tell this body and mind yes number one I'm back on the board may I just because I love Henderson very much means a lot to me anything I can do to help I want to I appreciate governor Hutchinson so much for standing behind the stew this tough time I appreciate which all done the. Back in as financially with the loans because I do feel like we're going to get through this tough time I'm so appreciative to Chuck well to enter I. issue for stepping up because I tell everyone I know futures can be brighter and even if we had not had hard times I think this is a great move for us and I just a good things were in person right and I appreciate y'all Sam well thank you we are we do have a couple of the questions here Senator hammer do you have something management cave thank you. Could you tell me what was your term your first turn you Sir from wind when by ninety eight to twenty twelve okay twenty twelve was that when the discussion was going on about the dorms or was that after you left that was after I left okay I'm actually went up in January but I just item for the interview process with the new president okay and you heard the previous testimony about policy procedures and practices. The so with regards to the student debt there was no policy in place during that whole time that you were on. Not to my wrecking I don't remember any policy I don't remember any issues coming up with okay alright thank you thank you. Yes Sir Senator rice. You should be L. thank you and that was my question were you aware of student debt before you got off in twenty twelve that they would never brought it up okay. Thank you I appreciate your passion for Henderson. Miss Kay. I appreciate you coming down here and don't think I put you last on purpose what I did is had staff to do a random drawing and course the to the I did move the two ahead that were own to zoom so you just that we love I got your body else persistence well as a look at the draw for you yes ma'am thank you ma'am. Okay I have been told that Mr Whipple has a follow up comment so on June so if we can get him back up somehow some way. Is there anybody else here that wants to have any type of follow up No Way being in. Anybody had sitting thing once talk. Seeing none so I think Mr Whipple will be the last one. If we can get him up. You're fine. Which will can you hear me Sir. But not really hold on just a moment. Well we can barely hear you so we're still we're working. Right now. Yes the that is better so. All of the. Couple things sent out. You may have to Mr whip we may have to speak up we can hear you and it'll it'll work but it's not real. I understand. Hold on just a moment to get let us get seven just another minute let us see if we can do something. Go ahead. Okay can you hear me now yes Sir we're going what that work with everybody here this gonna be quiet I think we can hear. and verify that by one. Five I have a. English majors you agree was to get a quote part of it was unclear and not to say and that's why the. Of the the idea and a couple other quick things of. Just because there was some comment made that the trustees tried to influence. The. Appointment of certain potential nominees trustees at our sure you under room they contact with the governor to influence that in any way and I'll think Mr Harmon may be a little unclear of that when he said that other was a policy they did not the look at the the trustees on campus that was a preference of Dr John and the reason for that reference was to keep. Trustees for running all over the campus and. You know I'll say that they would or could but you know you could potentially. Intimidate employees when you have the trustees run all over campus it wasn't trying to keep anybody all it was just tried to put some control to it of any guys that's all I got I apologize for making you wait for that motor two statements of mine no up to sure no that's true that you know we don't mind at all and we've we're committed to get into this and that's why allowed everybody come back at the at the end if they wanted to say something some of the as some of those comments that were the names were given that is totally only because at this point I'm just we're is we're going to be as transparent with this thing and there may be reasons that you board voted against something we appreciate you coming back and telling us why but like I salute you know to me it kind of sounded deal like I was against the bylaws and that the service and that's why we will lead you to come back in the and have that statement so we do appreciate you coming back. Thank you when I appreciate it that's all I got all right miss Whipple thank you Sir thank you hold on just a second if you don't mind still there not I'm still here Senator hammer did you have a comment I have a question yes if you he doesn't mind. Did you offer up a proposal to amend the one section in the by laws that you didn't like so that the rest of the by laws could stand. Yes Sir I I. I think I tried to enter just thing to be futile and I gave up but it it was just it it's a matter of worry and it was unclear to me and hello I like the bylaws to be very clear. I thank you support but and that's why building up the. Alright thank you and that's where thank you Mr Whipple thank you yes Sir. That it yes Sir for you it is thank you ladies have a nice weekend. A last call anybody else want to say anything any member in here want to say thank. Words are.