$ 1.5 million for UA System Grantham buys OK’d

A request from the University of Arkansas system for $ 1.5 million from the state’s restricted reserve fund received legislative approval Friday after the system’s top executive briefed lawmakers on the needs financial related to the acquisition of an online university only.

“The one thing we can’t forget is that when you acquire a university of 4,000 students, there is a lag between when students enroll in class and when they actually get paid,” and this lag varies from one federal government to another. Pell Grants and other financial aid, ”said UA System Chairman Donald Bobbitt earlier this week at the Arkansas Legislative Council’s Performance Review and Expenditure Review Committee meeting, Monday.

State money is part of the system’s efforts to cover expenses associated with Grantham University in Lenexa, Kan.

The University of Arkansas board of trustees on Friday approved a plan to seek out a line of credit of up to $ 8 million which, according to UA System CFO Gina Terry , would be used “as needed” to meet school management obligations.

Trustees approved a $ 1 acquisition of Grantham University in August, agreeing to take on “certain discreet responsibilities” while acquiring “substantially all of the assets” of the institution.

In Monday’s meeting, State Senator Missy Irvin, of R-Mountain View, asked why the UA System is asking for $ 1.5 million in restricted reserve funds to support Grantham University’s purchase for $ 1. Along with the delay in financial aid, Bobbitt brought up the expenses of the contract.

“In addition, on the first day, we will then be responsible for the contract between the student information system and the online program management system. [and] other types of systems that we need to be able to manage in our environment, ”Bobbitt said.

“It all … actually comes to over $ 3 million,” he said. “We are asking for less than half [in state funds] to help us and try to reallocate money internally to be able to cover that. “

The state’s restricted reserve fund stands at $ 68.5 million, after the Legislative Council approved the request for $ 1.5 million for the UA system and a request for $ 2.25 million Department of Agriculture dollars for grants to county and district fairs, said Department of Finance and Administration spokesman Scott Hardin.

Finance Department Secretary Larry Walther recommended that the board approve the requested transfers from the restricted reserve fund.

Grantham is a fully online institution founded primarily by and serving members of the military and first responders, Bobbitt said in a September 2 letter to Walther. The college’s study programs complement and expand the UA System’s current online programs and continually focus on the needs of the workforce, the letter says.

The UA System’s eVersity is an online-only business established with Board approval in 2014 to recruit working adults and enroll them in programs to complete their degrees. The eVersity program has around 700 students and employs around 20 full-time staff and a group of 36 faculty members, UA System spokesperson Nate Hinkel said.

An acquisition proposal presented to UA System administrators in August stated that “the new campus will eventually integrate with eVersity, creating a single online university.”

The acquisition comes as other public universities have acquired for-profit online institutions across the country, including the purchase of Purdue University from Kaplan University and the more recent purchase of the University of Ashford through the University of Arizona, ”Bobbitt wrote in his letter to Walther.

The UA system acquires a recognized and accredited university for the purchase price of $ 1, Bobbitt said.

“The transaction includes intellectual property to serve more than 60 degree programs and will bring approximately 4,000 students, 170 full-time staff and 240 part-time faculty into the UA system,” he wrote.

Bobbitt said Monday that the owners of Grantham University have finally decided that the best way to honor its legacy of military service and first responders would be to work with an existing institution with the same philosophy.

“They were prepared to take a loss of probably $ 8-10 million on their books to secure the legacy,” he said.

An independent appraiser valued the company at around $ 27 million, Bobbitt said.

“While I am asking for help with start-up funds, UA-Graham will not be asking for general revenue for its annual operations,” Bobbitt said Monday.

Hinkel said the scheme aims to complete the Grantham acquisition in October.

At Friday’s AU Board meeting, Terry said the line of credit is offered for a two-year term. She cited office rental as one of the expenses associated with Grantham University.

No financial condition for the line of credit has been determined, Terry told administrators, with talks still ongoing with various banking institutions. Council documents indicate that the interest rate will be approved by Bobbitt and Terry.

The Board of Trustees approved the line of credit application without objection.