ARKADELPHIA, Ark. — The Henderson State University Board of Trustees today approved a merger agreement and transition plan with the Arkansas State University System.
The agreement is subject to approval of the ASU Board of Trustees and the Higher Learning Commission, as well as action by the Arkansas General Assembly. ASU System President Chuck Welch said the system board will be asked to approve the agreement at its regular meeting on Dec. 6 in Little Rock and the target for completing the transition would be Jan. 1, 2021.
On Oct. 24, the Henderson board approved a resolution to join the Arkansas State University System and proceed with development of a merger agreement. The board also voted in favor of Henderson retaining its name and mascot as a member of the ASU System. On July 29, Henderson signed a Memorandum of Understanding for the ASU System to provide various operations support services to the university.
Under terms of the merger agreement approved today, the Henderson interim president would report through Welch to the Henderson board as part of an interim management process. Welch would also chair the search committee for a new Henderson president, who would become chancellor of the institution following the merger.
“We will make every effort for the transition of Henderson into the ASU System to be as smooth as possible for everyone,” Welch said. “The inclusive process for identifying the next chief executive of the institution will be similar to what we’ve successfully done at each of our campuses. I’m confident that affiliation with the ASU System will strengthen Henderson, our institutions and all of higher education in Arkansas.”
Moody’s Investor Services issued a report that determined Henderson State University’s decision to join the system is “credit positive” for Henderson because of increased oversight expected from joining the ASU System. The Moody’s comments were related to Henderson’s $31 million in auxiliary enterprises revenue bonds, which were downgraded to Baa2 from A3 with a “negative” outlook on July 2, and addressed the impact of the university’s intent to join the ASU System.
“Henderson’s moderate size and manageable leverage mean there will be limited immediate credit impact for ASU from the merger,” the Moody’s report said. “ASU’s system of oversight, which has led to strong fiscal stewardship at its other campuses, is likely to help restore balanced operations at HSU. Henderson’s willingness to cooperative with ASU over the past six months shows a commitment to correcting its imbalanced operations.”
“Governance and oversight by the State of Arkansas will continue to be credit positive for HSU and enhance its strategic position,” Moody’s said. “The state demonstrated solid oversight both through supplying short-term cash flow relief for HSU and encouraging it to join the ASU system.”
Additional provisions of the agreement include:
• Requesting an expansion of ASU board membership from five trustees to seven, with the two new appointees by Gov. Asa Hutchinson having “specific familiarity with Henderson State.”
• Creation of a Henderson Board of Visitors to be appointed by the governor of Arkansas pursuant to legislative enactment. The Board of Visitors would have an advisory function and serve as a liaison to the ASU president and board.
• Giving the ASU System the right to retain a third party to review Henderson’s operations and financial standing. The ASU System has issued a request for proposals for third-party audit services.
• Providing ASU System with ongoing management compensation that is consistent with the current Henderson MOU and the formula used by other ASU System institutions.
Founded as a private institution in 1890, Henderson has a strong liberal arts heritage with more than 65 undergraduate and graduate programs that gives the university its status as Arkansas’s public liberal arts university. It became a public institution in 1929 and is the second oldest university in Arkansas under state control.
Henderson would become the second four-year institution in the ASU System and the third higher education institution to join the system in four years. Mid-South Community College in West Memphis became Arkansas State University Mid-South in July 2015, and College of the Ouachitas in Malvern will become Arkansas State University Three Rivers effective Jan. 1 pending approval of the Higher Learning Commission.
Henderson, which competes in NCAA Division II sports, would become the third ASU System institution with an intercollegiate athletics program. Arkansas State has an NCAA Division I program, and ASU Mid-South competes in NJCAA Division II men’s and women’s basketball.
The ASU System, based in Little Rock, serves almost 23,000 students on campuses in Arkansas and Queretaro, Mexico, and globally online with a total operating budget of $285 million. The ASU System includes Arkansas State University<http://www.astate.edu/>, a four-year Carnegie R2 Doctoral research institution in Jonesboro with degree centers in Beebe, Mountain Home, Blytheville, Forrest City, and West Memphis. Arkansas State University Campus Queretaro<http://www.astate.mx/> opened in September 2017. The system’s two-year college institutions include ASU-Beebe<http://www.asub.edu/>, with additional campuses in Heber Springs and Searcy and an instructional site at Little Rock Air Force Base; ASU-Newport<http://www.asun.edu/>, with additional campuses in Jonesboro and Marked Tree; ASU-Mountain Home<http://www.asumh.edu/>; and ASU Mid-South<http://www.asumidsouth.edu/> in West Memphis.