Colleagues,

The Henderson State University Board of Trustees voted unanimously Thursday to join the Arkansas State University System. Governor Hutchinson had publicly encouraged Henderson to consider joining a system, and we executed an MOU with the university in July to provide assistance and support through the end of this calendar year. Now we will transition to formalizing a merger, with a target date of finalizing the transition no later than January 1, 2021.

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. The ASU System fully recognizes the rich history of Henderson and the university’s importance to the region and the state.

Henderson’s membership in the ASU System would provide multiple benefits to our employees, students, communities, and the entire state. Program collaboration, student transfer relationships, purchasing collaboration, and multiple cost efficiencies would all be significant benefits to ASU System campuses. Additional system campuses also allow for greater leverage in negotiating contracts and employee benefits programs. Our ability to affect public policy would be significantly increased by having an institution such as Henderson as a member of the ASU System. Henderson also has multiple high-profile and widely recognized academic programs that would complement current ASU System offerings.  

The addition of Henderson would be the third such addition to our system since 2015, following ASU Mid-South in West Memphis and College of the Ouachitas – soon to be ASU Three Rivers – in Malvern. Because of these additions and the need for greater governance oversight, plans are to add two trustee positions to the existing ASU System Board of Trustees.  These positions would be appointed by the governor and result in a total of seven members of the ASU board. We will be working closely with Governor Hutchinson to implement these changes.

Henderson would retain its independent accreditation and independent appropriation just like the other campuses in our system. Any existing debt or obligations of the university would remain with Henderson and would not be applied to any other campus. There would be no transfer of funds from the ASU System, or any of our member campuses, to Henderson.

We have consulted with our bond rating agency, Moody’s Investors Service, about this merger to ensure that Henderson’s recent challenges would not adversely impact our ASU System rating. Moody’s released a report this week indicating a stable A1 rating for the ASU System, and multiple external financial entities have indicated that this merger is viewed as a positive. As further proof, Moody’s stabilized Henderson’s bond rating just one business day after they signed the MOU with our system as an indication of its confidence in our partnership.

I also want to provide you with a list of steps that will be required to be taken regarding the merger, along with a sample timeline:

         1. Approval of an affiliation agreement by Henderson and ASU System Boards—Fall/Winter 2019. An agreement outlining the affiliation and defining key components of the affiliation will be developed and signed by both parties.

         2. Development of “Change of Control” application for submission to the Higher Learning Commission with a deadline to file an application no later than March 1, 2020. Henderson will be required to submit an official application seeking approval from the Higher Learning Commission. This application is necessary when an institution changes governing boards.

         3. Arkansas General Assembly action—2020 Fiscal Legislative Session or Special Legislative Session. The General Assembly must pass legislation to change certain sections of Arkansas Code related to Henderson. These changes would primarily be statutes related to the Henderson Board of Trustees. Adding a Henderson Board of Visitors appointed by the governor will be required. The General Assembly must also pass legislation to change the composition of the ASU System Board of Trustees to add additional members.

         4. Higher Learning Commission Site Visit—Summer/Fall 2020. As part of the approval process, HLC will send a small visiting team to confirm information submitted in the institution’s report. This visit is not a comprehensive review and is limited to the specific request. This is typically a visit of a couple of days.

          5. Final Higher Learning Commission Approval—Fall/Winter 2020. Following the site visit, a report from the visiting team will be submitted to the HLC Board of Trustees for final approval. These approvals and processes are typically not controversial.

There is still much work to do, and the ASU System retains the right to continue due diligence and verify all financial information prior to the final merger date. Henderson will not participate in our employee benefits plans for 2020, and no decisions have been made regarding future years. Henderson will also continue to compensate the ASU System for services provided, utilizing the same assessment formula used for all of our campuses.

We believe this is a significant development for our system and will afford us many positive opportunities in the future. I hope you will feel free to contact me with any questions you may have, and please welcome our Henderson colleagues to the ASU System!

Chuck

Dr. Chuck Welch
President
Arkansas State University System