UofL trustees resolve differences with school’s foundation
LOUISVILLE, Ky. (AP) — University of Louisville trustees voted Thursday to resolve their differences with the school’s investment arm, which was plagued by a period of mismanagement and excessive spending.
The agreement avoided a potential legal dispute between the university and the UofL Foundation after a scathing audit months ago that exposed problems at the foundation that included excessive compensation of administrators and flawed investments.
UofL’s Board of Trustees chairman David Grissom talked Thursday of a renewed partnership between the university and the foundation’s new leadership team.
“The resolution signals the Board of Trustees’ confidence that all critical management issues have been addressed, allowing the university and the community to focus confidently on future success,” Grissom said.
But he said the university and the foundation have not “closed the book” on possible litigation stemming from past problems at the foundation.
Grissom said “we continue to look at causes of action” against some of the foundation’s leaders when the entity was beset by management problems.
Trustees decided that any legal action against the foundation would have been “costly, lengthy and disruptive,” the university said in a release. Instead, the focus was on implementing safeguards at the foundation to boost confidence among university donors, the school said.
“We would be suing ourselves,” Grissom told reporters. “And that’s important for the public to understand. Whatever dollars we would recover from the foundation would just be coming out of the foundation — taking it from the left pocket and putting it in the right pocket.”
Trustees voted on the agreement after a lengthy session behind closed doors.
They also formalized changes to foundation policies and procedures to increase transparency and oversight of foundation budgeting, expenditures, investments and compensation.
A forensic audit released in June shed light on the foundation’s woes.
It found, among other things, that foundation officers and directors at the time depleted the university’s endowment to fund excessive spending on compensation and pointed to bad investments in real estate and startup companies.
The foundation has adopted reforms such as a line-item budget and prohibition on the university president also running the foundation. Former UofL President James Ramsey once held both roles.
The foundation’s woes were among a series of problems that surfaced during a turbulent period for the university’s administration.
An accrediting agency recently lifted UofL’s yearlong probationary status after the school resolved issues related to its governance, administration and finances. UofL officials met this week with the NCAA’s Infractions Appeals Committee to appeal sanctions from a sex scandal involving the school’s men’s basketball program.