After a year marked by low donations, the University of Louisville Foundation unanimously passed its 2018-19 budget Tuesday afternoon. At the meeting, the foundation also said a third-party study found that the foundation had overcompensated unnamed foundation officials while James Ramsey was president of the university.
UofL will receive around $65 million from the foundation, which manages the university’s more than $700 million endowment. That’s around $5 million more than what the school received this year, according to interim executive director Keith Sherman.
Most of the budget discussion focused on whether, with limited donations, the foundation should focus on funding the endowment for future use, or aim for current use gifts that can immediately go to the University.
“Without those current use gifts, we’re in big trouble,” President Neeli Bendapudi said, adding she is still gathering information.
The foundation expects to lose around $6.1 million in net income in the next fiscal year, according to the operating budget, with the bulk of that coming from depreciation. Compared to the 2017-18 budget, the 2018-19 budget anticipates around $33 million less in revenue, with around $12 million more in operating expenses.
The bulk of the revenue drop comes from a projected decline in investment return, according to the budget. Key expense changes in the new budget include:
- The foundation will be spending an extra $2 million from the endowment, with all of that going to UofL to spend.
- The office of advancement, which controls fundraising for the university, will be getting $265,000 more. That office will now receive a total of $6 million.
- The president’s office no longer receives money from the foundation, freeing up $867,000.
- Unidentified university contributions jumped to $616,000 from $110,000.
- Professional services will increase from $3 million to $5.4 million.
Donations to the foundation appeared to be improving, as the school added a new president, athletic director and men’s basketball coach this spring.
The foundation said it received nearly $10 million in donor pledges this quarter after receiving under $5 million for the last four quarters. In projecting for the budget, the foundation considered this year’s donation level as a “base line” for future, saying its unlikely contributions will drop below that level in the future.
“Well, there’s been a lot going on,” Sherman said when asked about the drop in donations. He noted that this quarter saw a higher amount of bequests than normal, partially causing the bump in donations.
Foundation officially acknowledges overcompensation
Foundation chairman Earl Reed told reporters that the foundation overcompensated foundation officials, with five officials receiving a total of over $3.9 million from 2010 to 2016.
The Korn Ferry study focused on Ramsey, Kathleen Smith, Shirley Willihnganz, Michael Curtin and Jason Tomlinson, comparing their payouts to what others in comparable positions were paid. Benefits, deferred compensation and additional work for the foundation were considered, as well. Any payments over the 50th percentile is considered excessive, according to the study findings.
Three of those focused on — Ramsey, Smith and Willihnganz — worked for both UofL and the foundation during the given timeframe. Ramsey made the bulk of the $3.9 million, being excessively paid around $3 million over the course of seven years, according to the study. Smith also made over her determined worth every year, Korn Ferry found. Willihnganz made more in six of the seven years tracked — she had left the position by the seventh year.
The two foundation officials, Curtin and Tomlinson, received much less. Curtin wasn’t overpaid in any of the years tracked, and Tomlinson was overpaid by $2,601 in one year, the study found.
Ramsey, who was president of UofL and the foundation during his tenure, Smith, Curtin and Tomlinson are currently being sued by the school and foundation due to, in part, alleged overspending of foundation funds. Willihnganz is not currently named in the suit.
The foundation also authorized its lawyers to use any legal means to get any excess compensation back. Reed told reporters that the foundation would need to refile some documents with the IRS due to the official finding of overcompensation.
Ken Payne, Mark Nickel and James Boone were all named as new board members at the meeting.
This story has been updated to reflect more accurate numbers and context from the study commissioned by the foundation.