University of Louisville Interim President Greg Postel told the board of trustees Thursday that balancing UofL’s budget next year will require cutting roughly $48 million in expenses, which amounts to just over 4 percent of the total budget.
A final draft of a proposed budget for the 2017-2018 fiscal year will not be given to the trustees for approval until May, but Postel briefed the board about the challenges ahead in crafting a budget that remains balanced. In addition to keeping a pledge made by the previous board of trustees last summer to freeze tuition rates in the upcoming academic year, Postel said revenues would be impacted by a decrease in funds made available by the UofL Foundation — the embattled manager of the university’s endowment that is currently undergoing a forensic audit and has a new mission to cut its spending rate.
Postel said he met with the university’s deans and vice presidents in a four-hour meeting Wednesday to explain possible methods to achieve such a reduction in expenses, including a salary freeze for faculty and staff, a strict hiring “frost” — replacing no more than 25 percent of employees who retire — and putting a hold on renovations and deferred maintenance. However, he ruled out layoffs, furloughs or closing programs.
At the end of Thursday’s meeting, the board of trustees approved a new contract for Postel, in which his salary remained at $950,000 — the same as it was under his position as interim vice president for health affairs, which he still maintains. While Postel would be eligible for a $100,000 performance-based bonus as part of an annual evaluation process of the trustees, he chose to delete from his contract a considerable total of possible benefits through deferred compensation.
After the meeting, Postel said he declined deferred compensation — the much-criticized benefits package provided by the foundation that enriched former President James Ramsey and many of his top staff — because “we just feel that it’s better not to have that embedded in these contracts at this time… it’s a burden on the foundation that is difficult, and we’re trying to improve the financial strength of the foundation.”
SACS president to be briefed on accreditation legislation
Board of trustees chairman J. David Grissom opened the meeting by stating a key objective in the near future is “restoring the university’s accreditation by SACS,” the accrediting agency that placed UofL on probation in December due to Gov. Matt Bevin’s executive orders attempting to abolish and recreate the board. While this new iteration of the board was made possible by legislation passed by the state legislature last month, Grissom noted that Senate Bill 107 — additional legislation proposed by Senate President Robert Stivers that would allow the governor to dismiss individual trustees or an entire board — “is a key ingredient for the university to have its accreditation restored.”
Grissom praised Stivers for being the “tip of the spear” in crafting the legislation, and said UofL will present an altered version of the bill to SACS President Belle Wheelan in a conference call at 3 p.m. Friday, hoping it now addresses the concerns she previously had brought up about the legislation.
“I had a very promising conversation with (Wheelan) yesterday – we’ve made a couple of modifications in response to her concerns – and our hope is she will sign off on that tomorrow,” said Grissom. “And if so, President Stivers is committed to getting the bill through the Senate next week and over to the House the following week.”
Grissom said after Thursday’s meeting that the newest version of the bill sets out procedures for how trustees or entire boards could be removed, as “SACS felt it was important for an aggrieved trustee to have a right to make his or her case in front of the Council on Postsecondary Education.” He said the legislation would apply to the trustees of higher education boards going forward, but would not be retroactive — thus would not create a grievance process for trustees of the most recent board that was abolished by the legislature in January.
Though Wheelan is not on the SACS board that rules on accreditation matters, Grissom said the Senate will push forward with the bill if she gives it her seal of approval, as “we didn’t want to pass a bill that wasn’t responsive to the concerns of SACS. That would be an empty gesture.”
Junior Bridgeman resigns from board of trustees
While discussing various new board committees, Grissom mentioned as an aside that Junior Bridgeman had submitted his resignation from the board last Friday.
The successful local businessman and former UofL basketball star had served on university and foundation boards for over a decade, briefly chairing the trustees last summer. Though he was reappointed to the newly created board in January, he was not chosen by Grissom to be one of the four trustees who would also be board members of the foundation, a role he had previously filled.
Grissom told reporters after the meeting that Bridgeman had told him in advance of sending the resignation letter that “his business activities have expanded greatly, he’s now involved with some other ventures, and the letter of resignation that he sent me a copy of was consistent with that.”
Four longtime members of the foundation board resigned two weeks ago, citing out-of-town commitments. With Bridgeman no longer serving on either board, Dr. Mark Lynn of the foundation’s board is now the only member of either board to have been serving at this point last year — highlighting just one aspect of the remarkable transition that the university is undergoing.
Scope of foundation’s forensic audit to expand
Grissom announced that while the accounting firm conducting a forensic audit of the foundation’s finances expects to have a final report in early May, the cost of the audit will exceed its roughly $900,000 price tag, as “the scope of the inquiry has broadened, based upon preliminary findings” of the firm.
Asked about the nature of such findings, Grissom later said they were not necessarily findings, but rather “I think we have determined that there were certain activities that weren’t contemplated at the time the original (audit contract) was put together.” While declining to provide specifics, he said “I can assure you that when the audit is complete and after it is reviewed by the board, it will be made public.”
Committees in place to search for president, review governance
Grissom announced the members of the search committee for a new permanent university president, which he will co-chair along with John Schnatter, vice chair of the board of trustees. Postel announced this week that this process will be lengthy, as he has been told he may occupy the interim position for as much as 18 months.
Additionally, trustee Bonita Black will chair a new ad hoc governance committee, which Grissom said will examine “all aspects of governance” at the university and foundation. The foundation has faced substantial criticism in the press and public over the last two years, and its governance and oversight was deemed to be poor in a recent examination by state Auditor Mike Harmon.