The University of Louisville Board of Trustees meeting on Thursday revealed there still are significant points of contention between its members and the UofL Foundation on finding consensus for a “pathway to restored confidence” for the university’s nonprofit — specifically when it comes to which board will select and direct an accounting firm to thoroughly audit the foundation’s finances.
Two weeks ago the board of trustees voted near-unanimously for a resolution threatening to sue the foundation — which manages the university’s $681 million endowment — unless it improved its financial records transparency. That action followed letters to the foundation by major donors calling for it to hire a forensic accounting firm of the university’s choosing, or else future donations would be withheld.
On Tuesday, Brucie Moore — a trustee and new chair of the foundation’s board of directors — stated in a press release that she would create a committee to hire a firm to conduct a “comprehensive” audit, but she did not indicate the university would have any input.
While giving an update on the foundation at Thursday’s board of trustees meeting, Moore stated that her use of the term “comprehensive” to describe the audit seemed to have “got some people’s feathers (ruffled).” However, she said that due to the makeup of this committee, “everyone should be comfortable that it’s going to be thorough and it will have a good outcome.”
Perhaps expecting the negative feedback she was about to receive on this issue, Moore asked “everyone to simmer down, take a breath, let this group meet and see what their request is. And they can do that within a week… All people that have reasonable minds have to have good faith in all of our other (foundation) board members. I do, and I hope that you will share that with me.”
Trustee Craig Greenberg immediately spoke up to point out that their previous resolution — which had the backing of acting UofL President Neville Pinto — and demands of donors specifically called for a forensic audit that would be under the supervision of the university.
“Why, in your first week as chair, and as a member of the board of trustees, are you ignoring both of those key requests of the university, that it be a forensic audit and that it be independent?” asked Greenberg. “You just seem to be thumbing your nose in the face of this board, the president and the donor community.”
Moore criticized Greenberg’s comments as “adversarial,” saying she hoped he “would not continue this type of discord” and would “try to make progress by being more collegial in this situation.”
“I did sign that (resolution),” said Moore. “Things have changed since that. President (James) Ramsey has resigned. I am now the chair. I listened to all of the interested people, especially our donors. And all I’m trying to do is have a process that is (done) quickly, and I’m answering all those questions…. I want it all out there as quickly as possible — everything — so that then it can be assessed.”
Moore added that “as you know, I was resistant, or very hesitant about that whole resolution, I expressed that very clearly.” She followed by stating that Larry Benz — the chair of the board of trustees spearheading the resolution who is also on the foundation board — had appeared content with the direction of the foundation last week, but then renewed his threat to sue the foundation this week unless Moore took further actions.
“I don’t think that that is a way to move forward,” said Moore. “That’s the way I feel about it. I will not be bullied like that.”
Trustee Emily Bingham told Moore that her concerns about the foundation audit are not a personal attack directed toward any individual, “but when you are looking at the level of questions involved and the continuity of leadership on the foundation body, that body itself is composed of people who are conflicted to a degree that I believe would make it extremely wise to supervise the process that we are trying to get going.”
“True good faith would be to remove themselves from that process,” said Bingham. “And that would be the ethical thing to do. And we would be able to follow the audit we are seeking to totally clear the air, would be able to proceed to follow all leads wherever they may go, let the chips fall. And there’s nothing to be afraid of, there’s nothing to be defensive about. It has to be done to satisfy the constituents that we all want to serve.”
Driving home the point about the foundation, Bingham said “there has been a massacre in the henhouse,” and those in charge of the foundation during that time should not be the ones controlling the audit.
Moore replied by saying that the foundation is critical to the university’s success, but it is also a separate entity that deserves some amount of independence. She added that Benz and another trustee will be on the committee issuing the RFP for a reputable accounting firm, so trustees should have faith that the foundation will do the right thing.
“How — if you hire a reputable, nationally recognized accounting firm, with Chairman Benz and another trustee on there, with new eyes around that — can you possibly say that there’s going to not be anything but openness and scrutiny?” said Moore. “You’re almost claiming that they can’t put out an RFP and hire an accounting firm. But with that said, that is our intent to do that tomorrow, and I will move forward with that.”
Concerns about the governance and finances of the foundation have been aired by trustees and media reports over the past two years, much of it focused around millions of dollars worth of compensation packages given to former President Ramsey and his top staff by the foundation. WDRB also reported Thursday that the foundation has withdrawn at least $60 million from the endowment since 2008 to lend to its own real estate affiliate, and much of the university’s recent $38 million loan to the foundation was used to pay down that affiliate’s credit line with the endowment.
After the meeting, Benz and Moore held a joint press conference where both emphasized the importance of restoring confidence in the foundation and the progress that has been made in the past week — though differences clearly remained between the two about the details of the foundation audit.
Asked if she was backing off wanting the foundation to supervise its own audit, Moore said, “There’s no one backing off, but we are looking for solutions that will bring confidence back to our donors, our staff, our faculty, all these folks that are involved. This is not a contest. This is a race to see that all those issues out there are answered, that all of you in the media want answered, all the other folks in our university system want answered… We may have differences on how to get those answers, but the important thing is we all want the same questions answered.”
Benz told reporters to “stay tuned” and see what happens at Friday morning’s meeting of the foundation board, saying the two are committed to working together and “allay all of those fears that are out there, and at the same time resolve amicably those pathways to restored confidence.”
Unprompted, Moore also brought up the lawsuit challenging Gov. Matt Bevin’s executive orders in June that abolished the board of trustees and created a new one full of his own appointees. That case will be decided soon in Franklin Circuit Court, though a temporary injunction issued by Judge Phillip Shepherd reinstated the board that is now meeting.
Despite a settlement of a different case in March in which Bevin agreed to promptly appoint racial minorities to the board and put it into compliance with state law — and allow the board to make major personnel actions — he has still not done so. However, Moore asked Bevin to do just that, as “we have five vacancies on the board of trustees and we need those vacancies filled.”
“I would respectfully request that Gov. Bevin go ahead and appoint those five members,” said Moore. “In March, Gov. Bevin said that he would as soon as possible appoint to racial minority members. And he can still maintain his lawsuit on the merits of the case going forward and to see whether or not he has the authority to remove the trustees. I think it’s important that we have those appointments.”
Moore’s request of Bevin echoes a resolution that passed UofL’s Student Senate this week by a unanimous 42 to 0 vote.
Earlier in Thursday’s meeting, Greenberg was voted in as the new vice chair of the board, which drew a “no” vote from both Moore and former foundation board chair Bob Hughes, who criticized the fact that no women were included on its executive committee. Moore was previously the vice chair.