A committee in Frankfort on Monday rejected the University of Louisville’s request to spend an additional $1.25 million on legal services, in a move that could affect the school’s ability to pursue potential litigation against officials in the administration of former President James Ramsey.
UofL had sought to double the amount it was permitted to spend on outside legal services to $2.5 million, but the Government Contract Review Committee voted 5-3 to reject that request, with members criticizing UofL for repeatedly coming back to the committee to increase its spending limit on contracts.
Sen. Max Wise, the Republican co-chair of the committee, told IL that the new leadership at UofL had made good strides to get their house in order and correct past mistakes, but because general funds of the university are now at stake, a message had to be sent that “enough is enough.”
“We want to see this thing get to some point of resolved,” said Wise. “But at the same time, when we continually, month after month, are requested for an additional $1.25 million or an additional amount for the forensic audit or legal fees, we have to eventually say that the time has come that we have to say no to this.”
This rejection comes at a key time for UofL, as it appears poised to soon file some type of litigation stemming from the Alvarez & Marsal forensic investigation of the UofL Foundation under the former leadership of Ramsey, which found mismanagement and overspending that is estimated to have cost the school’s endowment roughly $60 million. Though no final decision has been made on whether such a lawsuit will be filed and against which former university or foundation officials, last week the UofL board of trustees created a four-member committee that would be tasked with such litigation, with board chairman J. David Grissom expecting them to take action within the next month.
This move also comes a week after UofL announced that two large private foundations — the James Graham Brown Foundation and the C. E. & S. Foundation — would contribute $2 million toward the $2.2 million price tag of the Alvarez & Marsal investigation. This announcement followed criticism by members of the same committee in Frankfort that had approved the initial $900,000 contract for A&M before its costs ballooned upward.
Asked if the rejection of additional legal fees by the committee would thwart UofL’s ability to follow through on a lawsuit against former officials, Sen. Wise suggested the university needed to consider requesting that those same two foundations pitch in extra funds to help pay for any legal services that are necessary — keeping the university’s general budget and taxpayers off the hook.
“I don’t know if those discussions have been made, but at what point in time do we – in terms of the University of Louisville dealing with these issues – have outside assistance that can go towards that, instead of using general funds,” said Wise.
One of the committee members that voted against rejecting UofL’s request was Sen. Julie Raque Adams, R-Louisville, who told IL that because everyone now knows the wrongdoings uncovered by the A&M investigation: “We have legal matters that have to be addressed. So we have to have the ability to fund the continuation of the legal process.”
Adams added that her takeaway from the testimony of UofL’s attorney at Monday’s meeting was if the university could not pay the additional $1.25 million in legal services, that “the post-audit follow-up would be severely limited.”
As to Wise’s suggestion that the two large foundations pick up the legal costs as well as the cost of the forensic investigation, Adams said: “I think that it’s still a responsibility, and good fiscal responsibility, to pay for the legal services that result from that audit so that we can maintain that public trust… It’s really important for us to do what we need to do to have the community and the state and government really trust the university and the foundation again.”
UofL spokesman John Karman said neither Grissom nor interim UofL President Greg Postel have had a chance to discuss the committee’s rejection of the university’s request, but “the university’s leadership will meet with legal counsel to determine what options are available to us.”
Asked about the committee co-chair’s suggestion that the James Graham Brown Foundation kick in more money to cover UofL’s addition legal costs for litigation, its CEO and president Mason Rummell told IL in an email that “we have not had any conversations about the legal costs, nor has the University asked us to consider. Our focus has been getting the audit underway and completed. At this time, that is the extent of our participation.”
David Jones Jr., the treasurer of the C. E. & S. Foundation, told IL via text message that the nonprofit “hasn’t been asked for such support,” so it “has not considered the question.”
Disclosure: IL investor David Jones Jr. is an officer of the C. E. & S. Foundation
This story has been updated.