FRANKFORT, Ky. (WDRB) -- Kentucky Auditor Adam Edelen said his examination of the University of Louisville Foundation will provide an “outstanding opportunity” to give the U of L Board of Trustees a “fact-based path forward” to improve its oversight of the $1.1 billion nonprofit organization. 

Heeding the call of at least one U of L trustee, Edelen announced Thursday that he would get involved following reports of multi-million compensation packages from the foundation to top executives at U of L, including President James Ramsey.

“When decisions are made at the foundation level that may or may not have been approved at the board (of trustees) level, we've got a problem, and we need to get in and really answer these questions,” Edelen said in an interview Thursday.

U of L Board of Trustees Chairman Robert Hughes, a Western Kentucky physician who also chairs the separate board of directors for the foundation, said in a statement that the trustees “look forward to working with” Edelen's office on the review.

At least a handful of U of L trustees welcome Edelen's involvement following a testy meeting in May in which Ramsey rebuffed questions about the foundation and its compensation of university employees, saying such inquires imply a lack of trust.

Even ardent supporters such as trustee Larry Benz said at the time that it might “make sense to have an outside organization do an audit” of the foundation's management processes.

“I've spoken with almost every member of the board of trustees and literally dozens of members of the business and civic community in Louisville who believe that an evaluation by my office…would have the net result of relieving some of the tension we have right now,” Edelen said.

In 2012, the foundation reported paying Ramsey $3.2 million, then-Provost Shirley Willihnganz $1.9 million and Ramsey Chief of Staff Kathleen Smith $1.4 million – mainly due to the vesting of several years' worth of “deferred compensation” and “gross up” payments to cover the executives' income taxes on the special incentive pay.

In April, a WDRB investigation, drawing on foundation records, showed that some of the compensation was “deferred” for as little as a single day; that the executives' awards had been credited with retroactive investment returns; and that two of the administrators had been drawing salaries from a foundation subsidiary called University Holdings.

WDRB also revealed that a longtime foundation board member had been given a six-figure, no-bid consulting contract without board approval shortly after resigning his seat.

“The questions about compensation – particularly deferred compensation – questions about contracting and the degree to which conflicts are disclosed … all fit into our scope,” Edelen said Thursday.

Edelen was quick to praise U of L's progress over the last decade under Ramsey, calling him “a truly transformative figure.”

And Edelen will not look at whether the foundation should be dissolved into the university, saying the separate nonprofit provides key flexibility for U of L at a time of declining state support for higher education.

“You can't argue with the growth of the foundation or the way the university has expanded its research mission. There is truly a lot to be proud of,” Edelen said. “But going forward, all of us, even the most successful of leaders, have to be accountable to our board.”

Trustee Steve Wilson, who called on Edelen to get involved in late April, said in a statement Thursday that the review “will help us govern with more efficiency and transparency.”

Trustee Craig Greenberg said he “strongly support(s)” Edelen's intervention and he's “hopeful that his work will help bring the board together to govern more effectively.”

Hughes, the trustees and foundation chairman, said Thursday: “Since recent questions arose in the media, we began action to clarify misinformation about the U of L Foundation and its importance in supporting the University of Louisville.”

Asked what specific “misinformation” had been clarified, U of L spokesman Mark Hebert said the university would have no comment beyond Hughes' statement.

While Ramsey has called WDRB's reports “incomplete” and “distorted,” the university has yet to point out any specific errors of fact.

In his presentation to the trustees on May 14, Ramsey said he had “discovered inaccuracies” in news reports and implied that a WDRB reporter had missed something significant by not attending or reporting on a joint trustee-foundation committee meeting in December 2011, shortly before Ramsey was given a contract extension through 2020 and additional deferred pay to remain on the job.

But the minutes of the 2011 meeting say only that the trustees and foundation directors met in a closed session – with no hint of what they discussed -- and then took no action.

When pressed to explain the significance of the meeting – and given a month to do so – foundation spokesman Tim Mulloy acknowledged last week that the university had no answer.

Previous stories:

SUNDAY EDITION | Part 1: University of Louisville executives benefited from quick vesting, retroactive investment returns for "deferred" pay

SUNDAY EDITION | Part 2: University of Louisville Foundation gave $120,000 no-bid consulting contract to ex-board member

Ramsey: Reports about University of Louisville compensation 'incomplete and distorted'

University of Louisville trustee asks state auditor to examine university, foundation

Former U of L foundation board member's first consulting deal worth $27,000 a month

University of Louisville President James Ramsey defends foundation compensation in testy meeting with trustees

University of Louisville to spend $23,000 on consultant to review top salaries

University of Louisville Foundation paid Ramsey $1.8 million in 2013, disclosure shows

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