SUNDAY EDITION | Ramsey's outsize role in U of L Foundation differs from similar schools
LOUISVILLE, Ky. (WDRB) -- At the University of New Mexico, President Robert Frank is a trustee of the university’s non-profit foundation, but the foundation provides none of Frank’s roughly $500,000 annual pay.
Clemson University’s non-profit foundation provides more than half of university President James Clements’ $775,000 annual pay, but he doesn’t have any voting rights on the foundation’s board.
At the University of Louisville, however, President James Ramsey earns more than $1 million annually from the university’s non-profit foundation – and, when compared to two-dozen similar universities, he has an unusually large amount of power within the organization.
Since he arrived at U of L in 2002, Ramsey has been the foundation’s top executive; a voting member of its Board of Directors; a member of board’s executive committee; and chairman of the committee that nominates the board’s chairperson and vets candidates for most of the board’s open seats.
“There is a lot of power concentrated in the hands of one person,” said Beth Gazley, a professor and nonprofit management expert at Indiana University who reviewed the U of L Foundation’s bylaws at WDRB’s request.
Dr. Robert Hughes, chairman of the U of L Foundation board, said Ramsey has managed to quadruple the foundation’s annual support to the university, to about $150 million, during his 13-year tenure while keeping the foundation’s operating expenses to a minimum.
“How has it worked out in practice? I think the results speak for themselves,” Hughes said.
But questions about oversight of the $1.1 billion foundation – and the charitable organization’s compensation of Ramsey and other U of L executives – have roiled U of L since February, when a public disclosure revealed Ramsey had received $2.7 million from the foundation in 2012.
Ramsey earned an additional $1.3 million from the foundation in 2013, and a consultant hired by the university estimated his total compensation in a report last month as $2.5 million for 2014 – nearly all of it from the foundation.
The consultant reported that the foundation would pay Ramsey $873,422 in “tax gross-ups” – special payments to offset his income taxes – in 2014, which is more than the total pay of most of the two-dozen other university presidents listed in the report.
Now, a dissident faction of U of L’s Board of Trustees is pushing for closer oversight of the foundation, and Kentucky Auditor Adam Edelen’s office has begun an examination into how the foundation is governed in relation to the university’s Board of Trustees, which is the school’s ultimate authority.
Established in 1970, the foundation is a 501(c)3 charitable organization whose board members are selected, for the most part, with Ramsey’s approval. The university’s trustees, on the other hand, are appointed by the governor.
Ramsey, who is president of the U of L Foundation, declined to be interviewed for this story. But in a written statement, he said when he arrived in 2002, the respective leaders of the foundation and trustee boards were “on two different pages, and they were taking the university in two different directions.”
Now the foundation is “working well” – providing $153 million in academic support to U of L this year, up from $39 million in 2002 – after its fundraising has reached “levels never imagined” at U of L, Ramsey said.
“I believed then as I do now that the Foundation should exist for one reason, and that’s to support the academic mission of the University of Louisville,” Ramsey said. (Click here to read Ramsey's full statement).
Ramsey among presidents with powerful roles in foundations
With states cutting back on funding for higher education, it’s almost routine for public universities to have 501(c)3 charitable foundations that support the schools by raising money, buying property and managing endowments.
The foundations’ relationships with their respective universities and university presidents vary widely across the country.
But Ramsey is one of the most powerful university presidents in an affiliated foundation, according to a WDRB analysis of the same 26 public universities that U of L’s paid compensation consultant selected for its comparative report last month.
Among the more-than two dozen peer institutions, WDRB found only one other school – the University of Alabama at Birmingham – in which the university president is paid by the affiliated foundation, is the chief officer of the foundation and has a direct role in choosing new members of the foundation’s board.
UAB President Ray Watts is also president of the UAB Educational Foundation, which provides him a $24,000 annual car allowance, according to UAB spokesman Jim Bakken. Watts’ total pay is $853,464 annually, Bakken said.
To be sure, a few other university presidents in the comparison group have arguably just as much authority in their affiliated foundations.
At the University of South Florida, President Judy Genshaft is a voting member of the foundation board, appoints the foundation’s chief executive officer and gets to approve the chairperson of the board before the rest of the directors, according to the USF Foundation’s bylaws.
The USF Foundation funds $270,000 of Genshaft’s $470,000 base salary, according to a copy of her employment contract provided by the university.
At Florida State University, the foundation’s president is also the university’s vice president of advancement, who reports to the university administration. Florida State President John Thrasher is a voting member of the foundation board and is “consulted” on new board members, according to a foundation spokeswoman.
Florida State’s previous president, Eric Barron, who left last year, was paid $418,621 of his $649,950 salary from foundation funds, according to a university spokeswoman.
Common for presidents to serve on foundation boards
Nearly all university foundations include the university president as a member of the foundation board, and a little less than half of foundations give the university president voting power, according to the Association of Governing Boards of Universities and Colleges.
In a survey last year, the organization found that pay for a university president from a foundation is a little less common: 13 of 75 foundations contributed to the university leader’s compensation.
WDRB’s analysis showed that, of the 26 comparable universities to U of L, 21 have affiliated foundations, and at least 8 of those foundations compensate the university president in some form.
The university presidents who earn money from foundations also tend to play a larger role – with seven of the eight holding voting seats on the foundation’s board.
Some foundations are independent of the university -- with their own staff answering only to their boards – while others are intertwined with the university administration, said David Bass, director of foundation programs and research at the Washington, D.C.-based Association of Governing Boards.
"There is no one right way -- or wrong way -- to go about it," said Hughes, who is also the outgoing chairman of U of L's Board of Trustees.
What’s important, Bass said, is “trying to ensure there are mechanisms for accountability and transparency” in how foundation spends money, including any pay to supplement administrator compensation.
Some members of U of L’s Board of Trustees find the foundation lacking on that point.
At a contentious meeting on May 14, Trustee Steve Wilson said he was “embarrassed” to realize he did not know the full extent of Ramsey’s compensation.
In July, members of the trustees’ compensation committee were quick to accept the consultant’s report stating Ramsey’s total annual compensation was about $1.1 million.
But within a week, the consultant revised the figure to $2.5 million after WDRB published a story outlining several components of Ramsey’s foundation pay that the consultant had not included, including the tax gross-up payments.
Gazley, the nonprofit governance expert, said charitable organizations need to tread lightly when compensating their board members, and the structure of the U of L Foundation raises “a lot of red flags” in terms of Ramsey’s extensive role.
For example, Gazley said, the foundation board ought to a have a separate committee, of which Ramsey is not a member, to make compensation decisions.
The board’s executive committee, of which Ramsey is a member, deals with compensation. While meeting minutes show Ramsey is not present when the committee has discussions about his pay and benefits, that’s “not sufficient” separation, Gazley said.
Dennis Menezes, a marketing professor who recently retired from U of L, wrote in an op-ed for The Courier-Journal last month that Ramsey’s role in the foundation, given his compensation from the organization, is “analogous to putting a fox in charge of the hen coop.”
Director: Ramsey still answers to trustees
Ramsey, Hughes and other longtime foundation board members have stressed that the foundation acts in close coordination with the university’s Board of Trustees, particularly with administrator pay.
“The University of Louisville Foundation does what it’s requested to do by the Board of Trustees,” Ramsey told the U of L Faculty Senate when defending pay arrangements for him and his top staff in May.
And it’s still the Board of Trustees that sets the university’s direction and oversees Ramsey’s employment, said Junior Bridgeman, a longtime foundation board member and former chairman of the Board of Trustees.
“It’s not as if the foundation is going out and doing things that aren’t tied to the strategy and plan for the university,” Bridgeman said in an interview last week. “You can be the president, (the chair of) the nominating committee and all those things, but (you) still answer to the Board of Trustees.”
Four of the foundation’s 15 board seats are reserved for members of the Board of the Trustees, which allows for coordination between the two boards, as Bridgeman and foundation director Margaret Handmaker explained in a presentation to the foundation board last month.
The other 10 foundation board members, besides Ramsey, are appointed through the nominating committee that Ramsey chairs on a permanent basis, according to the foundation’s bylaws.
In his statement, Ramsey said he has used his nominating authority to put as many former trustees on the foundation board as possible. Currently, eight of the foundation’s 10 at-large directors are former trustees.
“These are people who are committed to the university and understand the university’s mission and history and have enabled the two entities to work together,” Ramsey said.
Hughes acknowledged Ramsey’s “very key role” in the foundation, but he said the foundation directors – many of whom are successful businesspeople – still exercise independent judgment.
“(Ramsey) does not dictate what the foundation does,” Hughes said. “The foundation is a democracy…Dr. Ramsey may be one of the people that primarily recommends certain actions be taken, but at the end of the day, it has to be voted on.”
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