Auditor Mike Harmon to continue examination of University of Louisville Foundation
Saying he wants “greater transparency,” Kentucky Auditor Mike Harmon announced Tuesday he will continue the examination begun by his predecessor, Adam Edelen, into the University of Louisville Foundation. Harmon, a Republican, had been noncommittal about his plans regarding U of L since upsetting Edelen in the November election.
LOUISVILLE, Ky. (WDRB) -- Saying he wants “greater transparency,” Kentucky Auditor Mike Harmon announced Tuesday he will continue the examination begun by his predecessor, Adam Edelen, into the University of Louisville Foundation.
Harmon, a Republican, had been noncommittal about his plans regarding U of L since upsetting Edelen, a Democrat incumbent, in the November election.
Dr. Robert Hughes, chairman of the U of L Foundation, asked Harmon to continue the examination in a letter dated Monday.
Hughes, an ardent supporter of U of L President James Ramsey, has been a staunch defender of the foundation’s role in the university.
But, in a brief phone interview Tuesday, Hughes said there is broad sentiment on the Board of Trustees, of which he is also a member, for a “better definition of the relationship” between the university and the foundation and "best practices" for governing the two closely related organizations.
“This is something that all of the trustees have asked for, for a number of months, from the auditor, and I am just following through with that,” Hughes said.
The foundation, which has total assets of about $1 billion, is the fundraising arm of the university and manages the university’s endowment.
Ramsey is president of the foundation, which is overseen by a separate board of which Ramsey is a voting member.
In a press release, Harmon said his review will explore “best practices for governance of such non-profit foundations that are attached to Kentucky’s public universities.”
Former U of L trustee Steve Wilson -- who has since called for Ramsey to resign -- asked Edelen to get involved last April, saying "various events - too numerous to list - have led me to be concerned about fulfilling my fiduciary and statutory responsibilities" as a trustee.
Wilson said a board meeting in May that it was "embarrassing" to realize he did not know the full extent of Ramsey's compensation -- the vast majority of which comes from the foundation.
Because of deferred compensation and special payments like tax "gross-ups", Ramsey earned $1.3 million and $2.7 million from the foundation in the two most recent years for which figures are available.
In July, a university compensation consultant reported that Ramsey was due to get $873,000 in tax gross-ups alone, which are meant to cover his income tax liability, in the 2014 fiscal year. The consultant recommended ending the tax gross-up payments to Ramsey and a few other key administrators, but the Board of Trustees never acted on the recommendation.
There have also been questions about the foundation's oversight of funds. Last year, WDRB revealed a longtime foundation board member had been given a six-figure, no-bid consulting contract without board approval shortly after resigning his seat.
It's unclear whether Harmon's examination will be as comprehensive as the review Edelen had planned.
In addition to governance recommendations, Edelen said he would also look into the foundation's compensation arrangements and compensation practices.
“The questions about compensation – particularly deferred compensation – questions about contracting and the degree to which conflicts are disclosed … all fit into our scope,” Edelen told WDRB in June.
Michael Goins, Harmon's spokesman, said, "Our goal is to meet with the foundation, have our people go in and see where the data leads us."
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