University of Louisville trustees block tuition increase, questi - WDRB 41 Louisville News

University of Louisville trustees block tuition increase, question $38 million loan to foundation

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Craig Greenberg, shown March 1, 2016 Craig Greenberg, shown March 1, 2016
Stephen Campbell, March 1, 2016 Stephen Campbell, March 1, 2016

LOUISVILLE, Ky. (WDRB) -- For more than a decade, members of the University of Louisville Board of Trustees have treated annual tuition increases as a regrettable necessity as state money for higher education has declined.

That changed on Thursday when three trustees refused to allow the board’s finance committee to vote on a proposal by President James Ramsey’s administration to increase tuition by 5 percent for most students in the coming academic year.

“Just because we are permitted to raise tuition doesn’t mean we have to raise tuition,” trustee Craig Greenberg said during the meeting.

The move by Greenberg and trustees Stephen Campbell and Jonathan Blue forces Ramsey’s staff to come up with a different budget proposal for the fiscal year that begins July 1. The full board normally approves the budget, including tuition increases, by June 30.

In an email to the U of L community Thursday evening, Ramsey said he is "confident we'll get to an approved budget in the very near future."

The budget presented Thursday had an additional $23 million in tuition revenue compared to the current year, for a total of $300 million.

In his email, Ramsey said because the university's state money will decline by $6.26 million, "it becomes very difficult to build a budget for the coming year without a tuition increase."

But Trustees Chairman Larry Benz said he also wants to see a budget with no tuition increase, and he realizes "a lot of challenging deliberations have to occur" with Ramsey's staff to make that possible.

"We have to stop the on-going escalation of tuition that is a burden to our students and their families and often results in insurmountable debt at graduation," Benz said in a written statement.

During the meeting, Greenberg questioned how the university spends money, calling Ramsey and his administrative team “masters of financial obfuscation.”

The sharpest debate of the meeting was over a transaction Ramsey approved last year in which the university loaned $38 million of its cash on hand to the University of Louisville Real Estate Foundation, a creation of the U of L Foundation, which Ramsey also runs.

WDRB News first reported the loan in a story on Wednesday.

Campbell and Greenberg questioned why the loan was not approved by the trustees and whether the money could be used to fund more pressing university priorities or to curtail tuition increases.

Jason Tomlinson, the foundation’s chief financial officer, told the board that the transaction is not a loan but a “receivable.” But U of L’s independent auditors called it a loan in the university’s annual financial statements, as WDRB reported Wednesday.

Greenberg blew up at Tomlinson, asking how he could tell the board the deal is not a loan when the document governing the transaction has a file name of “University Loan to FDN.docx.”

Tomlinson struggled to explain the details of the transaction amid interjections by trustees Campbell, Greenberg, Ron Butt and Robert Hughes.

Butt, a certified financial planner, did more than any staff member to defend the transaction, saying it’s simply a way for the university to earn more interest on its short-term cash than lending it to a bank.

But the 1 percent interest on the loan comes from U of L’s foundation, which already dedicates its resources to supporting the university.

In an interview following the meeting, Butt said he doesn’t know exactly how the foundation will come up with the 1 percent interest, but the deal is a “good opportunity” for the university to earn a much higher return on its cash.

“How does it invest the money? I have no idea, I am not on the foundation board,” he said.

WDRB reported Wednesday, based on prior confirmation from Tomlinson, that neither the foundation nor trustee boards approved the $38 million loan.

But during the meeting, Hughes told the group he had reviewed notes and found the board's audit committee and the full Board of Trustees had approved the arrangement.

"Hey Craig, you playing semantics?" Hughes asked Greenberg. "You voted for it in October 2014...You need to look through the minutes, attend all the meetings, read all the materials and then it’s right there in front of your face."

However, the minutes of the meetings in which Hughes said the deal was approved contain no references to the arrangement, according to a review by WDRB News.

University spokesman John Karman had no immediate information on whether the deal was approved as Hughes claimed.

A "resource" and not an "obstacle"

After the move to block the tuition increase, Butt said he was challenging Greenberg, Campbell and Blue to be “a resource and not an obstacle” in helping come up with an alternative budget proposal.

Hughes said Greenberg’s comments about tuition sounded like he was “running for office.”

The tensions at the meeting were emblematic of a roughly 50-50 split on the board over support for Ramsey, who is under contract through 2020.

Butt, a Ramsey supporter, said after the meeting that Greenberg, Campbell and Blue have other motives for their actions.

“It’s really unclear what that agenda is, and they are not forthcoming in stating what that agenda is,” Butt said.

Copyright 2016 WDRB News. All rights reserved.

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