BEVIN: U of L president James Ramsey to resign, board of trustee - WDRB 41 Louisville News

BEVIN: U of L president James Ramsey to resign, board of trustees to be replaced

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LOUISVILLE, Ky. (WDRB) -- Kentucky Gov. Matt Bevin abolished the University of Louisville's board of trustees and pledged to reorganize it on Friday, while announcing that embattled school president James Ramsey has agreed to resign.

Bevin said his action was the only way to restore the board’s ability to function.

In an executive order signed Friday morning, Bevin scolded the 20-member board for its "lack of transparency and professionalism" and described the relationship between the U of L administration and trustees as "operationally dysfunctional."

“We are going to start putting that house in order," Bevin told reporters in Frankfort.

He declined to say whether he asked Ramsey to step down, but he said the decisions made between him and Ramsey were the result of "a culmination of many things."

"Some have had to do with academic things," the governor said. "Some have had to do with administrative things. Some have had to do with athletic things."

Ramsey was out of the country Friday and unavailable for comment.

In his 14 years on the job, Ramsey is credited with raising the institution’s academic and athletic profiles and transforming its campus. But the university has been dogged by a number of scandals in recent years, and about half of the trustees have said they no longer have confidence in Ramsey’s leadership.

It’s unclear when exactly he will depart. In a letter to Bevin, Ramsey said he will “immediately offer, to the newly appointed board, my resignation/retirement.” Bevin said it will be up to the new board members how to proceed.

But Bevin appeared to foreclose the possibility that his newly appointed board would ask Ramsey to remain.

"Exact semantics (are) to be determined by the newly constituted board, but he will be stepping down," Bevin said. "The timing of which will also be in conjunction with the decisions made by that new board. It could be effective immediately."

It’s also unclear whether Ramsey will remain president of the University of Louisville Foundation, which provides the vast majority of his multi-million-dollar annual compensation and is governed by a separate board that Bevin’s executive order did not affect.

Foundation Chairman Robert Hughes said he hadn’t spoken to Ramsey about his status with the foundation, which manages the university’s $650 million endowment.

“I really don’t know what this means in terms of the foundation,” Hughes said by phone Friday.

Bevin named a three-member interim board to serve for two weeks until a permanent board is in place. Interim trustees include Louisville businessman and former U of L basketball player Junior Bridgeman, attorney Bonita Black and Dr. Ron Wright.

Bridgeman, a Ramsey ally, chaired the board of trustees in the mid-2000s and has been a longtime member of the foundation’s board.

Under the executive order, Bevin directed the postsecondary education nominating committee to meet "as soon as practicable" and submit 30 nominees for the board within the next two weeks.

Trustees were given no prior notice of Bevin’s decision to remove them.

The announcement came less than less than 24 hours after Ramsey sent a university-wide email outlining a budget he was looking forward to proposing to U of L trustees next week.

Ramsey’s letter to Bevin said a restructured board "should have the opportunity for a 'fresh start.'"

Questions about Bevin’s authority

The move immediately raised legal questions. Under Kentucky law, the board must have 17 members appointed by the governor -- in contrast with the 10 that would be installed under the executive order. Three other members – representing faculty, staff and students – remain unchanged.

State law also says board members can be removed "by the Governor for cause" after being given a hearing with an attorney before the Kentucky Council on Postsecondary Education.

Bevin also on Friday issued an executive order that abolish the Kentucky Retirement Systems board of trustees, replacing it with a new board that will be an agency of state government.

“Today Gov. Bevin took unprecedented actions directed at two important governing boards,” Kentucky Attorney General Andy Beshear said in a statement. “Lawmakers mandated that these boards be independent. My office is therefore closely reviewing today’s actions.”

Former Attorney General Jack Conway, whom Bevin beat in the governor's race last November, told WDRB he believes Bevin "is on shaky legal ground. By executive order, a governor cannot change what’s in the statute."

Conway said boards of trustees are appointed under state law and "governors can do executive orders, but those orders cannot trump state law."

Louisville attorney Joe Dunman said in an interview that Bevin's plan to "reduce the U of L board of trustees from 20 to 13 members appears to conflict with state law."

"KRS 164.821 says the board shall consist of a total of 20 members, 17 of which are appointed by the governor," Dunman said. "The attorney general could ask the Franklin Circuit Court to determine if what the governor is doing is allowed under Kentucky law."

Trustees react

Board members had varying reactions – from support to dismay that all of the current trustees were let go.

Hughes, a trustee for 11 years and ardent backer of Ramsey, applauded Bevin’s “bold move,” calling it a necessary step to get past the divisions on the university’s board.

 “The damage that was being done to the board of trustees needed to be put to an end,” he said.

“I am supportive of Governor Bevin's actions this morning and desire to give the University of Louisville a fresh start,” board chairman Larry Benz said. “I am grateful that I was able to serve the University as a Board member and pledge my continued support.”

But Emily Bingham, a trustee who had been critical of Ramsey, said Friday afternoon that it wasn’t necessary for Bevin to abolish the entire board.

“I think there was a very dug-in leadership here,” she said. “We worked closely behind the scenes trying to bring up issues of a smooth transition. This is not the ideal outcome.”

She said a national search for Ramsey’s successor must start “as soon as possible.”

Another trustee, Craig Greenberg, said he and other board members have discussed whether Bevin’s actions were legal. But, he added, “We will let other lawyers, the administration and the courts system weigh in on that.”

Asked whether he believes a new board could reject Ramsey’s offer to retire, thereby keeping him in the president’s role but with a new board, Greenberg said: “I’m very hopeful that games are not being played here and what was announced today regarding the president’s resignation is … to take taken at face value.”

He also called on Bevin to demand changes to the university’s foundation, saying the “level of financial arrogance and deception at the U of L Foundation is alarming.”

“Without a new team and a new level of transparency at the foundation, the governor’s actions today are for naught,” Greenberg said.

A Bevin spokeswoman did not immediately return an email sent Friday afternoon after Greenberg’s remarks.

Improving academic metrics

A professor of economics and former Kentucky state budget director, Ramsey came to U of L in 2002.

As Ramsey said in a trustees meeting last year, U of L has done “pretty damn well” under his leadership despite a string of state budget cuts beginning in 2008.

“He basically transformed a commuter college into a major university. If you look at the progress under his leadership, it’s been phenomenal,” Hughes said Friday.

Perhaps the university’s biggest academic accomplishment has been an increase in the percentage of students who graduate within six years of starting school, which rose 33 percent in 2002 to 53.6 percent in 2015, according to university statistics.

U of L is also attracting better prepared students. The average ACT score of entering freshman rose from 23.3 in 2002 to 25.5 in 2015.

Annual research expenditures have grown from $80.9 million to $179.3 million during that period.

Ramsey is often praised for his fundraising prowess. The university completed a seven-year, $1 billion “capital campaign” in 2014.

The university’s endowment – a pool of donated funds that supports academic departments – grew from $479 million in 2002 to $822 million in 2015. However it was down to $650 million of January 31 after recent losses from its investments.

In keeping with the general trend in higher education, tuition has risen every year of Ramsey’s tenure at U of L. In 2002, in-state undergraduates paid $4,082 a semester in tuition and mandatory fees. Last fall, the bill was $10,432, according to the Kentucky Council on Postsecondary Education.

Kentucky has drastically reduced state support for colleges and universities, and U of L’s annual state funding fell from $169 million in 2007-08 to $139 million in 2015-16.

Ramsey has found other ways to generate revenue besides tuition hikes.

He has made extensive use of tax-increment financing, a state program that diverts some new tax revenues to pay for economic development projects.

U of L’s three “TIF” districts – the ShelbyHurst office park in eastern Jefferson County, the Nucleus area downtown and the main Belknap campus – had generated $16.2 million for the university as of July 2015.

The university, through its foundation, also gets rental revenue from the three offices buildings it built on the ShelbyHurst campus with real estate company NTS. The buildings command some of the highest office rates in Louisville. More commercial development is planned on the campus.

Under Ramsey, U of L’s Belknap campus continued shedding its “commuter school” appearance. New dorms were built, freshmen are now required to live on campus and a half-dozen private developers have built luxury student apartment complexes within walking distance of campus.

Broad success in athletics

Ramsey presided over the most expansive periods in athletics history at U of L. He gave athletics director Tom Jurich two lifetime contracts, and helped make him a university vice president for athletics.

He oversaw U of L’s departure from Conference USA for the Big East Conference, a move made in large part because of the growth in athletics facilities. After the Big East was raided, he was part of the effort that took the school from the American Athletic Conference to the top-tier Atlantic Coast Conference.

Jurich’s athletics work, with Ramsey’s backing and often the U of L Foundation’s financial support, changed the face of the west side of U of L’s campus, and helped make the school more hospitable for housing and other retail development around the campus.

Ramsey signed off on retaining U of L basketball coach Rick Pitino after an extramarital affair and extortion scandal in 2009, and was behind Jurich when he re-hired Bobby Petrino as football coach following his own scandal while coach at Arkansas.

U of L athletics’ gender equity profile grew greatly during Ramsey’s tenure, under Jurich’s leadership, with new facilities and at least one national ranking for every women’s sport in the past six years.

Jurich thanked Ramsey in a statement and said he and his wife, Terrilynn, "will support the governor and will continue to be committed to our university.”

Recent scandals and embarrassments

But in recent years, Ramsey’s presidency has been beset by a number of scandals and embarrassing revelations.

“There have been a number of news stories… that have been in the wind in recent months and years… that have not shed the best on the light on the university and the commonwealth as a whole,” Bevin said Friday.

Beginning with former education dean Robert Felner in 2008, a number of university employees were implicated in thefts or misappropriation of funds under U of L’s control. The university eventually hired an auditing firm to help it implement tighter financial controls.

Early last year, federally required tax disclosures showed that Ramsey and other senior administrators had received multi-million-dollar compensation packages from the university’s nonprofit foundation, which manages its endowment.

A WDRB investigation showed that, besides large deferred compensation awards, some administrators got extra pay from a separate nonprofit created by the foundation and that the payments were inflated with “tax gross-ups” – or extra money meant to offset the administrators’ federal, state and local income taxes.

In July 2015, a university-hired consultant said Ramsey was getting at least $600,000 – and sometimes up to about $900,000 – in tax payments alone each year from the foundation, and the consultant recommended ending those payments.

Those payments were the biggest component of Ramsey’s $2.8 million in compensation from the foundation in 2014.

Also last year, a WDRB investigation showed the foundation had awarded, without board discussion or competitive bidding, two six-figure consulting contracts to a former longtime board member and vice chairman.

Revelations about the foundation prompted former State Auditor Adam Edelen to begin an examination, which is being carried on by Mike Harmon, Edelen’s successor.

In October, a former Louisville escort released a tell-all book alleging that a former U of L basketball staffer paid her to arrange dances and prostitution for players and recruits over a four-year period.

This past February, Ramsey made the decision to self-impose a postseason ban on U of L’s men’s basketball program in the wake of an NCAA investigation following the allegations. Ramsey and the university also announced a secondary round of sanctions later in the year.

Last fall, Ramsey and his president’s office staff posed for a photo with The Courier-Journal during a Halloween party in which they wore Mexican costumes, including sombreros and fake mustaches.

After a backlash, Ramsey publicly apologized and the university committed to diversity training.

In early November, 78 faculty members – most in U of L’s College of Arts and Sciences – wrote a letter to Ramsey complaining about the "drumbeat of crises that have embarrassed the university and made many ashamed to be associated with it."

Even so, a majority of the university’s 66 faculty senators voted in support of Ramsey earlier this year.

In December, the university placed its vice president for health affairs, David Dunn, and vice president for information technology, Priscilla Hancock, on paid leave following a campus police and federal law enforcement inquiry into “allegations of potential misconduct” that surfaced in the summer of 2014, Ramsey told faculty in a letter.

In March, several trustees wanted to take a vote of “no confidence” in Ramsey’s leadership. The move, although symbolic, was blocked on procedural grounds by Ramsey’s supporters on the board.

Former trustee Bill Stone said Ramsey will be remembered as one of the “great presidents” in school history.

“You have students and people who have been away for 10 years who come back to U of L and can’t believe the changes that they see. He’s truly built us into a destination campus,” Stone said. “If we can get students from out of town to visit our campus, the chances are very good that we’re going to get them. That’s a credit to Jim Ramsey.”

Reporting by WDRB’s Chris Otts, Marcus Green, Jason Riley, Toni Konz, Travis Kircher, Eric Crawford and Rick Bozich. This story was written by Otts and Green.

Copyright 2016 by WDRB News. All rights reserved.

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