University of Louisville Foundation puts off dealing with debts to school's endowment
The University of Louisville Foundation board of directors put off deciding Thursday whether to forgive $28 million in debt that the foundation’s own holding company owes the university’s endowment -- a situation that has complicated the preparation of the foundation’s annual audit.
LOUISVILLE, Ky. (WDRB) -- The University of Louisville Foundation board of directors put off deciding Thursday whether to forgive $28 million in debt that the foundation’s own holding company owes the university’s endowment -- a situation that has become an issue in the preparation of the foundation’s annual audit.
The $655 million endowment – which the foundation manages for U of L -- was one of the worst performing university funds in the country for the year-ended June 30, as WDRB reported Wednesday, citing an internal report that the foundation says is still subject to change.
A big part of the decline had to do with a massive loss foundation recognized on the money its own company, University Holdings, owes to the endowment.
WDRB first revealed on Sept. 22 that the foundation allowed the organization, also called UHI, to borrow up to $60 million from the endowment over an 8-year period with few controls or restrictions.
An official with the foundation’s external auditor, BKD LLP, had been set to brief the board Thursday on a request for “forgiveness” of debt to the endowment for UHI, according to the board's agenda. BKD is preparing the foundation's annual financial statements.
But foundation chairwoman Brucie Moore said additional time is needed to address the “complex issue” internally before bringing a recommendation to the board. She added that the debt in question is $28 million.
“I think it is something that there has to be a deliberate and accurate decision about the handling and reporting of those items,” Moore, an attorney, told reporters following Thursday’s meeting.
Moore said despite a flurry of conversations in recent days with external auditors and foundation staff, she still hasn’t fully grasped how the endowment “line of credit” with UHI works.
“I am working hard to understand it completely,” she said.
But Moore said the situation needs to be cleared up by end of the month to meet the deadline for the foundation’s annual audit.
Amid concerns from major donors, the foundation is separately looking to hire a firm to prepare a “forensic” audit of its finances.
The foundation board on Thursday did not discuss the performance of the endowment, which, as WDRB reported Wednesday, dropped from $780 million a year ago to $655 million on June 30.
But Moore said that too is an issue the board will address in the near future.
“All these things are important, going forward,” she said.
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