Wednesday, April 29, 2015

State auditor considering investigation into U of L Foundation

This from Insider Louisville:
The office of state Auditor Adam Edelen is considering launching an investigation into the University of Louisville Foundation after recent reports from Insider Louisville and other media outlets revealed millions of dollars in deferred compensation payments for some of the university’s top employees.
Stephenie Hoelscher, spokeswoman for Edelen’s office, confirmed to IL Monday night that the office is “looking at the situation preliminarily” but has not decided yet whether to launch a full-scale audit.
“We are having internal conversations about the Foundation,” Hoelscher said.

Kentucky State Auditor Adam Edelen
Kentucky State Auditor Adam Edelen
Hoelscher did not reveal any details, although she did confirm the conversations are based on recent reports about more than $5.6 million in deferred compensation packages for U of L President James Ramsey, Provost Shirley Willihnganz, and Ramsey’s chief of staff, Kathleen Smith.

IL reported in February that the three had received generous packages from the Foundation, which raises and spends private funds — some of which go toward the university’s academic functions. The nonprofit Foundation, which currently manages more than $1 billion, is governed by a 16-member board that includes Ramsey and four members of the university’s board of trustees. The trustees’ chair, Robert Hughes, is also chair of the Foundation’s board. The dual roles has raised questions about both boards’ accountability.

According to recent tax documents, Ramsey received $2,437,312 in deferred compensation from the Foundation last year, the result of an incentives package that vested in 2013. Willihnganz, who is leaving her post later this year, received $1,879,462 from the Foundation in the same year. And Ramsey’s chief of staff, longtime U of L employee Kathleen Smith, received $1,334,402 in deferred compensation.

Those packages include earnings on incentives, interest gained, tax gross-ups, and additional taxable benefits such as auto allowances, according to the Foundation, which defended the payments to IL as necessary to retain top talent. Gross ups are provided to pay for the income taxes assessed when the big deferred compensation packages are claimed.

It is typical for universities to provide deferred compensation to presidents. However, it is rare for such incentives to be offered to provosts and even more unusual for them to be provided to a university president’s chief of staff.

Earlier this month, WDRB reported that the deferred compensation packages for the three officials were backdated to provide investment results from the past, and that Smith and Willihnganz were also each paid as much as $78,000 for an average workload of two hours per week from a separate organization created by the Foundation.

A spokesperson for U of L referred IL to David Saffer, an attorney for the Foundation. He did not immediately respond to a request for comment.

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