Executive Compensation at UofL— A Tipping Point?

This from the Kentucky Health Policy Institute:

Over the past few years there has been a plethora of events, reports, investigations, prosecutions and miscellaneous scandals involving the University of Louisville that should have made the Louisville and Frankfort communities sit up and take notice that all may not be well or even legal within the Cardinal Citadel.  However, a recent series of investigative and other reports about the amount and mechanisms of executive compensation have proven to be the tipping point for public outrage. The income disparity between a select few in leadership and the not-keeping-up-with-inflation salaries of faculty and staff– supported as they are by soaring student tuitions– became too great for University of Louisville spin-meisters to stonewall, to facilely explain away, or to blame on the Commonwealth’s lack of funding.  Prominent among the recent reports are those of Chris Otts of WDRB, Andrew Wolfson  of the Courier Journal, and Stephen George of Insider Louisville. The faculty and staff of the University are also understandably outraged.  I put my two cents in also.

I don’t have the patience or space to detail how the story unfolded. The journalists above have published detailed analyses of “how much, how come, and who knew?”  The story has gone nationwide.  Troubling is the observation that numbers and other details from different sources do not always agree.   Official UofL and UofL Foundation documentation is shockingly sparse, inconsistent, and embarrassingly incomplete. The recollections of present and former Trustees of what actually transpired vary, in my opinion, proportionally to obvious personal loyalty to President Ramsey and to the detriment of University credibility.

In its typical effort to deflect the widespread criticism, the University hired an outside consultant to prepare a comparison, or more correctly a justification for the Board of Trustees of how President Ramsey’s compensation compares to that of presidents of other selected universities.  However, at the very session at which the consultant presented its report to a formal meeting of the Trustees, it was revealed that the necessary supporting information given to the consultant by the University was incomplete and grossly understated Ramsey’s compensation!  [Incomplete disclosure? Has that ever happened before?] Additionally and following subsequent full disclosure, the consultant expressed concern about some elements of Ramsey’s compensation that were atypical at other universities.  Despite this revelatory debacle, a majority of the full Board voted to give Ramsey a (reduced) raise and a bonus! It is apparent to me that UofL Board members, both old and new, have no idea how much money Ramsey has been getting nor how he came to receive it!  Shame on them! Ramsey recently forcefully complained that his credibility was being challenged by those asking for accurate information.  It is clear that somebody’s credibility is in tatters.  It is now the responsibility of President Ramsey to tell us whose.

Local newspapers and broadcast media that are sometimes accused of being soft on UofL for fear of losing advertising revenue or sports access are coming out with hard hitting investigative reports. The Courier-Journal, the Lexington Herald Leader, Leo, and other newspapers have recently published editorials very critical of the University and its Board of Trustees in this matter.  Prominent citizens are now also asking hard questions and arguing for more transparency.  Good!  This degree of community concern, including a direct request from at least one member of the UofL Board of Trustees, has culminated in the initiation of a limited management audit by the Office of the Auditor of State Accounts of the relationships between the University and at least one of its maze of not-for-profit and for-profit corporations and side-businesses.  In my opinion this is an insufficient response, but at least it is a beginning.  “Following the money” is usually more revelatory than looking at organizational documents.  Independent outside review is what is indicated.  When the University hires its own consultants, we can anticipate before the results are in (if they are disclosed at all) what the reports will say.  As noted above, the initial recent report used by Board of Trustees was embarrassingly ignorant of the facts, but was nevertheless used to justify a 3% raise.  With the exception of predictable fan-boy support, or letters from business partners and special friends promulgated by the University, public comments in the social media to current articles and editorials has been much more negative than the responses to earlier issues.  A current poll by the Courier Journal shows that some 80% of respondents believe that President Ramsey is paid too much, and that a similar proportion believe he is not entitled to a bonus.  Count me among them for reasons discussed below.

How could all of this have happened?

The UofL Board of Trustees are smart, connected people. How could this mess have emerged under their watch?  I was enlightened by a reference offered by the prominent Louisville executive Rich Gimmel as a comment to one of the articles above.  It identified to the concept of “group-think,” or how is it that good people working together can make bad decisions.  I offer the link to my readers.

First things should come first.

Ramsey’s supporters, mostly those who have rotated for years among the various University corporate boards, enjoyed the best seats and invitations to University functions, and whose own prior University involvement is being judged, defend Ramsey’s compensation in a variety of ways.  They point to his longevity on the job with attendant compounding of his compensation, his leadership as the University increased the number of diplomas awarded, the amount of money raised by the Foundation, success in other self-selected metrics approved by the Board, and so on.  Fair enough.  What galls me the most is the prominence given to the justifications that we are now in the Atlantic Coast Conference and have been named by CBS as the “Number Two” sports program in the country.  These latter achievements would be well and good if their foundation rested upon an excellent, or for that matter even an average academic program.  Alas, that is not the way others look upon us.

Academic ranking among other similar institutions.

Using publically available information, U. S. News & World Report’s current profile of Colleges and Universities ranks UofL #161 in the category of National Universities– “those offering a full range of undergraduate majors, plus master’s and doctoral programs, and demonstrating a commitment to research.”  (For comparison, the other ranked national universities in Kentucky are the University of Kentucky at #129, and Spalding University at #181.)   UofL’s undergraduate acceptance rate is 71%– not very selective.  Only 78% of freshman return for a second year.  Our 6-year graduation rate is 53%, but our 4-year gradation rate is only a feeble 25%.  Recall that every year beyond the traditional 4 years entails another basic $10,432 tuition and fees for in-state students, and $24,320 for out-of-state students to which is added other costs of living and education! This is another example of how the “success” of the University comes unnecessarily out of the pocketbooks of its students. Yes some students choose to extend their stay for a variety of reasons other than academic success, but non-availability of required courses and inadequate counselling have been problems as well. Recruiting out-of state and out-of-country students to increase tuition revenue has become standard operating procedure for at least some units of the University.  Tuition remains a major funding stream for UofL, perhaps the major stream.

Phi Beta Kappa.

Phi Beta Kappa is the oldest and best known academic honorary society for institutions of higher education offering liberal arts and sciences programs.  It uses a rigorous process to vet applications wishing to host a chapter on their campuses.  There are currently 283 chapters comprising some 10% of the nation’s leading colleges and universities.  Membership is a well recognized feather in the cap of institutions and students alike. The University of Louisville does not have a chapter.  At least the last three of its applications have been rejected.  UofL is the only eligible member of the Atlantic Coast [Athletic] Conference that does not have a chapter of Phi Beta Kappa.  (Georgia Tech does not have a chapter either, but it is not primarily an arts and sciences institution.  Virginia Tech on the other hand does have a Phi Beta Kappa chapter.)

In 2004 the rejection letter stated concerns about low faculty salaries, a poor graduation rate, and a weak role for foreign languages. It commented that “the overall place of the liberal arts and sciences in the institution’s mission needs clarification.” There was concern about “the lack of a policy on freedom of inquiry.”  In 2007 the graduation rate of 41% “seemed seriously low,” the ratio of academic advisors to students seemed “perilously high,” and “it was a matter of concern that a full third of the instruction in arts and sciences  disciplines was conducted by contingent faculty.”  Faculty salaries were still considered to be “relatively low.” In 2011 the reviewers commented that UofL was “in many ways an institution on the cusp of readiness for a Phi Beta Kappa chapter” but withheld approval in part because “it appears that over half of the arts and sciences curriculum is being taught by contingent faculty” Concern was expressed about “who was actually responsible for some courses.”  The graduation rate was still too low.  The rejection letter acknowledged the financial constraints facing the University. It appears that no further application for a UofL chapter of Phi Beta Kappa has been prepared.

How ’bout those Cards?

Sadly, UofL’s inability to to compete at this level academically is representative of the Commonwealth as a whole.  Although I do not know how many other schools have actually applied, the only schools in Kentucky with Phi Beta Kappa chapters are the University of Kentucky and Center College.  Public officials and the public at large should sit up and take notice.  This is a matter of national competitiveness and economic survivability.  I cannot avoid wondering what the result would be if academic competitiveness was awarded the same reverence as success on the playing fields? It clearly is not.  Our students and their parents deserve more for their money than Beer and Circus.

Research.

Over the past 15 years, clinical and academic programs at UofL have been starved in favor of the University’s commercial research initiatives. We paid a big price for that.  So, how have we done in the research business?  Surprisingly, it is difficult for me to sort out the claims from the actual progress.  Brick and mortar edifices built to contain scientific laboratories and startups house non-scientific entities. UofL publications and presentations by its leadership still brag that the University enjoyed the fastest rise in the ranking of medical schools for research funding by the National Institutes of Health.  That statistic was actually generated by me in the early 2000s when I helped advocate for the “Bucks for Brains” program in which the Commonwealth sunk several hundred million dollars into the research programs of the University of Kentucky and UofL. It was easy for UofL to improve its ranking in NIH funding at that time because it was already so low!  The existing NIH grants of new Bucks-for-Brains faculty hires that were recruited to UofL was enough to make a difference in our ranking. How have we done since then?   I have pointed out before, that our ranking for NIH grants has been flat and in fact that the initial bubble of funding rank after the initial hires and departures of faculty has actually deflated. Our updated rank for NH funding in 2014 was #71 out of 140 medical schools— unchanged over the last 15 years. [In 2014, UofL Medical School received 93 grants totaling $40.7 million.]

Of course, schools and non-medial departments of Universities are also eligible for NIH funding.   On a University-wide basis in 2014, UofL ranked #88 out of several hundred institutions of higher learning. The University of Kentucky ranked #53.

Commercialization of research– has it worked?

The promise to Kentuckians was that the monetization of intellectual property and research would bring a bonanza of money and jobs to the state.  I truly have no idea how things have turned out, who might have profited, or where any resulting jobs were located.  I do know that the change to a major focus on commercial research has had a dramatic effect on the academic environment of UofL and not all of it good. It is my concern that things are not as rosy as we are being told.

As an example, I draw your attention to Metacyte, a UofL for-profit corporation. According to the UofL Foundation website, “Working with the UofL Office of Technology Transfer and Nucleus, MetaCyte is creating a seamless commercialization process that will yield viable, operating companies with a combined value in excess of $1Billion by 2020.” However, at last update, only a paltry $16 million of funding was secured and 40 jobs created. It is claimed that more than $11 million was returned to UofL for additional research in the last 13 years.  This is less than $1million per year! This is a tiny fraction of the  mega-millions bled away from clinical and academic programs of the medical school and its hospital to support commercial research.

When I looked three weeks ago, the website of Metacyte itself had not been updated in any way for at least 3 years.  Since then, the website has been shut down.  I am told that the word on the street is that Metacyte itself has closed its doors altogether. Who can tell us different?  I am interested in knowing what is happening in all the other commercial endeavors of UofL and its maze of “private” corporations. I would like to think that other readers would be interested too.  Commercial research was supposed to be the major priority of the Unniversity.

They made me do it!

UofL leadership likes to justify its shift to research as responding to a mandate from state government to become a premier urban research institution, or something along those lines. I had already arrived at UofL when such language was adopted. My memory identifies that mandate as being initiated within UofL itself.  The University became apoplectic when it was announced that the Commonwealth was launching a major initiative to raise the University of Kentucky into the ranks of the top 20 state Universities nationwide.  In large measure, UofL was reacting to the “little brother” designation. The result was that money that would have gone towards the UK initiative was divided between the two schools and neither has achieved their goal. One can only wonder what would have happened if the resources had been divided or used differently. Some still suggest that UofL should be merged into UK, at least with respect to their medical schools. That would be an interesting proposal!

Finally.

I am at a loss for how to end this article. I am feeling discouragement. It bothers me greatly that even new UofL Board of Trustees members who dare to ask for accurate information and accountability are being demonized and cast as ill-prepared or ill-informed. I have felt some of that too. Nonetheless, the situation we have now is untenable and a source of embarrassment to the community.  Our reputation is suffering badly and adding to our image problem along with evolution-denial, wooden arcs and other science rejections; and continuing government resistance to same-sex marriage.  Surely others who would consider Louisville and Kentucky as places to live, to do business, or to learn are taking notice. I have taken some comfort that the last few rounds of gubinatorial appointments to the UofL Board of Trustees have not come from the group of UofL insiders.  That needs to continue. In many ways, we need fresh looks if not a reboot. The editorial boards of our newspapers are taking positions– our elected and community leaders need to do the same.

HT 2 Steve