New State Auditor to Continue Investigation of University of Louisville

Mike Harmon

Kentucky’s new state auditor announced Tuesday that he will continue the office’s investigation into the University of Louisville Foundation, the independent nonprofit that manages the school’s $1.1 billion endowment.

Former auditor Adam Edelen opened the inquiry following widespread public criticism of hefty compensation packages awarded to the school’s top executives — including U of L President James Ramsey, who presides over the foundation and the University of Louisville Board of Trustees.

It was unclear if the investigation would continue since Harmon, a Danville Republican, defeated Edelen in November’s election.

Harmon announced his intention to continue the audit Tuesday in a Facebook post and press release, saying he’ll explore best practices for governance of nonprofit foundations tied to Kentucky’s public universities.

Harmon later told WFPL News that it’s too early to tell what the specific scope of the audit will be. He was also unable to provide a timeline. He said his first step is to hire someone in coming weeks to oversee the audit.

“Sooner than later,” he said.

Students on the University of Louisville's main campus.

Eleanor Hasken / Kentucky Center for Investigative Reporting

Students on campus.

The audit follows a series of reports last year that detailed the compensation of top University of Louisville administrators. According to tax documents filed last year, Ramsey was awarded $1.86 million, former provost Shirley Willihnganz received more than $663,000 and chief of staff Kathleen Smith received more than $272,000 in the 2012-2013 fiscal year.

WDRB reported those payments were down from the previous fiscal year in which $3.2 million went to Ramsey, $1.9 million to Willihnganz and $1.4 million to Smith.

Harmon had publicly questioned whether the auditor’s office had the authority to examine the U of L Foundation before taking office. After researching financial data, Harmon said he determined it was within the purview of the state auditor’s office.

“We felt like we had the authority to move forward with it,” he said Tuesday.

Harmon said he received a request to continue the audit from Bob Hughes, chairman of the foundation’s board.

“Any audit that you can have a willing individual to be audited makes it easier for us,” he said. “They were anxious to get this resolved.”

Hughes could not be immediately reached for comment Tuesday.

In a December interview with Kentucky Public Radio and the Kentucky Center for Investigative Reporting, Edelen said that it would be a “significant setback” if Harmon failed to continue the investigation.

“The decision whether to continue the University of Louisville audit, is going to set the stage for the kind of auditor that my successor is going to be,” Edelen said.

Here’s Harmon’s full statement:

“There has been much attention and discussion since I took office last week as the 47th Auditor of Public Accounts on whether we would continue the examination of the University of Louisville Foundation started by my predecessor.  For the record, I would like to announce that we do intend to continue with the University of Louisville Foundation examination.

My office received a request from Dr. Bob Hughes, Chairman of the University of Louisville Foundation’s Board of Trustees, to continue the governance review of the Foundation and its relationship to the University.  As part of this examination, we anticipate exploring best practices for governance of such non-profit foundations that are attached to Kentucky’s public universities.

I want to express my appreciation to Dr. Hughes for his request that our agency continue this examination, and I look forward to working with and having the full cooperation of the Foundation and the University of Louisville Board of Trustees as we move forward.  Our goals are greater transparency and ultimately the best possible higher education system for the people of Kentucky.

We are currently completing the interview process to appoint someone that will serve as director of the office who will oversee this governance examination.”

This story was produced by Jacob Ryan, a reporter with 89.3 WFPL, our news partner.

Disclosure: In October 2014, the University of Louisville, which for years has donated to Louisville Public Media, earmarked $10,000 to KyCIR as part of a larger LPM donation.

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