By Kyeland Jackson —
The University of Louisville Foundation will cut $13.7 million from U of L, combating extensive spending by the foundation’s prior administrators.
The cuts promise changes for the university, which operated on inflated figures until changes to administration began.
ULF carryover funds, currently valued at $43 million, will soften the $13.7 million cut to U of L. However, that carryover has some restrictions from donors who mandate their funds be spent a certain way.
Cuts to university funding mean less aid to combat a $48 million budget shortfall exposed in January. Interim President Greg Postel calculated decreased funding into that budget deficit, and on March 16 reported a $22 million reduction in the budget thanks to cuts, hiring freezes and new revenue. Postel and the U of L Board of Trustees promised to curtail foundation spending. They upheld the promise by voting to decrease spending over time Tuesday.
ULF board members voted for the spending policy March 28 following a cautionary finance update from Cambridge Associates, ULF’s investment adviser. Cambridge said investment returns have been positive, but extensive spending outstripped resources and partially caused foundation assets to stagnate.
Spending by the foundation grew over time, peaking in 2016 at $71.1 million. For fiscal year 2017 so far, foundation spending has decreased to $30.5 million.
The foundation moved to eliminate the deferred compensation program immediately. The deferred payments went in large part to former U of L president James Ramsey, who made millions alongside his salary. The program affects six workers, and may be reconsidered in three years due to Internal Revenue Service rules.
“Going forward, we think it (deferred compensation) needs to be rethought in its entirety on whether it’s even a viable solution or viable plan going forward for the university,” U of L Foundation Chair Diane Medley said.
Employees promised deferred compensation before Tuesday will be honored.
The foundation also voted to formally separate the president of the university from being president of the foundation, satisfying recommendations by Kentucky Auditor Mike Harmon who criticized governance between the university and foundation in December.
The U of L Board of Trustees will meet March 29.
File photo / The Louisville Cardinal