In December 2014, with a background of increasing concerns expressed publicly by several University of Louisville Trustees that they were not given the information needed, nor the opportunity to discuss issues central to the Board’s legislatively mandated oversight responsibilities, a draft proposal was put before the full Board by several of the newly appointed Trustees to reevaluate the how the Board was performing its obligations. The proposal had the following overall goals:
- Ensure that the board is acting under current national best governance practices in exercising its powers under KRS 164.830.
- Demonstrate a deep commitment to improving the academic experience and outcome for our students.
- Foster greater openness, dialogue, discussion, education and accountability with the board to allow us to better assist in exercising our duties.
The remainder of the two-page document offered concerns and suggestions to be considered. These seemed pretty reasonable to me. Indeed, one could reasonably ask why such issues should have to be raised in the first place! Nonetheless, this modest proposal was immediately attacked by old-guard members of the Board who seem to act as President Ramsey’s “best-friends-forever” rather than as trustees with a fiduciary responsibility to the University of Louisville and its public. The questioners were in my opinion essentially told they were insufficiently informed, and had no business meddling with the operations of the University.
New committee appointed.
At the February 2015 meeting when the document was brought before the whole board, and with little or no discussion, Chairman Robert Hughes announced that he would appoint an Ad Hoc Committee on Governance. I later expressed a concern that while seeming to address the concerns of both trustees and the public, that the move could just as easily be seen as a way to brush those concerns under the rug. In my opinion that is exactly what has happened. In fact, the two principle authors of the “Draft Request” also perceived the maneuver in that way and wrote to Chairman Hughes expressing their surprise and disappointment with the handpicked committee and believed the initiative was “misleading to the public and UofL constituencies.”
Things got hot.
In May, following incremental revelations about the authorization and true amount of President James Ramsey’s compensation, there was a testy Board meeting in which President Ramsey lashed out at critics for not trusting him, including by implication trustees who were unfairly being labeled as dissidents. “Why can’t we just get along” pleaded a long-time Ramsey supporter. Chairman Hughes and others brushed-off the concerns of the new Trustees by asserting that it was not the place of Board members to meddle in University Operations. [If not them, who?] Since then, outward acrimony has settled down. Surely the Board recognized that some semblance of coherent and cooperative activity was essential to support the reputation of the institution. Indeed, on the eve of the scheduled presentation of the Committee’s report, I had a premonition that the status quo would be preserved when President Ramsey confidently informed the Faculty Senate that the Trustees would come together tomorrow and “sing Kumbaya.” He was right.
Trust me!
I and many others had been waiting for the fruit of the Ad Hoc Committee’s work. Earlier this month it fell from the tree, or rather splatted on the ground. At the end of a long afternoon, an agenda item referring to the report of the committee was called. Longstanding Trustee Bob Benson, a strong supporter of President Ramsey, offered a motion to accept the recommendations of the Ad Hoc Committee on Governance. Much to the surprise of most in the room, the report itself had not been shared even with all the Board members! In my view, this omission is proof-positive that a complaint of insufficient information being provided to the Board is embarrassingly justified! Furthermore, it appears to me that the motion-to-accept referred to documents not in the final report itself, such as the new Conflict of Interest Statements! Was this language misleading or simply bad? Please read the relevant documents themselves– they are not long. Here is the initial Draft Proposal from 2014, the Trustees Letter to Chairman Hughes, the Motion to Accept the (undisclosed) recommendation of the committee, and the actual final Report of the Ad Hoc Committee on Governance provided to me by the University.
Postponed.
When the absurdity of asking the Board to vote on the recommendations of an unseen document became apparent, the motion was withdrawn and the matter postponed without further discussion to a future meeting. I predict that we of the public will not hear another word of public discussion. When I was a member of a UofL affiliated Board, we met in below-quorum sessions so that we would not have to comply with open meeting laws where a final vote on an issue would be taken. I hope that is no longer a practice of the University’s Boards, but given that I rarely hear meaningful discussion of matters at Board meetings, I am forced to wonder if the most important deliberations are being conducted elsewhere and out of the public eye.
Comments on the report.
On the face of it, the 3-page final report will be a disappointment for those with hopes for a more engaged board. The Board will be given a new statement of roles and responsibilities but who will prepare that statement is not mentioned. Much credence is given to the concept of formalizing a mentorship program whereby longer-standing Board members will “mentor” [read perhaps “supervise”] new ones. One recommendation establishes a “peer-review” evaluation of individual trustees. Such group-think can place “questioning” or “concerned” trustees under pressure to conform– to sing Kumbaya continuously. Two pragmatic and commendable recommendations include a robust Conflict of Interest procedure (no more Trustees doing business with the University (they have and do), and a proposal to allow the student, staff, and faculty representatives on the Board have the full voting rights currently shared by the fifteen “at large” trustees and the two Alumni Club representatives (Go Cards!)
More a welcome than an orientation.
Much credence is awarded to the ”Orientation Program” offered to all new trustees. I must say, having just sat through that session myself with three new trustees earlier this month, I found it to be superficial and that it addressed virtually none of the issues on the table. In fact, anyone who reads the newspaper would have learned little that was new. Trustees who needed such a basic introduction probably should not be serving as trustees in the first place. The orientation is mostly just another opportunity for the Administration to spread its gospel.
Non-profit status in jeopardy?
Interestingly, the report contains a paragraph emphasizing the necessity of external review when determining the compensation of the President. It is being reported elsewhere that such a required step appears not to have been documented in determining the salary of President Ramsey and other high ranking executives which would be a violation of federal non-profit tax law. The possibility that the President and involved individual Board members may be personally liable for fines and claw-back of money may be an additional incentive to sing around the campfire. The claim that the University and Foundation may have violated their non-profit status appears plausible and should not be dismissed out of hand. Hopefully the Kentucky State Auditor’s office can help lay this matter to rest for us all. To me the fact that the claim has legs is yet another piece of evidence that earlier Boards have not been doing their job and that a demand to reconsider and adjust University governance is absolutely necessary.
Pay to Play?
In contrast to their junior status in operational matters, the Board is encouraged to help raise money for the University through “personal philanthropic support! Surely the ability to donate money for the university must not be used as criteria for appointment or in “peer evaluation.” I have discussed the flawed process of Board nomination and appointment elsewhere.
More subjugation of Board to President.
The Board is expected to uphold the following statement of fiduciary principles: “The legal expectations of the duties of care, loyalty, and obedience are the essentials of board responsibility.“ Why is obedience a required factor for a Board member? Obedience to who? Who gives the orders?
- “The Board must place a high degree of trust in the President.” Trust is necessary, but the other side of that coin is that trust must be earned. Blind trust is the antithesis of fiduciary responsibility.
- A specific trait for a board chair is “a sense of partnership with the chief executive.”
- The report notes that “Boards that meet almost monthly may be overdoing their oversight responsibility and ultimately diminishing their effectiveness.” In other words, “step away from the table and let us management do our thing.”
What will happen?
One paragraph more than others gives me pause to believe that nothing is going to change from the inside. The Trustees are told “not to focus on day-to-day management and operations” and to trust the President and his minions. Yet it has been a series of well documented failures and scandals stemming from breakdown of day-to-day management and operations that has badly compromised the integrity of the University in the eyes of the public. Of course our Board is responsible, just as the Board at Penn State had ultimate responsibility for the grotesque failures there. Of course “It is imperative our board works with the president in ways that respect and support his leadership and advance the mission of the institution,” and that “The board needs to form a robust partnership and an effective working relationship between the board and the president.” However, that does not mean that the Board must kowtow or swear obedience to an overlord. As one Trustee put it, “Sometimes loyalty means asking questions.” I agree. The process at UofL seems designed to suppress questions and stigmatize the questioner.
The report uses much noble-sounding language that is hard to disagree with. It gives at least lip service to higher education’s most basic tenants of “institutional autonomy and independence, the protection of academic freedom, and service to a public purpose.” However, given the background against which this document was prepared, the report in my opinion takes away trustee responsibility in favor of senior administrative autonomy. [I wince as I recall how much autonomy, independence, and freedom was so willingly given up by UofL administration in its recent partnership with KentuckyOne Health/CHI.] I do not see this report as a win for trustees demanding more transparency, accountability, and openness for both the Board and the public. What do you think? The fact that an attempt was made to approve it before its circulation or any general discussion is very troubling. It is hard for me to believe that this was simply an oversight. I predict that at next month’s series of Board meetings that we will hear very little more. The battle over accountability may have been lost even as it was first enjoined.
Peter Hasselbacher, MD
President, KHPI
Emeritus Professor, UofL
Sept 24, 2015