UofL’s Prolonged Agony is Over – Not!

r&bI missed one of the three initial meetings these last two weeks of the newly appointed and possibly legal University of Louisville Board of Trustees, showed up for one that had been abruptly cancelled, and could not wait out some six hours of executive session of the last one to learn first-hand its decision about Dr. James Ramsey’s tenure as President of the University. No matter.  The run-up and results have been dispassionately reported by others including Chris Otts of WDRB, Andrew Wolfson of the Courier-Journal, Joe Sonka of Insider Louisville, Kate Howard of the Kentucky Center for Investigative Reporting, Kyeland Jackson of the Louisville Cardinal, and others who have shown the bright light of responsible journalism on things our University can be proud of – but also on the shameful if not illegal goings on that would otherwise have remained in shadow.  I will not summarize all that has occurred.  I encourage my readers to review their previous work and my own prior reporting of the self-serving machinations that have brought our local University to its knees.

[Addendum:  As I was finishing these words, Frankfort Circuit Court Judge Philip Shepherd granted Attorney General Andy Beshear’s request for a temporary injunction, thus putting the dismissal of the former Board on hold and rendering the new Bevin-appointed Board invalid. The injunction allows the agreement on Ramsey’s resignation, the granting of degrees to recent graduates, and authorizing the appointment of Professor Neville Pinto as Interim Provost to stand. The order assumes that collusion between Ramsey and Governor Bevin occurred before the dismissal of the previous Board. More about this at a later time. I will finish this article as I originally intended.]

Attendant troubles at the Medical Center.
It is no secret that in my opinion, the house that Ramsey, Dunn, and their administrations built is collapsing – as much from leadership style as external challenges.  Just today we learn that Medicare has given our University Hospital a single star in its ranking of acute-care hospitals for overall quality.  It joins only 129 of 3617 hospitals nationally at the bottom of the list.  Yes, University Hospital along with others serves a large proportion of patients facing socio-economic disadvantage, but a few years ago we would have received three or even four stars or the equivalent. This did not have to happen. We can recover, but it will likely take as many years to do so as it did to collapse. The rising opinion of many at the University is that we must unwind our relationship with KentuckyOne and Catholic Health Initiatives whose bond-rating has just taken another hit and is facing troubles of its own nationally and in Kentucky. Because University Hospital is supporting Jewish Hospital financially, I doubt the KentuckyOne will easily consent to dissolution. I am rereading the Joint Operating Agreements with attention to conditions of termination.  It will be neither easy or inexpensive to do. Substantial penalties are built in should the University unilaterally withdraw.  In addition, I doubt that even UofL or the Commonwealth know how much of CHI’s colossal debt they have agreed to be responsible for.

A few other thoughts about the recent Board meetings.

Awarding of Degrees.
The new Board wasted no time in meeting, and that was not completely inappropriate even if the dismissal of the previous Board is ruled illegal.  [That judicial decision is expected shortly just came out.] I say this because some “official” Board had to authorize the awarding of degrees to this Spring’s graduates. I can’t imagine that any potential future board would reverse this decision.

Budget.
It is clear to me that at its second meeting, the Appointed Board was prepared to approve the University budget presented by then-President Ramsey containing the 5% tuition increase that had been rejected by the dismissed Board. It is also clear to me that the budget would have been approved save for the objections of students who were present and interrupted the proceedings to be heard.  I commend Chairman Bridgeman for his super-human tolerance in handling the students, although one must wonder if he had any other option! The result was a plan for a deeper and  more open analysis of the budget including an ability for public comment. In taking this path, Chairman Bridgeman has created a precedent of allowing public comment that will be difficult to reverse. He (and his successor) will need to find a way to allow public input before the Board that falls short of unmanageable ‘open-mike meetings.’  Perhaps he can borrow from the practice of Louisville Metro Council meetings for a ‘controlled-mike’ alternative.  I took Mr. Bridgeman’s’ handling of this difficult meeting as a good sign that things might be changing in leadership style at the University. As Yogi Berra might have said, the future remains to be seen. [Little did I know that change of a different sort was at the doorstep!]

Ramsey’s “Retirement.”
At last Wednesday’s marathon Board meeting, Chairman Bridgeman read a letter from Ramsey outlining new and prearranged terms that were very different than those Dr. Ramsey stated to Governor Bevin.  They included a clause that immediately after he resigned, he would be rehired as an interim President. At the speed of light and probably scripted, one of the Trustees called for removal to executive session. I do not know if Mr. Bridgeman supported Ramsey’s staying on, but apparently the Board would have none of it. Eight hours later a lucrative separation agreement was announced.  It is not known if the Board threatened to fire Ramsey, but regardless, Ramsey leaves under a cloud that is darker only because of his hubris and the machinations used to control the Board of Trustees. A more dignified way to leave had been passed up months ago.

Ramsey not really gone.
Dr. Ramsey had always been very cagy about his plans with regard to his role in the University of Louisville Foundation, and Foundation Chairman Bridgeman said nothing clarifying in that regard. No sooner was Ramsey’s buy-out accepted, then he declared his intention to remain as President of the Foundation in order to “help” the University.  That kind of help is the last thing the University of Louisville needs! Some of the more skeptical of us suspect this may just be a ploy to take another and bigger bite of the buy-out apple. The review by the Kentucky State Auditor of the relationship between the University of Louisville and the University of Louisville Foundation has not yet been released, but can there be any more definitive reason why the assets of our public University cannot lie in a foundation controlled by a semi-private entity beyond the control of the  Board of Trustees of the University of Louisville?  Ramsey is still literally holding the purse strings of UofL!  Foundation Chairman Bridgeman should not wait until September, but hold an emergency meeting of the Foundation Board to terminate the Presidency of Ramsey there as well.

This makes for a difficult position for Mr. Bridgeman who remains as Chairman of the Foundation. He is on record as a strong supporter of Dr. Ramsey. At least one current member of the Foundation Board (assembled over the years by Ramsey) has publically stated that Ramsey should remain on the Foundation.  Mr. Bridgeman was the intermediary in the negotiation of the buy-out of Dr. Ramsey’s presidency with Ramsey and his attorney.  He may well be reappointed to a “legal” UofL Board and now faces the perhaps impossible task of demonstrating that he is not advancing the interests of Ramsey over those of the University. Avoiding this difficulty is one of several reasons why the chairmanships of both the University Board and the Foundation should not be the same person.

Droppings left behind.
It was reported today by Kate Howard that then-President Ramsey signed very favorable contracts for his top lieutenants that gives them unprecedented benefits even in the event that he were to leave the University.  Are any of these people who have been telling the public that all is well, and that the bright lights shining on the Ramsey administration are misdirected, unjustified, or malicious?  People can draw their own conclusions, but concerns are inevitable when larger than customary monetary awards are made. Non-disclosure clauses in separation agreements are similarly a reason that can justify public skepticism about organizational ethics.  We have had too much of this.

Alas, the University’s long journey into chaos has taken a steeper descent.

Peter Hasselbacher, MD
Emeritus Professor Medicine
29 July 2016

 

3 thoughts on “UofL’s Prolonged Agony is Over – Not!”

  1. I was traveling in June and missed the fact reported locally that Moody’s Bond rating for the UofL Foundation had changed from stable to negative, keeping the designation Aa3. The reasons given included a decrease in liquidity and reserves, no doubt the reason that various units within the University whose special accounts were in the hands of the Foundation got haircuts in their budgets this year. Also noted was the $200 million outstanding debt and debt guarantees. I do not know if this includes any portion of the $multi-billion Catholic Health Initiatives shared debt pool in which the University community of institutions has underwritten.

    On June 23 last week, Moody’s also changed the bond rating of the University of Louisville itself from stable to “developing” also retaining for the time being a basic rating of Aa3. Relevant to the article above, the reason for Moody’s special attention relates to governance and management issues consequent to the disruption of the Board of Trustees – and this before the resignation of Dr. Ramsey. Also noted was the $178 million in debt with weak liquidity and narrow operating performance, and the absence of a budget for 2017. It may be that some of this debt is guaranteed by the UofL Foundation. We will be lucky if the rating does not turn into something worse. Such declines in ratings increase the cost of borrowing to the University and therefore to the Commonwealth.

    To make things more troublesome, on July 12, the bond-rating company Fitch downgraded its rating of Catholic Health Initiatives from A+ to BBB+ with a negative outlook. The reasons included an increase in debt to $6 billion, lean liquidity, and continued challenges in turning around core operating performance. CHI is selling real estate to generate cash. Without an improvement in operating performance, a further downgrade is anticipated.

  2. Governor Bevin has already called for a meeting of the (illegally constituted) Postsecondary Education Nominating Committee on August 1 at the Capitol. The atypical timing of the meeting suggests that it will forward names to the Governor to fill vacancies in the previous Board of Trustees of the University of Louisville. There were at least two vacancies already open that will likely be filled by minority Trustees by previous agreement. Additionally, two or three vacancies will have opened because of scheduled expiration of terms of office. Prior Trustee Butt has declared he does not wish to serve further on a Board that according to him contained three “troublemakers.” (Thank goodness for troublemakers!) Thus, the Governor still has an opportunity to shape the makeup of the new “legal” Board to reflect his vision. Having called so much attention to an improper make-up of the previous Board, many eyes will be watching to make sure his appointments will yield the statutory requirement for balance in race, gender, and political party. If I still have my counts right, the Nominating Committee is required by law to present him with a list containing only female candidates! Obviously the Nominating Committee will be using the same female-lite list of candidates it had before. I assume we will see some of the July Board members returning to join the old Board. It will be a neat trick indeed if Governor Bevin can nominate a Board with the required balance – if indeed that is his intention.

    1. Made a road trip to Frankfort today to attend meeting of Postgraduate Nominating Committee mentioned above. UofL Board not part of the day’s activities– a fact I did not realize because no public agenda was published beforehand, or during for that matter! More later.

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