The secretary of Gov. Matt Bevin’s Finance and Administration Cabinet has overruled the recommendation of an oversight panel in Frankfort last week, allowing the University of Louisville to spend more of its own budget on legal services through next summer — which may include a lawsuit against former officials in the previous administration of President James Ramsey.
State legislators in the Government Contract Review Committee voted last week to reject UofL’s request to exceed the previously set limit on how much of its own general budget the university could spend on outside attorney contracts. Sen. Max Wise, the Republican co-chair of the oversight committee, said the vote was intended to send a message to UofL, which had repeatedly come back to the panel requesting to lift spending ceilings that it had previously set on personal service contracts.
However, three days after that vote, UofL board of trustees chairman J. David Grissom sent a letter to Finance Cabinet Secretary William Landrum requesting that he overturn that decision, as the secretary of that cabinet is statutorily allowed to do.
On Wednesday of this week, Landrum replied to Grissom in a letter — released to the media by UofL on Thursday — granting the university’s request to spend more of its own funds on outside legal services, noting that “no additional funding from the Commonwealth or the taxpayers is being requested.”
UofL has not yet fulfilled an open records request for a copy of Grissom’s letter, but this correspondence was described in Landrum’s reply to the chair of the university trustees.
Landrum describes Grissom stating that Alvarez & Marsal — the firm that conducted the bombshell forensic investigation on the UofL Foundation’s management of the school’s endowment under Ramsey — continues to work with UofL’s outside counsel on investigating these matters “that could potentially lead to litigation, including numerous allegations of financial issues, misappropriation of endowment funds and breaches of fiduciary duties.”
According to Landrum, Grissom stated that any delay in UofL’s inability to spend more of its budget on legal services “could jeopardize the potential for recovery of lost endowment funds and the ability to hold those responsible accountable for potential wrongdoing.”
UofL spokeswoman Cindy Hess told IL in a statement the university is pleased with the decision, and that Landrum’s letter “authorizes the university to expend up to $1,250,000 in outside counsel fees during 2017-18 from money already budgeted to the university. The university did not seek authorization for additional funding. We sought only authorization to expend funds from the university’s existing budget.”
Sen. Wise — who had suggested that a private foundation could pick up the tab for extra legal fees — told IL that while he is “obviously disappointed in the decision to uphold the personal service contract pursuant to UL, it is my hope that UL continues to hold those responsible accountable for potential wrongdoing as they continue to move forward.”
The UofL board of trustees recently created a four-member special litigation committee that will be responsible for any decision the university makes on whether or not to sue former officials in the Ramsey administration, which is expected to occur in the coming weeks.
UofL’s attorney estimates that mismanagement and overspending on real estate, risky investments and compensation for Ramsey and his top staff could have cost the university’s endowment up to $60 million.