Audit raises new University of Louisville accreditation concerns

New questions have surfaced about the University of Louisville and its separate fundraising arm, the U of L Foundation, that could affect the university's accreditation, according to the outside body that accredits the school.

The questions relate to policies for compensation for school administrators, whether the relationship between the university and the foundation is clearly spelled out and whether U of L is "exercising appropriate control" over financial resources of millions of dollars involving the foundation, according to a Jan. 27 letter to U of L from the Southern Association for Colleges and Schools Commission on Colleges.

If the commission decides the questions could affect U of L's compliance with accreditation standards, the commission could expand its investigation into U of L, which already has been placed on probation by the commission, its president, Belle Wheelan said in the letter.

The new questions follow months of turmoil at U of L that included the departure of former U of L President James Ramsey, a complete shakeup of the school's board and a reorganization of the foundation board. The new issues raised by the commission are based  largely on the findings of an audit of the foundation released in December by state Auditor Mike Harmon, who identified multiple problems, including payments to Ramsey and a top aide and a lack of transparency at the foundation.

In a letter to U of L students, faculty and staff, interim U of L President Greg Postel said U of L provided the commission with a copy of the audit and is "committed to addressing issues that have arisen in recent months."

Harmon said Friday he was pleased U of L  officials chose to provide his audit to the commission for its review.

"I applaud the leadership at the University of Louisville for providing our governance examination of the U of L foundation to their accreditation agency as they work to bring trust and transparency back to the university and the foundation," Harmon said.

U of L spokesman John Karman said the university had no further comment outside Postel's brief letter. U of L's new board of trustees chairman, J. David Grissom — who has been highly critical of the foundation's "poor governance" and management of the university's endowment of about $700 million — also declined to comment.

Diane Medley, the foundation board's new chairwoman, said she believes U of L is on track to resolve any concerns of the commission, also known as SACS.

“The SACS letter does not raise new issues," she said in a statement. "The foundation plans to file its response to the state auditor’s report in the very near future, and I am confident we are on the right path to fulfilling our mission to support the University of Louisville.”

Officials with the accrediting commission, based in Decatur, Georgia, had no immediate comment, a spokeswoman said Friday.

U of L wound up on accreditation probation in December following Gov. Matt Bevin's attempt to abolish the university board  he had called dysfunctional and appoint a new one, an effort struck down in Franklin Circuit Court. The commission deemed Bevin's action to be improper external influence on the university's independence.

In January, the legislature enacted an emergency law abolishing the U of L board and allowing Bevin to appoint a new one, subject to confirmation by the state Senate. U of L officials said they expected that might allow the university to be removed from accreditation probation.

But the probation remains in effect pending further review by the commission and it may add the audit findings to that review, Wheelan's letter said.

Wheelan has asked the university to prepare a report on the extent of its compliance with the issues cited in her letter.

Wheelan's letter said it appears U of L may not be following its personnel policies for university administrators, citing the audit's findings that compensation and benefits for the school's administrators weren't scrutinized in the same manner as other staff members.

"It also appears that U of L's Human Resources Department may not know the terms under which university administrators serve (i.e., contracts) and does not control access to all U of L personnel files as stipulated in university policy," the letter said.

Wheelan also said U of L's relationship with its foundation "may not be clearly described in a formal, written manner" and that it isn't clear if these governance documents are regularly reviewed.

Finally, Wheelan's letter said the university "may not be exercising appropriate control over all of its financial resources" and that "appropriate operational controls" in its relationship with the foundation may not be clearly established or followed in practice.

Previous coverage

U of L bill step in right direction, SACS says

Four directors quit University of Louisville Foundation board