U of Louisville Audit Bright Spot a Mirage

June 20, 2017; Courier-Journal (Louisville)

A scandal surrounding the financial dealings, management, and governance of the University of Louisville and its related foundation have roiled the state of Kentucky for at least two years, resulting in the ouster of the former university and foundation president and the replacement of the boards of directors. As NPQ reported, the 269-page forensic audit report described a network of conflicts of interest, accounting misrepresentations of transactions between the university, the foundation, and numerous entities related to the foundation, excessive compensation of senior staff, and deliberate failure to keep the university and foundation boards properly informed.

In a follow-up article on the forensic audit report released two weeks ago, it was noted that the university’s provost, who also served as the foundation’s executive vice president, questioned part of her high compensation. In an email to the president’s chief of staff, she asked: Was it appropriate that she was receiving $50,000 a year for three years in additional deferred compensation when her contract didn’t necessarily guarantee her the money?

“I’ll gladly and gratefully sign this [contract], but I am worried that I’m now being overcompensated…obviously if the foundation and president want to give me this, I’ll be grateful, but I also don’t want to take advantage if this was a mistake” university provost and foundation provost Shirley Willihnganz wrote in a February 2012 email.

Sounds like an honest person uncomfortable with being paid too much, according to the article. However, the forensic audit notes that Willihnganz received a total of almost $6.8 million in compensation from 2010 to 2016, with $4.3 million of that total (almost two-thirds) in deferred compensation. She accepted the explanation from the president’s chief of staff, emailed later the same day: “We are deliberately ambiguous because ambiguity is in the employee’s favor.… Jim [former university and foundation president James Ramsey] needs you, as does the University, as his Provost.” In fact, 2012 was the high water mark for her compensation: she received almost $475,000 in salary and bonuses plus an additional $1.8 million in deferred compensation that year.

Willihnganz was credited with significant successes during her 13 years as provost, and successful employees should be rewarded. However, because she simultaneously served as university provost and foundation executive vice president, she was in a position to know—and participate in—the dealings described in the forensic audit report. The Courier-Journal’s “bright spot” is really just one more data point inviting scrutiny by charity regulators and, possibly, the criminal investigators considering next steps in the University of Louisville scandal.—Michael Wyland