Kentucky’s next state auditor, Danville Republican Rep. Mike Harmon, said he’s not sure if he’ll continue the investigation of the University of Louisville’s Board of Trustees and its relationship with the University of Louisville Foundation, which manages the school’s $1.1 billion endowment.
The board and foundation have come under fire over the past year for hefty compensation packages awarded to U of L President James Ramsey, who is the sitting president of both boards.
Harmon said he’s adopted a “wait-and-see” policy about whether he’ll continue current Auditor Adam Edelen’s investigations. He also expressed skepticism about whether it was the state auditor’s role to look into the U of L Foundation, which is a nonprofit and technically independent from the university.
“I’ve always been unclear as to where the auditor gets the authority and the power to be able to audit a fully private group, and they do use the funds toward public good,” Harmon said. “So that’s something that we’ll have to review in more detail.”
The board of trustees has authorized large bonuses for Ramsey, and the foundation has independently awarded hefty deferred compensation packages — delayed bonuses used to retain employees — to Ramsey, former provost Shirley Willihnganz, and Ramsey’s chief of staff, Kathleen Smith, among other top officials.
According to a report commissioned by the board of trustees this year, Ramsey’s estimated deferred compensation for 2014 was $1,905,239, bringing his total compensation last year to $2,529,239. The initial estimate for his 2015 compensation is $1,672,114 — which includes $1,023,153 in deferred compensation and tax gross-ups.
The consultants advised against using gross-ups — awarded to reimburse Ramsey for taxes paid on his income — saying they are “not common practice and should be eliminated, going forward.” The consultants also criticized the university’s overall use of deferred compensation, which isn’t deferred at all and vests at the end of each year.
Stephenie Hoelscher, a spokeswoman for the current auditor’s office, said the U of L audit isn’t close to being finished. She said there is “zero chance” of it being completed by the end of Edelen’s term.
Hoelscher also said an ongoing investigation of a collapsed commercial development in Bowling Green is unlikely to be completed by January, either.
Harmon said he wasn’t sure if he’d continue that investigation, too.
“That’s another one I’ll have to get more detail on,” Harmon said.
Every year, the auditor’s office completes about 600 financial statement audits of local governments, which are required by law to continue into Harmon’s administration. Auditors also have the authority to conduct special audits.
Harmon said when he takes office, he’ll make good on a campaign promise to “audit the auditors, just to make sure everything’s operating as efficiently and effectively as possible.”
He has also pledged to conduct a performance audit of the Kentucky Retirement Systems.
“We want to make sure we can do everything we can within the confines of the law to make sure we get as much transparency as possible,” Harmon said.