UT System report deems Law School Foundation's loan program inappropriate


A report released by the UT System Tuesday determined the interaction between the School of Law and the University’s central administration is insufficient in regards to faculty compensation.

Last December, UT President William Powers Jr. asked Larry Sager, former dean of the School of Law, to step down from his position after it was found he obtained a $500,000 forgivable personal loan from the University of Texas Law School Foundation, which helps support law professors’ salaries, without notifying appropriate administrators.

The UT System report, written by Barry Burgdorf, UT System vice chancellor and general counsel, looked into the relationship between the foundation and the University following Sager’s resignation.

Burgdorf’s report found the forgivable personal loan program began in 2003 during Powers’ time as the law school dean prior to his appointment as University president. Powers did not obtain a forgivable loan but did receive a deferred compensation agreement from the foundation in 2001, which was approved on various administrative levels.

The expansion of the forgivable personal loan program occurred while Sager was dean in response to the departure of various law school faculty members.

The report recognized the foundation’s significant role in the School of Law’s development helping supplement faculty compensation and providing adequate funding to retain the top faculty, but Burgdorf’s report determined it inappropriate for a public institution to grant forgivable personal loans to faculty through an independent foundation.

In Sager’s case, essentially awarding himself the forgivable loan, the lack of administrative approval is fundamental to the conflict.

“The idea of Dean Sager’s $500,000 forgivable personal loan was his,” Burgdorf wrote. “Obviously, this lack of transparency and accountability is unacceptable and, at a minimum, it creates an impression of self-dealing that cannot be condoned.”

Sager approached former foundation president Robert Grable in 2009 and proposed the loan over dinner after Steve Leslie, executive provost and vice president, denied Sager a salary increase because of a tight budget. Leslie oversees compensation of University deans.

According to the report, Powers said he did not discuss the personal loan with Sager either.

While the loan program did not violate any laws, it is inappropriate for a public university in Texas, Burgdorf wrote.

Burgdorf’s recommendations include distancing the School of Law from the foundation as separate entities, not releasing compensation to a dean without consent from University administrators, permanently ending the program and awarding compensation to faculty through restricted gifts rather than direct payouts.