Regents rein in foundation funding

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The UT System Board of Regents took nearly one year to review and address disclosures about loans to the faculty from a foundation established to support the UT School of Law. In December 2011, those disclosures forced the resignation of former UT School of Law Dean Larry Sager.

The time the regents devoted to the issue appears well spent and, in the best possible outcome, their efforts could lead to more and welcomed transparency about UT faculty compensation.

According to a report released the week before Thanksgiving drafted by UT System Vice Chancellor and General Counsel Barry Burgdorf,  in 2009 the University administration, due to budgeting limits, denied Sager a raise he had requested. Burgdorf’s report states that Sager then approached Robert Grable, then president of the UT Law School Foundation, about receiving a $500,000 forgivable loan. Subsequently, the foundation’s executive committee, which oversees the organization’s $111 million endowment, approved Sager’s loan. The foundation’s executive board also approved a slew of others loans to law school faculty members. Sager, who is still a faculty member of the law school, said through a spokesman in a statement issued following Burgdorf’s report that he did not deliberately try to avoid University oversight. But Burgdorf’s report concludes that flaws existed in the approval and reporting of loans from the foundation to the law school faculty members.

So far, the regents in their response to Burgdorf’s review have been careful not to insult the foundation while simultaneously endorsing Burgdorf’s conclusions, which the Office of the Attorney General also supported.

In a carefully crafted statement issued on Nov. 13, the regents wrote, “We express gratitude to the Law School Foundation which has been cooperative and helpful throughout this process. It plays a significant role in supporting the goals of the UT School of Law.” After a Nov. 15 meeting, Board of Regents Chairman Gene Powell issued a written statement that said, “Let me first acknowledge the importance of the extraordinary support provided by UT affiliated foundations and the many additional foundations and nonprofit corporations, as well as the work of countless volunteers working with these entities.  We are grateful to the individuals who participate on these important boards and who contribute their time and generous financial support to advance the missions of UT institutions.”

But Powell’s statement also added that Chancellor Francisco Cigarroa has asked UT administrators “to identify and cease any impermissible direct payments, benefits, or reimbursements to UT employees for their work on behalf of UT from external sources and to assure that external support is not provided in the form of gifts targeted to specific individuals.” Powell also announced the establishment of an advisory task force on the relationship of UT System institutions to UT-affiliated foundations, which will be chaired by Regent Brenda Pejovich, who will be joined by Regents Bobby Stillwell and Wallace Hall, and, among others, UT and Attorney General representatives.

With the regents, the University administration and the AG’s office now somewhat focused on how and when deans may pass out goodies from foundations to faculty members, we believe transparency — apparently long-needed — will enter into the equation. Transparency, when it comes to University governance, invariably represents a step forward.