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U of Louisville’s Endowment Returns 12.6%

Scandal-plagued university, foundation face Moody’s downgrade.

By Michael Katz

The University of Louisville’s endowment reported a 12.6% investment return for fiscal year 2017, according to Bloomberg News, offering a sliver of light in what has otherwise been a difficult year for the university and its foundation.

The University of Louisville Foundation (ULF) saw pledged donations fall by more than $32 million in a nine-month period and a scathing audit of the fund in June uncovered widespread mismanagement, including unauthorized spending on executive compensation, football bowl game trips, and basketball tickets, as well as risky investments, questionable real estate acquisitions, and poor transparency.

Kentucky state authorities are investigating irregularities at the endowment, and in recent weeks Louisville basketball coach Rick Pitino has allegedly been tied to an illicit program that funneled money to the families of basketball recruits from an executive from Adidas, which outfits the school’s athletic teams.  Tuesday, Moody’s Investors Service announced that the credit ratings for both the university and its foundation are under review for a possible downgrade. 

“Newly developing credit issues, including recent criminal allegations against senior athletic personnel, have the potential for increased financial burden on a currently weakened university liquidity profile,” according to Moody’s. 

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The credit ratings service said its review will focus on the university’s ability to maintain stakeholder confidence and structural balance, considering its current weak liquidity, which Moody’s estimated at approximately $80 million of unrestricted cash as of June 30.

At the end of September, the foundation agreed to make several operational changes intended to increase transparency and eliminate questionable financial practices.

ULF eliminated all but one transaction in which it is a guarantor, and recommended no guarantees of others without the approval of the board of directors. It also said no direct investment, other than Cambridge advised, should be made unless requested by the board of trustees and approved by the board of directors.

In addition, the foundation decided endowment funds may no longer be used in quid pro quo arrangements such as rents, donations, grants or other support from investees. The June audit found that the foundation was requiring the startups in which it invested to rent space from the University. The foundation says it has provided training to all board members on conflicts of interest, and that it will require board members to complete conflict-of-interest forms annually, which will be reviewed for red flags. 

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Home > News > Newsmakers > Congress Members Introduce Bill to Protect Miners Pensions
Newsmakers

Congress Members Introduce Bill to Protect Miners Pensions

New Act would direct Treasury to make loans to near-insolvent plans.

By Chris Butera

Four members of Congress introduced the American Miners Pension Act (AMP Act) on Tuesday in Washington D.C. The bill is designed to protect the health benefits of more than 100,000 coal miners.

The AMP Act seeks to shore up the 1974 UMWA Pension Plan and ensure that its 100,000-plus members keep their current pensions. The plan currently faces insolvency.

In May, Congress extended health care benefits for more than 20,000 retirees upon the expiration of those benefits with the passage of the Miners Protection Act.

At a press conference to announce the introduction of the legislation, Senators Joe Manchin (Democrat, WV) and Shelley Moore Capito (Republican, WV) and Representatives David McKinley (Republican, WV) and Peter Welch (Democrat, VT), along with United Mine Workers of America (UMWA) President Cecil Roberts and retired miners, explained the legislation, its importance, and why they believe a speedy adoption is essential for all parties involved.

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“We have come together today to deliver on an unfinished promise. Earlier this year, we passed legislation to ensure the health benefits of 22,600 miners,” Senator Manchin said at the conference. “The bill we will introduce today, the American Miners Pension Act, protects the pensions of nearly 87,000 current beneficiaries and another 20,000 eligible coal miners with vested pensions. Let’s finish what we started and pass this fix to ensure our coal miners keep their hard-earned pensions.” 

The AMP Act would use the provision from the Miners Protections Act, which is separate from the AMP Act, to allow transfers of excess funds in the Abandoned Mine Land program into the UMWA plan. The government-sponsored Abandoned Mine Land program reclaims mines abandoned before 1977 using fees paid by current coalmining companies.

The US Treasury would also be directed by the AMP Act to loan the pension plan funds annually, capping the annual loan amount at $600 million with a 1% interest rate. The fund will be required to pay interest for the first 10 years, paying back the principal plus interest over a 30-year period. The fund will also be required to certify annually that the plan is solvent and able to pay back both the principal and interest.

“Congress needs to keep the promise made to our miners and protect the pension benefits these men and women earned with their sweat. More than 117,000 miners and their families are counting on us,” Congressman McKinley said.

The full conference can be watched on Senator Manchin’s YouTube channel.

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