The $1.238 billion budget includes $512 million in general funds, which support most of the university’s instructional and operational activities. Those funds come primarily from tuition and fees and from state appropriations. Non-general funds, primarily produced through affiliated corporations such as the UofL Research Foundation, the UofL Athletic Association and the UofL Foundation, will total about $726 million.

The budget addresses four priorities:

• Resolving a structural imbalance in the operating budget. The budget emphasizes efficiency in administrative operations, trimming travel expenses and implementing a hiring “frost” to more closely scrutinize the need to refill vacant positions.
• Keeping college affordable. The budget keeps tuition flat for all students and increases overall financial aid by $1.3 million. It also includes $2.5 million for the Credit for Credits program, in which students who complete at least 30 hours in an academic year receive a $526 credit toward the next year’s tuition. Students in the program will pay less in 2017-18 than they did last year.
• Strategic allocations. Using a $12 million reallocation pool from a 3 percent across-the-board budget cut in the past year, the university will direct funding toward targeted areas including academic quality and student recruitment.
• Establishing a firm financial foundation for future years. The budget includes a revised forecast of revenues and expenses, as well as savings realized through administrative efficiencies and capture of vacant salary lines.

Postel noted that while the budget is tight, it will enable the university to continue moving forward.

Interim CFO Susan Howarth told the board that the university has taken actions to offset a projected $48 million shortfall in 2017-18. Those actions included reducing operational costs by $9 million to $10 million, realizing $10 million in efficiencies and economies of scale in the university’s procurement practices, saving $10 million through the hiring “frost” and using $17 million in one-time funds from the university’s partnership with KentuckyOne Health. The KentuckyOne funds will be replaced through operational efficiencies as a result of the transition of management of University Hospital and the James Graham Brown Cancer Center to University Medical Center.

Also at the meeting, Kentucky Council on Postsecondary ����ֱ�� President Robert King provided an orientation session on board membership. King stressed that trustees’ loyalties must lie with the institution rather than with any particular university leadership. He also weighed in on UofL’s current SACS probation, stating that he is “confident that all the things you’re doing … will take you off probation.”

In other action, the board approved:

• Creation of an ad hoc committee on tenure and nepotism policy
• Construction of a television production studio. Athletics will fund construction of the $8 million facility, which is required as part of UofL’s membership in the ACC
• A long-term ground lease and development of the Churchill Park property near the Lynn Soccer Stadium. The property will be used for soccer practice fields.
• A motion to empower Postel to negotiate terms of a revised Yum! Center lease with the Louisville Arena Authority.

Interim President Greg Postel told the board that work is under way to address the $48 million budget shortfall forecast for the 2017-18 fiscal year. University leadership is studying a variety of proposals for dealing with the situation, including the possible elimination of 1,000 currently open positions. Avoiding mass layoffs remains a priority, according to Postel.

Postel said that by not filling 1,000 open positions, delaying some deferred maintenance and enacting other belt-tightening measures, the university has managed to trim about $22 million from the current year budget.

In his report to the board, the interim president noted that the state House of Representatives this week passed Senate Bill 107, a measure that officials hope will satisfy concerns raised by UofL’s accrediting body over the issue of university governance and whether it had come under undue political influence.

The Southern Association of Colleges and Schools placed UofL on probation last year. SACS is scheduled to visit the university in September and review its status at a December meeting.

BOT Chairman David Grissom told the board that the forensic audit of the foundation is scheduled to be completed in early to mid-May. Alvarez & Marsal Disputes and Investigations, the firm conducting the audit, recently expanded the scope of its review. For that reason, the firm has doubled the cost of its work, Grissom said. The audit will now cost the university about $1.8 million.

In other news, the committee charged with selecting a new permanent president for UofL held its first meeting on March 15. The decision was made to split the 16-member body into two groups for some of its work. One group, led by Grissom, will be tasked with creating a job description for the position. The second, led by trustee and Papa John’s International founder John Schnatter, will develop a request for proposals for a search firm.

Grissom said the goal of the committee is to have a new president in place in a year and a half—in time for the start of the 2018-19 academic year.

That was among the topics at an activity-packed meeting that also included a report on UofL’s accreditation by the Southern Association of Colleges and Schools Commission on Colleges, the appointment of a presidential search committee, approval of the interim president’s contract and introduction of new deans.

Postel told the Board that the university should complete 2016-17 with a balanced budget but will face a $48 million shortfall in 2017-18. That is about 4 percent of the university’s overall budget. Postel said the university will take several steps to cover the deficit, including freezing salaries of faculty and staff, implementing a hiring “frost” (filling no more than 25 percent of vacant positions) and delaying some renovation projects and deferred maintenance. He added that the university will not need to mandate campus-wide layoffs and that UofL will stick to its commitment not to raise tuition in 2017-18. 

Board Chair David Grissom said he has been in contact with Senate President Robert Stivers and with SACSCOC President Belle S. Wheelan about Senate Bill 107, an effort by Stivers to maintain some changes sought by Gov. Matt Bevin while meeting the requirements of UofL’s accrediting body. Grissom said he and Postel will discuss the latest version of the bill with Wheelan. Pending a positive response from SACS, Stivers is prepared to move the bill in the Senate next week, Grissom said.

Grissom also announced a 16-member presidential search committee that will begin what he expects to be a lengthy process to find UofL’s next leader. The committee includes:

• David Grissom – co-chair
• John Schnatter – co-chair
• Bonita Black
• Brian Cromer
• Charles Denny
• Sandra Frazier
• Alice Houston
• Diane Medley
• Alex Rankin
• Eddy Roberts
• Jim Rogers
• Nitin Sahney
• Steve Trager
• Will Armstrong – staff representative
• Enid Trucios-Haynes – faculty representative
• Aaron Vance – student representative

Also at the meeting, the board approved a contract for the interim president. Despite serving as both interim president and interim executive vice president for health affairs, Postel will maintain his current $950,000 salary. At Postel’s request, the board removed several perks, including $100,000 in deferred compensation, but did include potential for a similar bonus based on performance. Grissom noted after the meeting that the bonus was “solely at the discretion of the board.”

Deans Gerard Bradley, School of Dentistry, and David Jenkins, Kent School of Social Work, shared presentations with the board. Both deans touted their nationally ranked programs. Postel praised both Bradley and Jenkins for the energy they have brought to their respective schools.