UT System Releases AG’s Law School Review

By Andrew Roush in 40 Acres on January 21, 2015 at 11:17 am | No Comments

The UT System released a set of documents last Friday that comprise the state attorney general’s review of the now-ended forgivable loan program at UT Law. The review represents a kind of autopsy for the defunct compensation program, through which the UT Law School Foundation augmented Law School faculty pay with loans that would be erased if certain conditions were met, a technique used in academia and the corporate world known as “golden handcuffs.”

The new report shares many of the findings of an internal review conducted by then-System counsel Barry Burgdorf, BBA ’85, JD ’90, Life Member, who resigned last year. The matter was then sent to the office of then-attorney general Greg Abbott, BBA ’81, Life Member, who was inaugurated as governor on Monday.

The latest review describes a “climate of non-disclosure” created by former Law School dean Larry Sager, who was abruptly fired by his predecessor, UT president Bill Powers, in 2011. While the Law School Foundation, a nonprofit group separate from the Law School itself, contributed forgivable loans in order to recruit and retain faculty, the review indicates that Sager attempted to paper-over the additional compensation. According to university rules, all compensation must be reported to the provost. The investigation concluded that the missteps created a lack of transparency, one that hinder’s the public university’s need for openness.

Sager failed to correctly report on a number of transactions between 2006 and 2011, according to the attorney general’s office, including 20 forgivable loans. At a time when the chief financial officer of the Law School was also the CFO of the Foundation, Sager used Foundation funds expansively to fill in perceived needs of the Law School, including hiring “star” faculty.

In early 2009, Powers met with Sager and notified him that faculty salaries were frozen. In May of that year, allegedly at Sager’s request, the dean reached an agreement with the Foundation for a $500,000 loan to Sager himself. The review notes that it is not clear whether the additional compensation was ever formally approved by UT, reinforcing a theme of procedural confusion at the time.

Foundation funds were also used during Sager’s tenure to settle a lawsuit by a faculty member under the Equal Pay Act, a suit that was not handled according to established reporting mechanisms. A summary of Foundation funding appended to the review also includes more than $450,000 in credit card expenses under Sager’s name.

The loan program ended prior to the release of the review, and Law School Foundation contributions are now sent through the university, rather than directly to faculty members.

In a statement, Board of Regents chair Paul Foster said that all UT institutions will continue to work with university-affiliated foundations with a renewed focus on improving transparency and accountability. “The report identifies areas for improvement related to transparency, alignment of university and foundation missions, and compliance with records production,” said Foster. “The problems highlighted in the attorney general’s report have been or will be addressed.”

You can view the report below. Can’t see it? Click here. Associated appendices can be found here. 

Attorney General’s Report on Law School Foundation (Redacted)

Tags: attorney general, bill powers, forgivable loans, larry sage, Law School Foundation, Paul Foster, UT Law, ut system