Louisville athletics budget chief: Audit overplayed department's reliance on foundation

Steve Jones
Courier Journal
Tom Jurich speaks at the grand opening of the UofL Thorntons Academic Center of Excellence at the south end of Papa Johns Cardinal Stadium.

The University of Louisville athletic department's budget chief said the recent U of L Foundation forensic audit findings overstated athletics' dependence on the foundation and that he never destroyed documents.

Executive senior associate athletic director Kevin Miller, who is athletic director Tom Jurich’s top deputy, told the Courier-Journal that he wrote a three-page letter earlier this month to the auditing firm Alvarez & Marsal pointing out his concerns.

“There are several things about that audit related to athletics that I’ve got a problem with,” Miller said.

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Miller said he outlined several points of contention in his letter to the auditors, including the salaries the foundation paid to Jurich; his son, senior associate athletic director Mark Jurich; and retired basketball coach Denny Crum.

Miller also said he doesn't know why some properties in the audit were listed as ones the foundation purchased for use by the athletic department.

Tom Jurich’s salary: In addition to his U of L Athletic Association salary, Jurich, who is a university vice president, also has been paid a salary by the foundation since 2007 to compensate him for his fundraising outside of athletics. During his tenure, former Louisville President James Ramsey concurrently was the president of the university, president of the foundation board and chairman of the U of L Athletics Association. 

Jurich's foundation salary averaged about $257,000 per year from 2010 to 2016, according to the audit. But Miller said the athletic department transfers money to the foundation to cover most of Jurich's salary. He said athletics covered $1.3 million of the $1.8 million Jurich has received from the foundation salary since 2010. The audit doesn't mention the payments made by athletics.  

Athletics paid $230,000 to the foundation each year from 2007 to 2016 for the purposes of paying Jurich's foundation salary except for in 2013, when it gave $184,100, and 2014, when it gave none, according to a summary of payments provided by the athletic department via an open-records request. 

Miller said he wrote checks of $230,000 every June because that's what he was told Jurich's foundation salary was. He said he didn't know why the athletic department didn't make a payment in 2014.

Louisville athletics spokesman Kenny Klein said no one in the athletics department could recall why an arrangement was made to send money from the athletic department to the foundation for Jurich's salary.


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Mark Jurich’s salary: The audit lists Tom’s son Mark Jurich, who oversees fundraising for athletics, as receiving $767,208 total from the foundation from 2010 to 2016.

As Miller explained and is noted in the audit, Mark Jurich is officially an employee of the president’s office, which sets and oversees his pay. The money paid to Mark Jurich by the foundation was for the only salary he receives, which averaged $109,601 over the seven years that were audited and was $160,080 the past two years. Miller said Jurich’s salary is about “middle of the pack” compared with other senior officials at U of L.

Mark Jurich has worked under the president’s office to avoid an appearance of nepotism, Miller said, and that Tom Jurich has never actually supervised his son, who in the past has reported to university Vice President for Advancement Keith Inman.  U of L spokesman John Karman confirmed that Mark Jurich now reports to the office of recently appointed interim President Greg Postel with an immediate supervisor having not been designated at this point. 

Miller said he assumed Mark Jurich was paid from the university's general budget and only learned in December that the money came from the foundation.

The athletic department began paying Mark Jurich's salary this spring after consulting with administrators, Miller said.

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ULAA properties: The audit includes an exhibit, called "ULAA Properties Schedule," listing 11 properties, including the $5.85 million U of L Golf Club, owned by the foundation for the purpose of supporting the U of L Athletic Association. The properties cost a combined $15.52 million.

Miller said athletics doesn’t use four of the listed properties on South Second and Third streets totaling $1.492 million that are described in the audit as having been purchased for the development of parking and streets near the baseball team's Jim Patterson Stadium.

Miller doesn't dispute that athletics uses a different property in the audit exhibit for baseball parking beyond left field, but he didn't know why the foundation labeled the others as ULAA properties.

Upon reading the audit, "I said, 'Oh my god, where are these at?'" Miller said. 

Karman wrote in an email that the audit listed the other four as ULAA properties "because the foundation described their primary purpose as being in support of ULAA."

"The referenced properties sit beyond left field of the baseball stadium," Karman said. "Two large plots of land were developed as parking lots, and roads were developed for access to the lots. (The auditing firm) was informed by the foundation that the lots were primarily used to support events at the baseball and football stadiums."

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As for the golf course, it was acquired by a foundation subsidiary on behalf of athletics in 2013. But Miller said the audit's "ULAA Properties" exhibit doesn't make it clear that athletics is responsible for the debt on the course and must pay back the foundation on a $4 million loan.

That loan covered the subsidiary's $3.5 million for the purchase of the course plus $500,000 in working capital. The group of sellers, led by Tom Musselman, gifted an additional $1.85 million of equity in the course to the foundation, bringing the total acquisition price to the $5.85 million listed in the audit.

Miller said athletics, which also manages and funds all operations at the golf course, is set to begin making those payments this year and is positioned to pay off the debt several years early. 

"It's disheartening to see that (the foundation) is taking 100 percent credit (for the financial burden) of the course when we're the ones who went out and negotiated with the Musselmans and then worked out the deal, paid off the existing deal and got people to donate their equity," Miller said. "We did all that, and they're saying we haven't done anything."

If the four Second and Third Street properties and the golf course were removed from the audit exhibit, the total outlay of foundation properties for athletics would be reduced from $15.52 million to $8.178 million.

Documents: Miller said that he ignored the instructions five years ago from Kathleen Smith, Ramsey's chief of staff, telling Miller to destroy some correspondence regarding a deal between athletics and the president’s office so that they could keep it secret. 

“This note is between you, Tom, Dr. Ramsey, and me,” Smith wrote on April 19, 2012. “I do not want it on the email where we have very little control. Please destroy your earlier note to me. I have done the same here.”

Auditors cited Smith's letter to Miller as an example of how transactions between the foundation and athletics “were not transparent,” though the audit does not allege that Miller destroyed any documents. Smith was fired by the foundation Thursday after previously having been on administrative leave. 

Miller said that he preserves all work documents and emails, including an earlier note he sent to Smith and her written response, which he said he kept in a safe where he said he puts paper copies of transactions. Miller's note to Smith was provided to the Courier-Journal this week via an open-records request.

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"I’ve probably got the biggest batch of archived emails of anybody,'' Miller said. "… I’m as honest as they come, and I would never, ever destroy anything like that.

“Truthfully, when I saw (Smith’s instructions to destroy his note), it didn’t raise a big red flag to me because, first of all, I was going to ignore what she said, but more important, she was always one that was apprehensive about somebody looking over your shoulder and something. I just kind of ignored it.”

In retrospect, Miller said he regrets that he didn’t tell Jurich that Smith had asked him to destroy a document.

“I should probably have taken it to Tom or somebody and said, ‘She’s acting overly cautious about this,'” Miller said.  “It wasn’t anything I thought that was that secretive or anything. It wasn't that kind of transaction. But I know she was always paranoid about things."