Forgivable loans program at the University of Texas Law School

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The forgivable loans program at the University of Texas Law School was a series of loans provided to professors that resulted in an internal university investigation and subsequently led to the abrupt resignation of Law School Dean Larry Sager.

Ultimately investigations revealed that the UT Law School Foundation funneled more than $5.5 million in secret loans to professors and deans.[1]

Background


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University of Texas Investigations

Background
Wallace Hall impeachment trialPolitical favoritism in admissions to the University of TexasForgivable loans program at the University of Texas Law School House Select Committee on Transparency in State Agency Operations (TSAO)Joint Committee on Oversight of Higher Ed Governance, Excellence & Transparency

UT Regents
Wallace HallPaul FosterEugene PowellSteven HicksErnest AlisedaJeffery HildebrandBrenda PejovichAlex CranbergRobert Stillwell

Elected Officials
Rick PerryJoe StrausCharles PerryTrey FischerDan FlynnNaomi GonzalezEric JohnsonLyle LarsonCarol AlvaradoFour PriceJim PittsDan Branch

UT Individuals
Bill PowersLarry SagerBarry BurgdorfKevin HegartyFrancisco CigarroaCarol Longoria

On December 8, 2011, University of Texas, Austin Law School Dean Larry Sager abruptly resigned from his position. Bill Powers, University of Texas, Austin, President, demanded Sager's resignation regarding a forgivable loan scandal.[2] The primary issue was the law school's salary stipends and "forgivable loans" that were meant as incentives to recruit and keep faculty. "The fact of the matter is, and there's no two ways about this fact, that I resigned now because I was asked to by the president of the university," Sager said.[3]

A total of 22 professors, including Sager, received six-figure forgivable loans or other payments. At the time of Sager's resignation, 19 members of the law school faculty were paid more than $300,000 per year. From 2006-2011, the University of Texas Law School Foundation -- an entity that is legally separate from the law school -- gave out more than $4.6 million in forgivable loans. Sager himself received a $500,000 loan from the foundation.[4][5]

In March 2013, the Board of Regents voted to re-open the forgivable loans investigation. This action was approved by regents Wallace Hall, Brenda Pejovich, Paul Foster and Alex Cranberg. Some legislators including Judith Zaffirini (D), Trey Fischer (D) and Kevin Eltife (R) criticized the action as a waste of taxpayer funds. In one specific email exchange among the FOIA'd documents, University of Texas Budget Director Mary Knight emailed President Powers in June 2009 about salaries of UT officials. The email specifically mentioned Larry Sager, with Knight writing: "note: Sager was included due to his $100K per year deferred compensation over 5 years." The email refers to the $500,000 forgivable loan that Sager received which eventually contributed to his forced resignation. While Powers maintained that he had been unaware of the loan until the official UT report was conducted, some regents believe that the email from Knight in 2009 proves otherwise.[6][7]

A December 12, 2013 Regents Board meeting listed as an agenda item the "discussion and appropriate action related to recommendation by Executive Vice Chancellor for Academic Affairs and Chancellor concerning employment of Wililam C. Powers, Jr., as President of the University of Texas at Austin."[8] State legislators previously instructed the board not to make personnel decisions related to anyone currently involved in legislative investigations -- including Powers.[9] Speculation was that the future of Powers could impact whether Texas Longhorns football coach Mack Brown is retained.[10] The Board met for four hours in an executive session closed-door meeting.[11] Because of the posting of the agenda, regents could have taken action following the closed-door session. "I do not know if there was a specific purpose in mind for the agenda item. I’m sure it was discussed between the chancellor and the chairman," said Regent Alex Cranberg. State Senator Judith Zaffirini said she hoped the board would vote in favor of keeping Powers as University President.[12]

At the meeting, the board did not take any action on Powers employment. Chancellor Francisco Cigarroa told the Board that Powers needs to improve trust, respect and communication in dealings with regents and system officials. "I am hopeful that the strained relationships can be improved. It is my recommendation as chancellor that Bill Powers should continue his appointment as president of the University of Texas at Austin," he said.[13][14] Cigarroa said that the relationship between himself and Powers had seen improvement.[15] Powers said: "There was a question about my employment, it got resolved positively. It is very positive to get this behind us and move forward in addressing these issues that face our campuses and face the system."[16]

Report

Former University of Texas General Counsel Barry Burgdorf issued a report in November 2012 after investigating the forgivable loans program. In that report,[17] University of Texas Regent Wallace Hall called the report "insufficient" and said that it did not provide the full story. In a July 2013 letter to State Representative Jim Pitts, University of Texas Regent Eugene Powell detailed a previously unrevealed letter regarding the forgivable loans program that was not included in Burgdorf's report. The letter, which was addressed to University of Texas Chancellor Francisco Cigarroa, was written by several female faculty members of the law school requesting an investigation into "two hidden salary systems that our dean has used during the last five years to hide salary raises and to discriminate against women and minorities in our institution." The letter was reportedly forwarded to Burgdorf.[18][19]

Impeachment proceedings

See also: Wallace Hall impeachment trial

The forgivable loans issue resurfaced in 2013 as a part of the state house investigations into University of Texas Regent Wallace Hall.

After he was appointed in 2011, Hall began looking into what he believed to be clout scandals within the University of Texas system. Hall investigated the university's forgivable-loans program and admissions policies and preferential treatment to politically-connected individuals.[20] Hall, as an individual citizen, filed FOIA requests with the University system after his inquiries via his role as a Regent were rebuffed.[21] Governor Rick Perry and University of Texas President Bill Powers have differed on education issues, specifically tuition, graduation rates, teacher roles and research.[22]

Hall filed requests of more than 800,000 pages, which some Texas administrators called an unnecessary burden. Hall has been accused of overstepping his authority in making demands on the University of Texas, Austin staff. Specifically, the allegations surround possible mishandling of private student information and providing inadequate information on his application to be a regent.[23][24][25]

In July 2013, University of Texas Chancellor Francisco Cigarroa and Regent Eugene Powell responded to the ongoing investigation and negative remarks against Hall from some elected officials and University of Texas staff. Cigarroa said Hall was not allowed to access anything that was not reviewed by University lawyers to ensure they met federal privacy standards. In a July 15, 2013 letter to state representative Jim Pitts, Powell wrote: "Regent Hall's efforts extend to bringing the U.T. System into a competitive position nationally; especially related to offering blended and online learning opportunities to U.T. students. I would point out Regent Hall's excellent service to the Board in terms of time and energy. I appreciate his Board service and his dedication and hard work designed to fulfill his fiduciary obligations."[26][27]

On August 5, 2013, Kevin Hegarty, chief financial officer for the University of Texas-Austin, announced that the records requests from Hall would be canceled immediately.[28] The University of Texas is required to seek approval from Attorney General of Texas Greg Abbott regarding whether information could be kept confidential from a records request. The process often takes months to complete. In 2008, University of Texas Austin referred one request to Abbott's office. In 2013, it referred 84 different requests, according to the Dallas Morning News. Hegarty said that the university reviews requests prior to seeking an opinion from the attorney general.[29] In August 2013, Chancellor Francisco Cigarroa recommended a "targeted compliance review" of how officials at the University of Texas, Austin were handling public record requests. In August 2013, the University of Texas System Board of Regents approved two measures to reform problems that Hall had discovered in his investigations. The regents voted to enact a new policy regarding the relationship between universities and foundations. Additionally, the regents approved an audit into how officials respond to public information requests.[30]

Censure vote

Although the committee left open the possibility of revisiting impeachment, an August 11, 2014 vote passed 6-1 to censure Hall, possibly bringing a close to the more than year-long process.[31][32] In response to the censure vote, Governor of Texas Rick Perry issued a statement defending Hall's actions, saying the regent acted in the best interest of Texas "in the face of withering personal attacks."[33]

See also

References

  1. Dallas Morning News, "UT slips to No. 52 in US News rankings amid faux prestige," October 14, 2013
  2. New York Times, "University of Texas President Ends Tough Year With Yet Another Battle," December 15, 2011
  3. Texas Tribune, "UT President Asks Law School Dean to Resign Immediately," December 8, 2011
  4. National Jurist, "UTexas dean resignation raises questions about compensation practices," December 19, 2011
  5. Austin American Statesman, "UT law dean forced to step down," December 8, 2011
  6. Houston Chronicle, "UT email exchange may provide key to controversy," March 24, 2013
  7. Houston Chronicle, "Perry-UT power struggle intensifies," March 25, 2013
  8. University of Texas System Board of Regents, "December 12, 2013 Meeting Agenda
  9. Texas Tribune, "UT Regents to Discuss Employment of Bill Powers," December 9, 2013
  10. ESPN "Mack Brown's future in limbo," December 10, 2013
  11. Dallas Morning News, "Could Mack Brown lose an ally? Texas' Bill Powers to be reviewed by regents," December 9, 2013
  12. Austin American Statesman, "University of Texas regents to discuss Powers’ job status," December 9, 2013
  13. Austin American Statesman, "UT’s Powers gets a lecture but keeps his job," December 12, 2013
  14. Houston Chronicle, "UT President Powers ready to get back to work," December 12, 2013
  15. Daily Texan, "While board takes no action on President Powers, Chancellor Cigarroa issues strong warning," December 12, 2013
  16. ESPN "Chancellor: Powers should keep job," December 12, 2013
  17. Texas Tribune, "UT Law's Forgivable Loans to Faculty "Not Appropriate,"" November 13, 2012
  18. Texas Monthly, "Gene Powell’s Letter to Jim Pitts," July 16, 2013
  19. Texas Tribune, "Wallace Hall: The TT Interview," June 25, 2013
  20. American Spectator, "Transparency for Thee," October 25, 2013
  21. Daily Texas Online, "Facing impeachment, Regent Wallace Hall defends actions in debate with Sen. Kirk Watson," September 28, 2013
  22. Austin American Statesman, "Perry pans impeachment proceedings, defends UT Regent Hall," October 30, 2013
  23. Daily Texas Online, "Former UT System vice chancellor alleges Regent Wallace Hall’s ‘clear intent to get rid of Bill Powers’," October 24, 2013
  24. Dallas Morning News, "UT regent sought 800,000 documents, official says in impeachment hearing," October 22, 2013
  25. Texas Tribune, "Pitts: Enough Evidence to Impeach UT Regent Hall," October 22, 2013
  26. Texas Tribune, "UT System Pushes Back Against Criticism of Regent Hall," July 16, 2013
  27. University of Texas System, "Letter from Eugene Powell to Jim Pitts," July 15, 2013
  28. Texas Tribune, "August 6, 2013,"
  29. [http://www.dallasnews.com/news/state/headlines/20140105-fight-over-president-bill-powers-buried-university-of-texas-in-records-requests.ece Dallas Morning News, " Fight over UT's Powers buried university in records requests," January 5, 2014]
  30. Watchdog.org, "University of Texas regents show support for Wallace Hall," August 22, 2013
  31. Dallas Morning News, "Panel censures but doesn’t impeach UT Regent Wallace Hall," August 11, 2014
  32. Austin American-Statesman, "Panel censures UT Regent Wallace L. Hall Jr.," August 11, 2014
  33. Your Houston News, "Statement by Gov. Perry on UT Regent Wallace Hall," August 11, 2014