UofL efforts negated the job retention obligation under a taxpayer sponsored loan – The Bluegrass Institute for Public Policy Solutions

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The Cabinet for Economic Development (IBD) has never done a deal like the University of Louisville’s Acquisition of the Jewish hospital. Their reliance on UofL in setting the loan terms showed either a lack of ability to evaluate the business or a lack of interest in an independent investigation into the Louisville health sector (or both).

As we reported Earlier this week it appears that CED has accepted a job retention number developed by UofL and UofL health.

UofL CFO Dan Durbin circulated an internal E-mail Please agree to a calculation that puts the number at 5,880 jobs. This figure was put into the by CED Loan approval documents. Durbin’s email contained a Spreadsheet.

He wrote, “The sheet contains a math error that increased the current number by 226 (see Excel spreadsheet). I found this and corrected it for the target jobs and reduced the current values ​​by 10% to get the target jobs.”

There is no explanation as to what caused the failure or why the adjustment down 10% was necessary.

Durbin have written that the UofL should say: “The downsizing is attributed to the dismantling of this management level, which brings no added value.” However, it is not clear whether the elimination of a management layer is directly related to the 10% reduction mentioned above.

The number is important, but not critical, to granting UofL a future loan waiver. CED has given UofL a second option – again with no job creation or job retention requirements – that will allow up to half of the $ 35 million loan to be waived without being tied to jobs of the more intriguing aspects of this agreement.

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The University of Louisville appears to have successfully negotiated all job retention requirements under the Kentucky General Assembly-approved, taxpayer-funded $ 35 million loan Buy Jewish Hospital. the Economic Development Cabinet (CED) initially proposed specific job-related metrics UofL health would have to meet to achieve a partial loan waiver but ultimately signed an agreement that essentially negated keeping the job as part of the deal.

March 5th, UofL President Neeli Bendapudi went before the Senate Education Committee to vote in favor of. to testify HB 99, the legislation that approves the loan program. In response to a question, Bendapudi specified, “Our requirement is to keep 100% of the Kentucky-based jobs.” The loan agreement approved by the Kentucky Economic Development Finance Authority (KEDFA) provided UofL with two options to have 50% of the loan waived Open Records Statutes, it looks like the University of Louisville and UofL Health are behind the wheel setting the terms that will allow them to evade full loan repayment. In theory, CED represents the public’s interests in negotiating with a company (or organization) seeking financial gain made possible by Kentucky taxpayers.

A March 17th E-mail from Katie Smith, the cabinet commissioner for financial services, urged the UofL to confirm that “the existing full-time jobs residing in Kentucky are 6,736.

“UofL CFO, Dan Durbin, spread an internal E-mail two days later to review a recalculation that reduced the number of existing full-time positions to 5,880. Durbin wrote: “The current number of jobs needs to be changed to 6,537 and we say that the decline in employment is due to the loss of this level of management, which is not adding value.” His E-mail ended with a question: “Can someone check that the numbers in the attached PDF are correct? I can’t know.”

CED accepted the figure of 5,880 as part of the Loan Approval Document that went before KEDFA. There is nothing in email exchanges or other documents to suggest the Cabinet has attempted to independently verify the number of UofL positions in Kentucky.

In addition, as part of the second option, which allows them to qualify for partial loan waiver, UofL Health suggested removing the language that should have forced them to increase the number of Doctors in Medically Underserved Areas (MUAs) . CED literally incorporated the language of UofL into the final loan agreement. Katie Smiths March 17th E-mail suggested that Option 2 include “maintaining the 4 existing facilities within the MUAs” and “increasing the number of doctors working in the four locations by 10%”. She asked UofL for her thoughts on this requirement.

Two days later, UofL Health Legal Advisor James Rayome responded, “It would be difficult to say by what percentage the number of employees should be increased (under option 2), since … the goal of providing high quality services to the medically underserved areas really depends on strategically located access points.” E-mail continued, “Since I am sensitive to the needs of the KEDFA to measure our progress, I am in the process of designing a language with a view to establishing an access point target.”

A conference call was held on March 20. Rayome followed this call using the Option 2 language proposed by UofL Health, thereby removing UofL Health’s obligation to increase the number of doctors providing services in the medically underserved areas. Smith responded, “This information is very helpful. We will update the loan agreement and the board of directors report.” Rayome’s language was presented to KEDFA as part of a March 26th provisional and confidential document Recommendation for lending.

UofL health up to 50% of the loan can be waived if the conditions in option 2 are met. Option 2 requires UofL Health to keep certain facilities in the medically underserved areas, but does not include conditions for job retention or job creation. If the requirements of option 2 are met, the job retention requirements set out in option 1 can be ignored.

The Center has put several questions to the Economic Development Cabinet asking whether this interpretation is correct. If so, does this ultimately mean that UofL Health doesn’t necessarily create or keep jobs in order to achieve partial loan waiver? (No response was provided before this article was published. We will update this post if we receive anything from CED.)

In one presentation Speaking to the provisional funding and revenue committee last month, UofL Health announced it had increased the number of jobs from 5,880 to 6,000. The General Assembly can and should revise the loan program requirements to induce CED to include job creation and / or retention as a condition of a future loan waiver.

President Benapudi shouldn’t be against signing a firm pledge in which she respects the statements she made to the legislature when she advocated it HB 99. How she reacts will speak volumes about UofL’s appreciation for the taxpayer’s help in doing this risky business.


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