A now-defunct forgivable loan program at the University of Texas School of Law "set into motion a lack of transparency that ultimately led to a lack of accountability," a newly released review conducted by the attorney general's office concluded.
The release of the long-awaited report, with findings similar to those of an internal review conducted earlier by the University of Texas System, closes a chapter in the long and complicated postmortem on the law school's controversial compensation scheme.
"This new report was based on many more interviews than the earlier one, but its major findings and conclusions are the same," said Ward Farnsworth, the current dean of the law school. "We've long since corrected the issues raised in both reports."
The practice of providing professors forgivable loans — including former law school Dean Larry Sager, who received one for $500,000 — courtesy of the University of Texas Law School Foundation came under the microscope in late 2011 when UT-Austin President Bill Powers abruptly demanded that Sager relinquish his post.
In April 2013, the system's regents asked then-Attorney General Greg Abbott, now the governor-elect, to investigate the appropriateness of the relationship between the law school and the foundation, a separate nonprofit that supports the law school and provided the funds for the loans. The investigation stalled for more than a year at the attorney general's office, which ultimately turned in its findings to the system on Dec. 31, 2014.
A redacted version of the report was released by the system on Friday. In it, the attorney general's office notes that there are ongoing efforts to improve transparency at the law school and the foundation, and concludes that "it is important that these steps be completed."
"The board of regents appreciates the hard work and attention of the office of the attorney general in its review of the issues related to the relationship between the UT-Austin Law School and the Law School Foundation," Paul Foster, the chairman of the UT System Board of Regents, said in a statement. "The report identifies areas for improvement related to transparency, alignment of university and foundation missions, and compliance with records production."
"The problems highlighted in the attorney general’s report have been or will be addressed," he said
A similar review conducted by the system's then-general counsel, Barry Burgdorf, was released in 2012. It found that Sager's receipt of a loan created "an impression of self-dealing that cannot be condoned."
Following that report's release, a spokesman for Sager said the former dean's receipt of the loan "was done in accordance with the law and with the foundation's historical practices."
Burgdorf recommended terminating the forgivable loan program. The foundation no longer provides money directly to law school faculty. Rather, its contributions to the law school are routed through the university.
But the issue has remained unsettled.
In March 2013, the system’s board of regents, in a split vote, decided to set aside Burgdorf's findings and commission an external review.
The forgivable loan program began in 2003, when Powers was law school dean. Powers never received a loan himself, but did receive a significant deferred compensation package from the foundation. Burgdorf's report drew a sharp contrast between that process and the one by which Sager received his forgivable loan.
The attorney general's report also makes a distinction. While it notes that the policy may not have been sufficiently transparent under either dean, it notes that "Sager wanted to — and in fact did — increase the use of forgivable loans to recruit and retain faculty" and that, where the loans were concerned, he "supported a lack of transparency."
Some regents — particularly those who have been publicly at odds with Powers' administration for years — took exception to Burgdorf's methodology. At the time, one regent, Alex Cranberg, described it as "so inadequate that I have heard complaints of it being a cover-up.”
In the same month that the regents voted to ignore his report, Burgdorf resigned from the system.
As followers of this saga have awaited its conclusion, other key players have either left their positions or are preparing to do so. Francisco Cigarroa, who was chancellor throughout this episode, stepped down less than a month ago. Powers plans to resign his presidency in June. The terms of three regents — Gene Powell, Steve Hicks and Bobby Stillwell — are officially up next month.
"The recent attorney general’s investigation recognizes the foundation’s valuable relationship with the school but also identifies ways that both entities could have been more transparent and more effectively followed their own protocols in the past," Gary Susswein, a spokesman for UT-Austin, said in a statement. "The attorney general’s review also confirms the problems that faculty members first identified and brought to President Powers’ attention in 2011, shortly before he made a change in leadership at the law school. Since then, the university and foundation have improved their procedures to promote greater transparency and accountability while ensuring UT has the resources needed to remain one of the best public law schools in the nation."
Meanwhile, other investigations are ongoing relating to the university and the system. A grand jury is mulling the legality of the handling of private student information by Regent Wallace Hall, who was censured by lawmakers in 2014 for the controversial way in which he has personally investigated the operations of Powers administration at the system's flagship university.
And the system has hired Kroll Associates, a private investigative firm, to look into another matter at UT-Austin: the integrity of the admissions process. Their contract, in which the system agreed to pay up to $405,000 for Kroll's services, ends at the end of the month.
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