Center for Open Government: UofL President didn't disclose $30 million line of credit in front of Senate committee

Testifying in the Senate Education Committee last March against a $35 million taxpayer-backed loan for the University of Louisville, the Bluegrass Institute’s Sarah Durand said, “When you look at UofL Hospital and university finances, they have hundreds of millions in assets. There is no reason UofL could not be successful in securing a private loan.”

Moments before Durand’s testimony, Sen. Jimmy Higdon, a committee member, posed a question to UofL President Neeli Bendapudi about the possibility of private-sector lending for the Jewish Hospital acquisition:

Higdon: Are there other options available for the university to secure this money?

Bendapudi: We’ve already closed the deal Senator, as you know. Without this, I’d say it’s difficult for us to do anything now.

Higdon was trying to glean information to inform his vote on the issue. His question was impartial and valid.

As we know now, UofL Health finalized a $30 million line of credit on January 7th, 2020 — two months before Sen. Higdon asked his question. Bendapudi could’ve disclosed there was a “fallback” plan. Instead, she withheld that information, no doubt calculating the disclosure would call into question the need for the state to borrow $35 million to give to her university.

From another document obtained by the Center for Open Government, we discovered that not only had UofL locked in the $30 million line of credit in January but other firms were offering additional financing to UofL Health.

In a March 25, 2020 email, Kirk Strack, the VP of Finance at UofL Hospital, wrote to James Rayome, UofL Health’s general counsel:

In the course of reviewing these (KEDFA) documents, did you note any prohibition against additional borrowing? I ask b/c GE has extended up to $20m in funds for capital and I want to be certain we are (sic) getting crossways with any of our existing lenders.

Rayome responded, “since UMC is not a party to the KEDFA loan documents, it wouldn’t appear that UMC is prohibited against any additional borrowing.”

In her testimony, Durand also said, “If bailing out (Jewish) hospital is such a lucrative move for UofL, banks would be competing for the loan.”

In fact, banks were competing to finance the deal. However, UofL kept that information from the General Assembly, even when Bendapudi was asked about it in front of a legislative committee.

(Video link to the March 2020 Senate committee meeting).