BRADENTON, Fla. – A Kentucky judge has granted an order blocking Gov. Matt Bevin from removing the University of Louisville's trustees.
Bevin removed the U of L board on June 17 saying it had become "operationally dysfunctional," and ineffective in performing fiduciary duties. He appointed a replacement board.
Franklin Circuit Court Judge Phillip Shepherd on Friday granted a
"The governor's unilateral action raises profound issues regarding the statutes on governance of public universities and the separation of powers under the Kentucky Constitution," Shepherd wrote in a 22-page opinion.
Shepherd also said that by using an executive order Bevin bypassed a process in state law that requires a hearing for any university trustee that is removed for cause, including neglect of duty or malfeasance.
Bevin's press secretary, Amanda Stamper, said the circuit ignored binding precedent from the Kentucky Court of Appeals, state statute, and a former state attorney general's opinion that backed the governor's authority to reorganize the UL board.
"The court's abrupt altering of the status quo, just as the newly constituted university board has begun to take constructive steps to put the university on a solid path forward, is neither in the best interest of the university nor the public," Stamper said in a statement. "We are very confident that this temporary injunction is just that – temporary – and will be reversed on appeal."
Shepherd said his ruling also considered the fact that the governor's decision to remove the board without any review, approval, or consultation with the Southern Association of Colleges and Schools could endanger the university's accreditation.
SACS has already begun a review because of Bevin's decision, the judge noted.
On June 23, Moody's Investors Service changed the University of Louisville's outlook to developing saying it reflected uncertainty about "governance and management changes, which have prevented the adoption of a fiscal 2017 budget and other business decisions."
Moody's changed the outlook while affirming the university's Aa3 underlying rating on $178 million of outstanding rated debt.
The University of Louisville Foundation's outlook also was changed to developing as Moody's affirmed its Aa3 ratings on $200 million of debt.
Moody's analyst Mary Kay Cooney said the governance change and Beshear's lawsuit "divert time and attention of senior leadership as well as create reputational risks" for the university.
"Today's court ruling is a win for Kentucky students, their families and our public universities," Beshear said in a statement Friday. "The governor does not have absolute authority to ignore the constitution and Kentucky law."
On June 17, Bevin also abolished the Kentucky Retirement Systems Board of Trustees by executive order and restructured the panel as an agency of state government.
Bevin appointed four new pension board members with investment experience to join the existing 13 members.
Beshear filed separate lawsuits challenging the governor's decisions with regard to the University of Louisville and the pension system.
