NEW ORLEANS — Faculty at LSU Health Sciences Center are calling on the new chancellor to investigate his predecessor’s spending of charity funds after a joint WWL-TV and Times-Picayune investigation last week.
The LSU Health Faculty Senate sent Interim Chancellor Steve Nelson a letter expressing concern about the news reports, which detailed former Chancellor Larry Hollier’s expenses. The faculty members called them “apparent abuses of LSU Health Foundation New Orleans funds.”
Those charges included thousands of dollars for alcohol, lavish dinners and first-class travel for himself and his wife – all while Hollier was being paid more than $1 million as chancellor of LSU Health in New Orleans.
"We implore the Board of Directors to investigate the lack of fiduciary oversight and take necessary action to ensure donor funds are used as intended – now – before our donors decide that LSU Health is not worthy of their financial gifts," said the letter from Faculty Senate President Judy Crabtree.
The LSU Health Foundation, an LSU-affiliated charity, defended Hollier’s spending using its Chancellor’s Discretionary Fund, saying the reimbursements followed all policies and procedures. But the foundation has not produced a policy that states what can and can’t be charged to the chancellor’s account.
“The Foundation contends that it has always followed the policies included in its governing documents – the Guidelines document, Affiliation Agreement and PM-48,” foundation spokesman Greg Beuerman said. “These guidelines are used to review all spending of Foundation funds.”
The “Guidelines document” Beuerman provided specifically states it is only guidance, not a policy, and only applies to endowed funds – which the Chancellor’s Discretionary Fund is not. PM-48 is an LSU school policy that says all expenditures on behalf of LSU employees by LSU affiliates, including the LSU Health Foundation, “are subject to the … affiliation agreement with LSU and the organization’s policies and procedures.”
Beuerman declined to provide a copy of LSU Health Foundation’s affiliation agreement.
He did say that the “ultimate authority and oversight” for the chancellor’s spending comes from LSU’s board or its designee. Under PM-48, all reimbursements to LSU employees of more than $1,000 must be reported quarterly to the board or its designee. The news agencies reviewed 600 pages of receipts and expense forms for Hollier since 2018 and found 27 reimbursements of more than $1,000.
Beuerman did not provide any of the quarterly reports filed with the university, but said all of them were “reviewed to ensure compliance based on their standards.” LSU said the board’s designee during most of the time Hollier was chancellor was his vice chancellor for finance, Keith Schroth.
Schroth’s own spending using a foundation credit card was blasted as “personal, inappropriate or excessive” in a law firm’s investigation from 2009. An internal LSU audit in 2021 alleged Hollier helped Schroth and Schroth’s son get additional compensation without proper approval.
Both Hollier and Schroth stepped down last fall after the audit was released. Hollier continues to serve on the LSU Health faculty and is scheduled to make more than $750,000 in 2022.
Nelson provided WWL-TV and The Times-Picayune with an LSU Medical School policy established when he was the dean of the medical school. It governs the proper use of the foundation spending accounts by medical school employees and clearly prohibits charging for alcohol, using first-class flights or accommodations without prior approval by the dean or spending more than $105 per person at dinner, all of which public records show Hollier repeatedly did.
The policy also urges medical school employees, before spending foundation money, to consider, “If this were my money, would I spend it this way?" and "If this transaction appeared on the front page of the local newspaper, would I still be comfortable with it?"
Beuerman said the Medical School policy didn’t apply to Hollier, though, because as chancellor of the LSU Health Sciences Center for 16 years, he oversaw not only the medical school, but five other entities, including the nursing school and dental school.
Nelson’s spokesperson said that LSU Health Sciences Center tried to get the “foundation to develop policies and procedures for reimbursements for non-endowed funds,” including the chancellor’s discretionary fund, in 2019.
But spokeswoman Leslie Capo said those efforts were “rebuffed by the foundation.” She said the foundation’s chief financial officer, Tim Hemphill, wrote, “The discretionary funds are to be used at the discretion of the holder as they see fit within the mission of LSUHSC.”
Three days after the initial WWL-TV and Times-Picayune report, the foundation board chairman, Warren Gottsegen, sent a letter to fellow board members proposing an independent audit “that will include internal control recommendations for the Chancellor's Discretionary Fund.”
Gottsegen’s letter blasts the reporting of Hollier’s spending as “irresponsible” and “misleading,” but also went on to say, “Obviously, we have relied and continue to rely on the Chancellor to use those funds expressly for the benefit of the HSC.”
Gottsegen also noted that the “Foundation has previously made efforts to curtail such spending but was shot down by leaders at the LSU Health Sciences Center.” LSU denies that claim.
Gottsegen’s letter was leaked to WWL-TV. After the news agencies asked him about the audit, Beuerman responded that no special audit will take place. Instead, Beuerman said the foundation’s annual audit of financial statements will proceed as usual.
That report likely won’t settle the question of whether Hollier did anything improper: The Postlethwaite & Netterville firm in its previous reports has said they don’t make comments about internal controls.
“We do not express such an opinion,” auditors wrote. The firm’s CEO didn’t return a message seeking comment.
The lone section of the most recent 30-page audit that referred to foundation reimbursements is a single sentence that lists the total amount the foundation paid to all LSU employees.
– Times-Picayune staff writer Joseph Cranney contributed to this report