The UT System Board of Regents announced an advisory task force on relationships between UT institutions and UT-affiliated foundations in response to a report deeming the procedure of obtaining a forgivable personal loan through the Law School Foundation inappropriate for the University.

During the regents’ regular meeting Thursday, Board Chairman Gene Powell said the advisory task force will look into the best practices regarding relationships with foundations that regularly contribute to UT.

“This review was a necessary step to assure that requests from universities to these groups are consistent to the best practices,” Powell said.

Last year, Larry Sager, former dean of the School of Law, stepped down from his position at the request of UT President William Powers Jr. after it was found he obtained a $500,000 forgivable personal loan from the Law School Foundation, a nonprofit organization not operated by the University that helps support law professors’ salaries, without approval from central administration.

The UT System report, released Tuesday and written by Barry Burgdorf, UT System vice chancellor and general counsel, looked into the relationship between the foundation and the University following Sager’s resignation.

In the report, Burgdorf wrote that Sager’s ability to recommend and negotiate the personal loan for himself created an impression of self-dealing that the System does not condone.

Sager approached former foundation president Robert Grable in 2009 and proposed the loan over dinner after Steve Leslie, executive provost and vice president, denied Sager a salary increase because of a tight budget, according to the report. Leslie oversees compensation of University deans.

According to the report, Powers said he did not discuss the personal loan with Sager either.

After discussing the report in executive session, Powell said the task force will create a central structure for relationships with UT-affiliated foundations and establish record-keeping procedures and provisions to assure that UT employees are not receiving direct benefits from external sources.

The task force is also expected to recommend locations and staffing for foundation offices. The Law School Foundation is currently housed on campus.

“This will go a long way to establish the best management practices to help support these entities that have supported UT System institutions for so long,” Powell said.

The forgivable personal loan program is currently suspended.

Sager’s spokesperson Glenn Smith said conflicts with Sager’s personal loan could have been avoided if the procedures the task force will recommend had already existed.

“Historical practices were followed by Dean Sager and other faculty,” Smith said. “Whatever new procedures will be put in place will be followed as well.”

Stephen Susman, a member of the Law School Foundation’s board of trustees, said he supports the creation of the task force. Any official procedures for salary approval that might be implemented through the task force will help avoid situations like the one Sager was put in, Susman said.

“This wasn’t Sager’s fault,” Susman said. “The University did not have a procedure in place. The notion that they would expect Sager to get approval for his own contract is stupid.”

Susman said the foundation was aware Sager was negotiating his own loan, and executive committee members assumed he had the authority to do so.

Susman was not on the foundation’s board of trustees when Sager was awarded the forgivable personal loan.

In a statement to The Daily Texan, UT President Powers said he welcomes the recommendations set forth by the report released by the System.

“The report released by the UT System recognizes the foundation’s vital role in maintaining a nationally ranked law school,” Powers said. “The report also offers some important recommendations to modernize and bring more transparency to the relationship between UT and the foundation.”

Regents Robert Stillwell and Brenda Pejovich will head the task force, and a representative from the Office of the Attorney General will provide advice. UT institution presidents will also participate in establishing recommendations that will be presented to the regents for approval in 180 days.

Printed on Friday, November 16, 2012 as: UT, affiliates' relation to be assessed