Opinion: U of L Health should repay all its state loan, not just half

By Jim Waters
Bluegrass Institute for Public Policy Solutions

The University of Louisville Cardinals men’s basketball squad gave its fans a timely stocking stuffer Dec. 14 with the team’s first win of the season, beating the Western Kentucky Hilltoppers at the KFC Yum Center.

U of L’s health-care system should follow suit and offer taxpayers some Christmas joy by fully repaying the $35 million borrowed from the Commonwealth under the auspices of needing the money to purchase Kentucky One Health’s assets, including Jewish Hospital.

The money was neither needed nor used for these purchases.

In previous columns, we urged lawmakers to “invite the university to either pay for this project out of its already-flush-with-cash pockets or seek a loan from the private sector.”

Kentucky’s taxpayers “should be outraged that U of L lobbied heavily for this loan even though the university is flush with hundreds of millions in cash and is more than capable of making this acquisition without one red cent from Frankfort’s coffers,” we opined.

But taxpayers’ voices were drowned out by the Santa-sized claims of former U of L President Neeli Bendapudi, who doubled down on her assertions that the loan was “vital” to purchasing the additional facilities and that there was no other way for the university to absorb Kentucky One Health’s operating losses.

Documents obtained by the Bluegrass Institute Center for Open Government reveal that not only was U of L capable of acquiring the funds to make needed improvements to the previously faltering Kentucky One Health system without the government loan, but that the monies were used for a variety of capital purchases, including upgrades to the system’s emergency medical records platform, computer replacement/remediation and even a new roof at Jewish Hospital.

Such outlays can improve a hospital’s ability to provide quality care, but were they so “vital” that UofL needed a subsidized, partially forgivable taxpayer-backed loan from state government to purchase them?

“Partially forgivable”? This health-care giant is only required to pay back half the loan even though the enterprise reaped year-over-year total operating revenues of $2.2 billion while holding more than $1 billion worth of total assets during the most recent fiscal year, according to audited financial statements obtained by the Center for Open Government via the open-records law.

In their annual report to the Legislative Research Commission, officials indicated they anticipated paying back “the obligated portion of the loan” ($17.5 million) ahead of schedule.

Bluegrass Institute Visiting Policy Fellow Andrew McNeill instead urges the company to “meet this moment by respecting Kentucky’s working families and taxpayers who ponied up for what has proven to be an unnecessary loan” by going beyond what’s statutorily required and repaying the entire loan.

New U of L President Kim Schatzel, whose administration officially begins in February and who has extensive business and private sector experience, should appreciate what a welcome gift that would be for the Commonwealth. Perhaps she could help spread some needed holiday cheer by voicing her own support for full repayment.

McNeill wrote in a letter to Interim Joint Appropriations and Revenue Committee members that such a gesture “would make an immediate and positive impression with Kentucky’s taxpayers, especially those from outside of Jefferson County.”