The Faculty Senate was called to order by Professor Rick Tepker, Chair.
PRESENT: Badiru, Benson, DeBrunner, Dillon, Durica, Elisens, Fiedler, Gana, Gilje, Gutierrez, Harris, Havener, Hillyer, Holmes, Hutchison, Konopak, F. Lee, R.Miller, Mouser, Murphy, Ogilvie, Patterson, Ragep, Scaperlanda, Stock, Tepker, Weinel, Wenk, Williams
PSA representatives: Iselin, Spencer
ABSENT: Baker, Bremer, Burnett, Carnevale, Dillard, Egle, Fung, Genova, Greene, Gupta, Hertzke, Horrell, Laird, Lucey, Nelson, Palmer, Shaughnessy, Sipes, Stoltenberg, Thulasiraman, VanGundy, Wallach
This special session of the Faculty Senate was called to discuss Athletic Department funding. Because of the Athletic Department accumulating deficit of over $6 million, the university is considering a proposal to dedicate E&G money to Athletic Department uses. Members of the Gender Equity Subcommittee of the Athletics Council were present to answer questions: Jack Kasulis (Athletics Council Chair), Lex Holmes, Connie Dillon, Pat Weaver-Meyers, and Dan Gibbens (faculty representative to the conference). The Athletic Department interim Director was unable to attend. Several handouts were distributed at the meeting (see Appendices): (1) draft recommendations, (2) NCAA External Audit, (3) Athletic Department Support of the University 1995/96, (4) Athletic Department Support of the University FY94, (5) Significant Cost Factors FY89 to FY94, (6) Athletic Department Ticket Distribution FY96.
Prof. Holmes said gender equity is of national importance because the federal government requires that the same athletic opportunities must be provided for male and female students. Due to the need to create more opportunities for females, women's soccer has been added, and a new women's softball field is being built. The subcommittee was formed to review the financial demands of gender equity. It became clear that the gender equity requirements were only a small part of the Athletic Department budget problems. The Athletic Department has been losing significant amounts of money the last few years (Appendix 2). The Athletic Department cannot run a deficit but can borrow against next year's ticket revenues. For nearly a decade the Athletic Department has overspent its revenues, so that now the accumulated deficit is about $6.3 million. This is money the department owes to itself; it is really a cash flow loan, but the loan has never been reduced. Revenues have been less than what was projected, and, in the last two years, expenditures have been greater than expected.
Women's athletics costs increased by $1.6 million between FY89 and FY94 (Appendix 5). The Academics and Student Life area, which includes academic counselors, has yielded higher G.P.A.s and graduation rates, but at a significant cost. As tuition goes up, the financial aid costs rise. The total increase from FY89 to FY94 is about $3.5 million, yet the size of the accumulated deficit is $6.3 million. When we change coaches, we end up paying double coaches for a short time. That accounted for nearly $800,000 in last year's budget alone.
Appendix 3 is an account of the free or discounted football and basketball tickets that are provided to certain groups. The faculty/staff and student figures do not include the donor component. In other words, the Athletic Department may be able to sell these seats to donors at a higher price. Prof. Penny Hopkins, former Faculty Senate Chair, commented that most of the faculty/staff and student tickets are not in good seats. Prof. Havener noted that the Athletic Department loses money on discounted tickets only if we have a sold-out stadium. Appendix 4 reports the same information but for FY94 and also includes the cost of the band, pep squad, academic center, and other student support compliance and the value of radio advertisements. Appendix 6 shows the amount of the free tickets given to the Athletic Department staff.
The important issue is how the budget will be handled now that the Athletic Department has reached the end of the string. The gender equity subcommittee has been meeting the last several months and will give recommendations to the President June 3 (later changed to June 6). The committee would like guidance on how to present the views of the Faculty Senate regarding Athletic Department funding alternatives. The Athletic Department has built in costs in excess of projected revenues, which will lead to another $1 million deficit, and the cost of the soccer program must also be added. Prof. Holmes moved adoption of the draft recommendations (Appendix 1).
Prof. Fiedler, referring to recommendation 3, said the Athletic Department thinks its staff should have free tickets, and it is not the Senate's business to tell the Athletic Department how to compensate its employees. Prof. Patterson asked for projections on the savings from recommendations 2.A-D. Prof. Holmes said he did not have those figures. Prof. Gilje said folding a lot of the Athletic Department functions into the university will bring the Athletic Department and university closer together, facilitating the process whereby general funds of the university could be used to support the Athletic Department.
Prof. Holmes said items 2.A-D are not simply matters of efficiency but also of authority. For instance, the university should have just one development office. Philosophically, it would be beneficial in terms of how the university is organized. Another consideration is whether there is a conflict of interest having the Athletic Department counsel its own students. Prof. Gilje said the tenor of the proposal runs counter to the previous sentiment of the Faculty Senate. The recommendations say that money will come out of the general budget to support athletics. Prof. Weaver-Meyers said that is true, but it seems apparent that some E&G funds will go toward athletics. The question is whether the university eats the general deficit or controls what it eats. A lot of other universities are funding significant portions of athletic expenditures.
Prof. Gilje said there is a distinction between this proposal and just simply giving the Athletic Department money. Prof. Kasulis noted that recommendation 1 calls for the Athletic Department to cut its budget. Prof. Tepker said the Athletic Department has not been asked to plan for reductions, while academic units have had to go through that exercise repeatedly. Prof. Hutchison pointed out that recommendation 2.A. would keep two separate entities from going after the same donor. He asked about the $.5 million in depreciation, the university overhead charges, and the medical training item (Appendix 2). Prof. Kasulis said the overhead charge is 2%. Medical training should read medical/training and was for things like treating injuries. Depreciation was added in 1991 because of a recommendation of the auditors. The Athletic Department is an auxiliary and has to pay for everything itself. Depreciation is not money in a pot but rather a recognition that a major expenditure may be necessary. There is a difference between cash flow and accounting for revenues and expenditures. The loss for FY95 of $962,052 less the $556,447 in depreciation is what would have to be borrowed.
Prof. Hopkins observed that gifts-in-kind had escalated since 1989. Prof. Holmes said gifts-in-kind under expenditures was balanced by gifts-in-kind under revenues. Prof. Mouser noted that total merchandise sales had dropped. Prof. Kasulis explained that a few years ago, the Athletic Department contracted out concessions, and that reduced costs. Prof. Weaver-Meyers said the Athletic Department makes more money by contracting out concessions.
Prof. Fielder said even without Title IX, women's athletics probably would increase over time because of demand. He asked how much of the budget increase was for show and how the Athletic Department decides what sports to fund. Prof. Dillon said the decision to add women's soccer was because of demand and interest in the sport and because of Title IX. Prof. Tepker said the pressure is on schools to comply with Title IX. Prof. Weaver-Meyers said certain sports will take a university further in complying with Title IX. Prof. Kasulis said Title IX has four criteria, one of which deals with the proportion of male and female athletes to the student population. One of the difficulties is showing comparability of cost structures. For example, salaries of coaches need to be similar. Women's sports costs will rapidly increase to play catch up.
Prof. Murphy asked whether there was any movement within the Athletic Department to reduce expenditures. Prof. Dillon said the Athletic Department had reduced expenditures since FY92. Prof. Murphy said it would be easier to agree to the recommendations if the Athletic Department had some plan to be fiscally responsible. Prof. Gibbens noted that the Athletic Department had done some cost cutting over the years. In three of the years since 1989, the costs of items like gender equity were covered by cuts in other areas. Prof. Tepker pointed out that the Athletic Department has been showing losses for several years and has not been asked to discipline itself. He contended that we should begin to use terms like neglect and mismanagement to describe the situation in the Athletic Department. Prof. Kasulis said several groups are looking at the budget problems. The budget subcommittee of the Athletics Council, chaired by Prof. Ken Hoving (Psychology), will probably mandate the Athletic Department to produce certain cost savings. The gender equity subcommittee of the Athletics Council, chaired by Prof. Ted Roberts (Law), started from a different perspective but is looking at the same issues. The President asked Budget Director Jan Jackson and additional administrators to survey other schools. The President requested two College of Business Administration faculty members, Russ Driver and Robert Williams, to identify efficiencies in several units in the university, one being the Athletic Department. For some things, the impact will not be realized for a few years.
Prof. Gilje said he would like to talk more about the motion, which represents a change in the general policy of the Faculty Senate. He asked whether there was an intended relationship between the first and second recommendations. Prof. Holmes said the $1.5 million is a reasonable guess as to what it would take to balance the Athletic Department budget. Prof. Gilje asked whether that would be accomplished by recommendation 2. Prof. Holmes said there was no implication that the university would pay for the functions moved from the Athletic Department to the university. It is possible that the Athletic Department would pay for those services. It would not be out of line to adopt one and two. Prof. Dillon said the intent behind one is for the Athletic Department to try to find ways to reduce its budget. Prof. Gilje said number 2 needed to be clarified so that the Athletic Department could not balance its budget solely by moving the functions listed in number 2 to the university. Prof. Weinel said if in fact number 2 suggested that the Athletic Department was paying for those services transferred, that would put a very different interpretation on it because we are not then paying for those things in whole or part if the Athletic Department is paying the university. Prof. Gilje suggested that a number E be added for clarification. Prof. Dillon pointed out that the last sentence of 2.B. would require the Athletic Department to pay for the additional services provided to student-athletes. Prof. Durica asked whether the recommendations had been floated to the offices mentioned in two. Prof. Dillon pointed out that the NCAA now requires that student-athletes and regular students be housed together. Prof. Tepker said these recommendations had not been shown to those offices.
Prof. Scaperlanda moved to add the following language as item 2.E.:
The Athletic Department shall compensate the university for the fair value of these services.
Prof. Dillon said it would not make sense for the Athletic Department to compensate the university for services that all students should have. Prof. Trytten (representing Prof. Thulasiraman) suggested adding, "beyond those provided for all students." Prof. Tepker said items A, C, and D are not student-oriented, and we probably should not try to figure out a specific definition of fair value. Prof. Holmes accepted the amendment.
Prof. Williams said it is not appropriate for the Faculty Senate to micro-manage the Athletic Department, which is a business that raises revenues and helps the university raise private funds. It is possible that the Athletic Department could generate more money for the university than it spends. The university should pay for services the students would normally be provided. The Athletic Department should not be tied into the academic side through the E&G budget.
Prof. Patterson said she would be more supportive if this was called a resolution instead of recommendations. Prof. Holmes accepted that suggestion.
Prof. Weinel said her inclination was to let the Athletic Department be separate and not use any E&G. The cross pollination can be used to blur distinctions that should be kept separate. She said she was concerned about the pattern of irregular losses, which should not be the university's problem. What happens in future years? Prof. Weaver-Meyers said this is a problem for almost every institution. Institutions are faced with the question of how much value the Athletic Department is to the university. Some universities have revised their mission statements to add athletics. Prof. Weinel said the resolution is not just a bookkeeping one, but one that revises our collective view of athletics. She said it is possible that revenues may even out or increase. Prof. Weaver-Meyers said football cannot pay as much toward other sports because football revenues are down, and costs of other sports are rising.
Prof. Benson pointed out that the university would spend about $1.3 million on tickets (Appendix 4) and ask the Athletic Department to cut $1.5 million from its budget, which gives the Athletic Department a decent deal. He asked whether the Athletic Department reimburses the university for scholarships. Prof. Dillon said the answer was yes, and that was listed under financial aid. Prof. Hillyer noted the potential for revolutionary change because the offices in 2.A-D are used to exercising business discipline. For example, the development office could decide athletic tickets were not the best investment, or Academic/Student Affairs could decide that all students should get some things that only student-athletes are now getting. In changing the location, we may be changing the decisions. Prof. Benson said it might change in the other way so that we start spending more money on athletics. Prof. Hillyer said it was written into 2.B that the Athletic Department has to pay for costs beyond those provided for all students.
Prof. Williams asked whether the Athletic Department could be declared an auxiliary service, which by definition has to balance its budget. Prof. Holmes said it is and would remain so. Only certain functions, like development, would move. Prof. Hopkins commented that academic programs already take a back seat to bricks and mortar. Would academic programs suffer even more? Prof. Dillon said at least athletic development would operate out of interest for the university in general. Prof. Tepker suggested that implicit in the last sentence of 4 is that academics would control the distribution of tickets.
Prof. Trytten contended that reducing expenditures (recommendation 1) was not sufficient; the Athletic Department should reduce the deficit. Prof. Williams proposed a change in the language to "... balance expenditures with income and seek to reduce the accumulated debt." Prof. Hillyer noted that the proposal says "... to balance the budget and reduce the accumulated deficit." Prof. Williams said one option could be to keep expenditures the same but raise additional revenue. It is up to the Athletic Department as to how they reduce the deficit. Prof. Tepker asked whether adding the phrase "in addition to recommendation one" before recommendation two would solve the problem. Prof. Weinel suggested rewording number one to read, "The university should reduce the accumulated deficit in the Athletic Department by balancing the department budget." Prof. Holmes said there were two problems: the accumulated $6.3 million deficit and the annual debt. Prof. Tepker said the lack of spending constraints would give the Athletic Department the opportunity to spend more. He would like to see the emphasis on spending cuts. Prof. Scaperlanda agreed that reducing expenditures is the key. Prof. Wenk questioned who was being asked to reduce expenditures.
Prof. Tepker proposed that number one be amended to read:
The university should direct the Athletic Department to reduce expenditures by approximately $1.5 million to balance the department budget and to reduce the accumulated deficit.
Prof. Williams asked about the emphasis on expenditures when reducing the debt is what matters. Prof. Tepker said the bottom line is how much money in academics will be shifted to athletics.
Prof. Havener asked whether "next year" should be added. Prof. Holmes suggested adding "in FY 97."
The amended resolution was approved on a voice vote with one opposed and one abstention.
The meeting adjourned at 5:10 p.m. The next regular session of the Senate will be held at 3:30 p.m. on Monday, September 9, 1996, in Jacobson Faculty Hall 102.
Sonya Fallgatter Connie Dillon
Administrative Coordinator Secretary