Fiscal Integrity Subcommittee Meeting
April 5, 2002
In attendance: Fraley, Krygier, Adelsberger, Borowiec, Divis,
Henderson, Marvel, McGee, Odoguardi, Sherman, Simonson, Stevens, Wruck
I. Reed Fraley introduction and Member Introduction
II. David Frantz
-Intentionally selected committee with a range of Athletics
knowledge - from a lot to a little
-Goals for Certification
1. self evaluation, chance to assess ourselves, our operation
2. educated the rest of the university about what Athletics does
-Four Certification subcommittees: equity, governance, fiscal,
academic
-Last study 1995, visiting committee had nothing to add to what self
study found
-Charge:
- look for other matters, other than what already listed, suggested
- help educated university community, bigger community as to how
Athletics functions
- fiscal probably area least understood by larger community, so
committee's work is extremely important
III. Susan Henderson
-external audit of Athletics must be performed every year
-not full blown financial audits - limited scope
-audits in last three years have no findings by auditors, no major
exceptions
- except in 1999, Booster portion
- three areas where auditors had concerns
1. not gotten signed compliance forms from every member of every
booster
2. not getting checks back in bank statements
3. one booster group had not amended their bylaws to say that all
assets would revert to university if dissolved
- all three issues were resolved
-Booster groups
- 6 or 7 booster groups here
-small, aligned with particular sport
-raise money for club, not part of university accounting system
-will contribute money to sport for specific things (Football
biggest)
-boosters raise a small amount in big picture of fundraising
- booster contributions come under "other fundraising"
- part of concern for certification, since booster not run through
university ledger, need to make sure all is well
-question on gifts to student athletes (summer employment, car
payments, etc.)
- closely monitored by compliance office (not issue)
-budget summary handout
- reflect 5% cut
- new in operating report: capital sources, capital uses
- sources of income to athletic department:
sports: ticket sales, postage and handling on tickets, broadcast
rights, big ten revenue sharing, any revenue specifically related to a
sport (only major revenue sports broken out, all others lumped)
administration: revenue from sponsorships, scoreboards, Nike
agreement, misc. revenues
golf course: restaurant, memberships, greens fee
sports camps: coaches run camps in the summer (few in winter), net
profit from camp use at coaches discretion (thus awash when see it on
budget, does not help rest of bottom line, discreet to camp operation
itself) if profit on camp, divided up between coaches, supplement to
their salary; entrepreneurial ventures; many intangible benefits
(recruiting etc.) plus a way to supplement salaries; not a regular
part of coaches duties; most sports run some sort of camp
-issue in first certification; NCAA requires that all camps be run
through university, did not used to be like that at OSU, reigned them
in
bowl games: big ten pools monies and then distributes on proportioned
basis, so we know every year how much we will get; also listed under
"bowl game direct" - if we actually go to a bowl, usually net even, do
not budget it as a line item, comes and goes depending on how team
does
ice rink
parking / programs - parking for football games, some goes to T&P,
some to Athletics; programs are program sales, media guides
championships/clinics - team goes, certain amount is covered by NCAA,
hard to budge for this since dependent on teams; separate from sports
budget since cannot hold teams responsible for fluctuation; clinics
are like camps but directed at staff (camp for high school coaches)
marketing - misc. marketing sponsorships, Donatos at hockey games
merchandising - revenue from the official team shop at Schott, also
tents selling merchandise on football Saturdays, plus online component
other (3rd section) - development, interest, other fundraising,
National Youth Sports Program (run every summer, free 10 week camp
program for inner city kids, get $90K to run it, spend another $100K
to fund it); royalties (down this year, fluctuates on how teams are
doing)
- Capital Sources
-totally earmarked for construction, not for anything
-ticket surcharge
-all revenue from club seats (annual), suites (5 and 7 years)
-incremental increase in scoreboard sponsorships revenue (the rest,
same as amount from old scoreboard is in operations)
-NO STUDENT FEES
-NO GENERAL FUND MONIES
-Big impact on budget - number of games, tickets sales
- Uses
staff - specials are intermittent casual employees, seasonal
employees, bonuses for coaches, any non-continuing type of personal
payment
operating - phones, printing, clothing, equipment, travel
equipment - really just capital equipment (truck for golf course);
major equipment purchase, not like typewriter
physical plant assessment - own maintenance department, except for St
John, ice rink, field house (physical facilities provides some
maintenance, janitorial, utilities) so this is the annual cost paid to
university for those three
university overhead - all non-development revenue is assessed overhead
by university of 5.7%, paid to university general fund; based on
calculation by budget office on cost of running the university, not
much fluctuation
cost containment - from 1990 and still in place, annual payment made
to general fund of university (put in place rather than a budget cut)
cost containment golf course - BOT decided not maximizing revenue from
all university assets, came up with plan to raise fees to increase
revenue and then give more to general fund (increase $100,000 every
year until $500,000 and stays there, becomes another cost
containment); membership dropped to golf course
budget reduction transfer to general fund - since Athletics not taking
a cut like the rest of the university, university taxed athletics 2%
of revenuer, just a one time thing
grant-in-aid budget - A pays all of this plus room, board, books,
approximately 420 full grant and aids allowed by NCAA rules
(scholarship, also medical non-qualifiers; does not include graduate
student fee authorization (stipends in special)
UBIT - $140K to pay unrelated business income tax; transfers are to
help fund special things (like David Frantz who is academic liaison,
faculty reps time, legal affairs time); direct transfers to help
support cost of support above overhead
JSC Operating Transfer - to Schott for offices in building
NYSP and non-operating - expenditures from discretionary development
account
- Capital Uses
charged overhead on capital sources
paying off $11.5 million deficit for Schott
series of small projects undertaken over years that are debt financed
(roof of St. john, stadium concrete job from a few years ago)
Ohio Stadium - this year's costs, will change next year since only
have partial bonding of the project at this point
Jesse Owen - partial
Scoreboard - partial
Transfer to Stadium Plant Reserve - difference between money coming in
and going out, this year more coming in, basically evens out for prior
years
Steelwood Drive Bond
- Five Year Plan
3 years of projections out, draft
haven't been revised since last year
'03 will change drastically in this years budget process, which will
change '04, '05
'05 has and has had a deficit
-look in '03 transfer to operating reserves (2.5 million right now) -
planning to build up operating reserve to cover '05 reserve)
-go down to five home games in '05 - NCAA rules
IV. Questions
-Deficits get funding internally, not in recent history spent more
than can cover
-Average balance in reserve? Big pay off to Cooper last year; last
certification recommendation was to carry 5-10% of operating budge;
balance right now is $1 million; UBIT has $900,000 (dedicated to tax
liability); stadium $1.5-2 million (would like to keep separate from
operating in case club seats sales down, etc. then would have a little
cushion to keep capital dedicated revenue for stadium project)
-The Fiscal Integrity handout - abstract out of self study guide:
outlines in a generic sense what our responsibilities are as well as
process
-Certification process has been refined since it was started -
lengthened the time period (now 10 years), made some processes
simpler, also NCAA rewrites every year, thus significant differences
from old self study report
-Committee will break down into three groups
-Confidentiality issues - caution on five year model - just for
planning process, but most else is public record, often requested, R
suggests treating data carefully, redirect requests to Reed, should
not be the source for information
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