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Officials: UCA not hiding things in funding reporting
Brad Teague, University of Central Arkansas’ athletic director, said the university had nothing to hide in the manner that it handled a percentage of money from fees not related to athletics being transferred to the athletic department during the transition to NCAA Division I.
State officials have said UCA did not follow appropriate accounting procedures in reporting the use of auxiliary fees for athletic funding, which they maintain is a violation of state law that carries no penalty. They claim state law mandates that a fee in which some amount is used for athletics must be clearly identifiable in public records and on student financial statements.
Tom Courtway, UCA’s interim president, said the auxiliary funds were reported to the state but not in a manner that they could be easily be recognized as coming from student fees.
“We are not trying to hide anything,” said Teague, who took over as athletic director in 2007 after the administration had already put into place the transfer of auxiliary fees in place to help with the immediate cost of the transition from NCAA Division II to Division I and membership in the Southland Conference, which accepted UCA for full membership in 2006. “If we have to further break down the auxiliary funds used for athletics on student billing statements and to the Department of Higher Education, we’ll do it. Or the athletic department might not take funding from the three areas in question. That’s something we’ll have to decide.”
“Higher education officials are asking for more transparency, and we want that too,” Courtway said.
Upon gaining membership in the Southland Conference in 2006, university officials estimated that the difference in the athletic budget ($4.5 million at the time) would be between $1.6 million to $2 million. UCA’s current athletic budget is about $7 million.
During a 2006 news conference to announce the SLC membership, Lu Hardin, university president at the time, noted the difference in funds required and said, “about $600,000 of that would be in additional scholarship money and we will be eligible for some auxiliary funds from the state to offset some of that.”
NCAA institutions, particularly those in major conferences like UCA, supplement much of their athletic funding from revenue from NCAA television contracts and resulting corporate sponsorships. UCA’s transition to Division I, which officially began in 2005, is a five-year process toward full NCAA Division I status. Only institutions that have full membership can receive funds from NCAA contracts. Provisional members, such as UCA, have to make up the difference in funding during the reclassification process in any way possible. UCA is expected to gain full NCAA status, making it eligible for NCAA funds and postseason events, in 2010.
There are four areas, outside of the NCAA distribution, in which a university can fund athletics: transfer from state funds (which is capped by an amount related to the gross national product); student athletic fees (which will generate about $3.8 million this fiscal year); extended funding (which includes ticket sales, Purple Circle funds. and corporate sponsorships) and auxiliary funds (which includes administrative fees charged to students for housing, food, special events, and health costs). “The fees for the auxiliary groups are administrative fees,” Teague said. “When UCA began its transition to Division I, the school decided to devote 5 percent of those auxiliary fees to athletics to help in the increase in funding. The auxiliary fees are the cost of doing business in the various areas. The administration didn’t change the cost of the fee, it just determined that 5 percent from each auxiliary fund would go to the athletic fund.”
The decision to use a percentage of auxiliary fees was noted by Hardin in several news conferences and interviews leading to the decision to move to Division I and subsequently to the Southland Conference.
Teague said the issue relates to the athletic department reporting the income under the broader classification as auxiliary funding and not breaking the 5 percent allocation from three non-athletic funding sources as separate line items in its reports to the Department of Higher Education and on student billing statements. Those three fees related to those from the HYPER Center, the student-health center and the student center. State officials, who are requiring more transparency in financial statements, are viewing that as a lack of transparency.
“My understanding is the transferred fees from those sources were reported as ‘other auxiliary funds used for athletics,’” Courtway said. “If we need to list those separately and more specifically to the Department of Higher Eduation, we’ll do it. We’ll certain break it down on the students’ statement of fees. The customer ought to know everything he is paying for.”
“We’re going to do what is right and whatever the law requires,” Teague said.
For fiscal 2009, UCA’s athletic department is projected to receive $77,250 from the student-health fee, $59,000 from the HYPER Center fee and $52,000 from the student-center fee.
“What we need to do is significantly reduce or eliminate transferring fees from those auxiliary funds to athletics,” Courtway said. “It’s OK over the short term. But to do that on a long-term basis would affect funding for major maintenance and upkee, which would use money from those accounts.”
Teague said as UCA has continued the Division I transition, it has been able to gain additional funding from guarantees and various contracts for “money games” in several sports. For example, the football team received $250,000 last year, primarily from its game at the University of Tulsa. The men’s basketball program got $117,000 in guarantees, primarily from participation in a preseason tournament; and the women’s basketball program received $17,000, primarily from games at Kansas State and Houston Baptist.
UCA officials are continuing to arrange for further “money games” that include the University of Missouri and the University of Mississippi in the future. Such contracts involving schools such as UCA and teams from major conferences can generate from $350,000 to about $700,000 in guaranteed disbursements.
When UCA began the Division I process, the student-athletic fee was $11.50 per student that included a fee of 50 cents (approved by the Student Government Association) to help fund the men’s soccer program while it searched for a conference home (the Southland Conference does not offer men’s soccer). That soccer program will have auxiliary membership in the Missouri Valley Conference next season. The extra 50 cents on the athletic fee went away last year but the SGA replaced it with an additional $1.50 to bring the total to $12.50, Teague said the fee will increase to $14 for next year.
“But we do not anticipate any additional increase in student-athletic fees for awhile,” Teague said. “And upon gaining full NCAA Division I membership, which we anticipate, and being eligible to receive television and postseason funds from the NCAA, should take care of many of the funding issues along with the guarantee games.”
Log Cabin Democrat