From the RG letters:

4/1/2010: From the RG letters:

What do administrators do? So what could be worse than some Duck football players who beat up their girlfriends, steal stuff, get drunk, do drugs, etc.? I mean, really? What could be worse?
Well, I think I know: certain people who get $2.3 million in severance pay (for what?) and former administrators who pull in $30,000 a month (for what?) while students pay higher tuition and underpaid faculty try to figure out what the heck those administrators do anyway.
I didn’t know what the heck they did when I joined the University of Oregon faculty in 1976. And retired now, I still don’t know! I do know that there are lots of administrators. Administering, I guess.
Go Ducks! Just don’t ask me where.
Barbara Dale May
Eugene

Grier’s explanation to the OUS Chancellor and Board President

3/31/2010: FWIW, UO General Counsel and Oregon Special Assistant Attorney General Melinda Grier tries to explain things to the OUS Chancellor and Board President, prior to the board meeting tomorrow, which now has this item as #1 on the agenda. Her letter below is courtesy of the Oregonian. From my reading Grier is saying that there was a verbal agreement on a 3 year contract, but that no one will even claim that verbal agreement included any promise Bellotti would be paid anything if he stepped down voluntarily. As to how we got from story A to story B, well it certainly doesn’t make anyone look good, and it probably leaves Lariviere owing Grier one, which is real bad news for UO.

Grier now says:

“A spokesperson for UO misspoke when she told a reporter there had been conversations between Bellotti and Pres. Lariviere regarding Bellotti’s contract to assume the position of athletic director.” 

She’s talking about this statement (from an earlier RG story):

“Richard (Lariviere)’s decision was based on those conversations he had with Mike Bellotti in July,” (UO Spokesperson Julie Brown) said. “He also took into consideration the current circumstances with the ESPN opportunity as well as the contributions over the 20-plus years Mike Bellotti had at the athletic department.”

 That story also quotes Bellotti as saying

 that he had a “handshake agreement” with Kilkenny and Lariviere concerning the payout.
“There was never a written contract that I signed,” he said. “There were some oral agreements.” There were also some “bullet point agreements” with Kilkenny, Bellotti said, but he would not elaborate on them. 

Grier now says that handshake never happened but that Bellotti will get his money anyway. She also says:

Kilkenny had negotiated salary, and there seemed general agreement that Bellotti’s first-year salary April 2009 – March 2010 would be $975,000; thereafter, it would be $675,000 per year.

Which is weird because the official UO data here lists his fall 2009 salary as $350,000, plus another $325,000 in endorsement payments – not quite $975,000.

Grier is probably right in saying that the payoff money isn’t coming from taxpayer funds though. Apparently it’s coming from Knight’s Athletic Legacy fund. Of course, Frohnmayer told the faculty and the legislature that fund would be used as security for the $200 million in Matt Court bonds. See more from the excellent reporting of former UO undergrad Ryan Knutson, here.

March 31, 2010
George Pernsteiner
Chancellor, Oregon University System
111 Susan Campbell Hall
Eugene, OR 97403

Paul Kelly, Jr.
President, Oregon State Board of Higher Education
c/o Garvey Schubert Barer
121 SW Morrison Street, 11th Floor
Portland, OR 97212

Dear President Kelly and Chancellor Pernsteiner:

In recent days, there have been a number of reports in the media concerning the separation agreement reached between the University of Oregon and UO Athletics Director Mike Bellotti. I have prepared this memorandum and chronology of events in an effort to clarify the series of actions that led to the creation of this agreement.

In November 2008, Mike Bellotti expressed interest in exploring a potential transition from his position as Head Football Coach to the role of Athletic Director with Chip Kelly, then Offensive Coordinator, assuming the head coach position. President Dave Frohnmayer authorized then Athletic Director, Pat Kilkenny, to explore the possibility with Bellotti. Kilkenny had agreed to serve as athletic director through June 2009 but did not desire to extend his contract beyond that time.

Kilkenny and Bellotti explored the potential transition with Kelly who was interested. President Frohnmayer and Athletic Director Kilkenny announced the succession plan December 2, 2008. The date of the transition was agreed to be subject to Bellotti’s decision when he wished to step down as coach. Kilkenny and Kelly negotiated the terms of Kelly’s subsequent contract as head football coach, which they memorialized in a term sheet agreement signed in December 2008.

In March 2009, Bellotti indicated that he was considering stepping down as head football coach prior to the beginning of spring term. Bellotti decided to initiate the transition at that time, rather than waiting until 2010 or later, in order to make an announcement prior to the end of winter term so that the football players would learn of his decision before they left campus for spring break. Bellotti believed it was critical to inform the team of his decision before spring practice began. During the week of March 8, 2009, Bellotti talked with President Frohnmayer as he was making his decision, envisioning a meeting with the team Friday, March 13.

March 12, Bellotti informed Frohnmayer that he had decided to go forward with the transition.

Spring term was intended to be a transition period when Bellotti and Kilkenny could overlap and Bellotti would have a chance to orient himself to the athletic director position. Frohnmayer authorized Kilkenny to negotiate a salary for Bellotti. The first-year salary negotiated was intended to transition Bellotti from his compensation as head football coach, slightly over $1.9 million in 2008-2009, to his athletic director’s salary. Bellotti and Kilkenny agreed Bellotti would be paid $975,000 in salary during the first year (April 2009-March 2010). They discussed additional compensation during that first year only that would be equal to the difference between his salary of $975,000 and his previous year’s compensation.

When President Lariviere took office in July 2009, he assumed that contracts with Bellotti were in place and had no conversations with Bellotti about his contract. A spokesperson for UO misspoke when she told a reporter there had been conversations between Bellotti and Pres. Lariviere regarding Bellotti’s contract to assume the position of athletic director. During early winter, Bellotti told President Lariviere that ESPN had approached him to consider a position as a color commentator. Bellotti had provided color commentary on Oregon Sports Network UO football game broadcasts during the fall and had received acclaim for the excellent quality of his work. At this time, President Lariviere determined that it was in the university’s best interest to expedite this transition and find new leadership for the athletic department. He subsequently began to negotiate with Bellotti regarding the terms of their mutual agreement for Bellotti’s separation of service.

When I learned of their intent, I began in earnest to search for a term sheet or other memorialization of the terms of Bellotti’s agreement. I had previously made requests but had not received anything, although there seemed to be a general assumption that such a term sheet existed. The terms and conditions of all UO unclassified employees, including coaches, are covered by extensive Board Administrative Rules, UO Administrative Rules and policies. Most employees, including most coaches, receive an annual notice of appointment, which they are asked to sign and return. A few employees, including a few coaches whose employment agreements contain terms in addition to the standard terms and conditions, are given more extensive contracts in lieu of standard notices of appointment. Until those more extensive contracts are fully negotiated and executed, the terms of employment are those in Board and UO Administrative Rules and policies and provisions contained in the agreed to term sheets.

It became apparent that no one could produce a term sheet. Kilkenny had negotiated salary, and there seemed general agreement that Bellotti’s first-year salary April 2009 – March 2010 would be $975,000; thereafter, it would be $675,000 per year. There was not agreement regarding other terms or conditions. It was Bellotti’s belief that, during the first year of his contract (April 2009 – March 2010), he would receive the additional compensation equal to the difference between his previous and current year’s compensation. This belief seemed reasonable in the general context of the discussions that occurred in the spring of 2009.

There was not general agreement around other terms. Bellotti believed he was promised a five-year contract. Kilkenny was not authorized to negotiate the length of the agreement. Frohnmayer had no conversations with Bellotti regarding the length of his contract. I recalled general discussions, not necessarily with Bellotti, of a three-year term. Employment contracts longer than three-year’s duration require approval of Chancellor Pernsteiner. Our office was not asked, as would be standard, to prepare a request for Chancellor Pernsteiner’s approval. As a result, President Lariviere assumed a contract term of three years, of which, Bellotti had already served one year. The $2.3 million represents the two year’s salary remaining on a three year contract at $675,000 per year plus the additional first-year compensation that was as yet unpaid. A separation agreement containing those terms was signed by both parties and publicly disclosed upon its execution.

Although the sum paid to Bellotti is large, it represents an amount that is consistent with President Lariviere’s best assessment of what would be due Bellotti. This is especially true for a long-time employee such as Bellotti who has served with such distinction and who is held in high regard.

Some have raised concerns that taxpayer funds will be used to pay this settlement. That is not the case, nor will Athletic Department operating funds be used. The UO will rely solely on donor funds for the payments to Bellotti.

I also want to assure you that President Lariviere has made clear his expectation, which I strongly support, to make certain that any conditions beyond those contained in a standard notice of appointment will be memorialized in writing.

Sincerely,
Melinda W. Grier
General Counsel

RG endorses DOJ review of UO

3/31/2010: The RG editors have endorsed Attorney General Kroger’s review of UO’s $2.3 million payment to Bellotti:

… One thing seems clear before justice officials begin their review: The manner in which the university handles its athletic department contracts and other financial dealings is disturbingly informal and secretive. Head coaches routinely work under informal agreements without written contracts for inexcusably long periods of time. Former basketball coach Kent, UO football coach Chip Kelly, baseball coach George Horton and others have all worked for extended periods without formal contracts. While Bellotti said he was surprised the university did not ask him to sign a contract as athletic director, he noted that he had worked as football coach for as long as two years under handshake agreements.

Requests by this newspaper for copies of coaching contracts are typically met with a response that the final contracts have not been finalized and remain under review by UO general counsel Melinda Grier’s office — and are not available to the public.

That’s inexcusable for a state university, which should be a model of transparency. The fact that significant portions of athletic department contracts often are underwritten by boosters through donations to the UO Foundation is no excuse. In fact, the UO’s secretive handling of contracts has helped fuel allegations by critics who charge that the athletic department has become a Nike subsidiary whose major decisions, including contract terms, are often made in Beaverton. …

Presumably anything that the AG’s office learns from its investigation will be a public record – so we may learn a little about whether it was Lariviere or Frohnmayer who approved this, and what role Melinda Grier had. I don’t expect a very thorough review though – Melinda Grier’s husband, Jerry Lidz, was appointed Solicitor General by John Kroger just last year. The AG’s office already knows how UO does its business, and they know a thorough review would turn up too much trouble.

As the editorial suggests, the issues at UO go well beyond this deal.  By the time he stepped down Frohnmayer was receiving more than half his own pay in the form of anonymous contributions laundered through the UO Foundation. Lariviere is getting about half his salary this way. The assumption is that these donations come in large part from athletic boosters – but the Foundation is allowed to keep the source secret.

Interim AD Lorraine Davis

3/30/2010: Since 2006, Oregon’s new Interim AD, Lorraine Davis, has been getting paid half time at a $197,278 FTE out of a fund that was originally intended to support retiring tenured faculty while they taught classes for 5 years prior to complete retirement.

When Provost John Moseley, and VP’s Davis and Dan Williams retired ~2006, Dave Frohnmayer set them all up with generous golden parachute contracts, paid from this fund. All of them are still on the books. Instead of requiring them to teach – as the program intended – Frohnmayer came up with administrative sinecures. Moseley is obviously the biggest offender. Despite an OUS audit about the situation, Lariviere has him on the books as “liaison UO to Central Oregon” (sic). We pay Moseley 1/2 time at a $248,941 FTE to liase from his fishing retreat on the Deschutes – you can rent one of his lodges here. We don’t know what Dan Williams is doing for his money.

From this anonymous email we were sent, it appears one of Lorrane Davis’s responsibilities while “overseeing the academic support services for student-athletes”, as President Lariviere’s email below puts it, actually involved proctoring student’s exams at away games:

Professor XXX,

I am writing to discuss a potential conflict for Student XYZ and the
final in your course.  As you may know, the volleyball team has
reached the NCAA tournament.  Depending on the outcome of their play this
weekend, they could be traveling as early as Tuesday next week to the
regional site for the next round.

The team will have to win two matches this weekend to continue in the
tournament.  I’d like to plan as if they will do so.

We have arranged for Lorraine Davis, Special Assistant to the
Vice Provost and former Vice President of Academic Affairs, to travel with
the team to proctor exams. 
I am happy to be a contact regarding the
facilitation of preparing those exams to be sent with Lorraine and your
preferences for how the exam is administered.  Or, if your preference is
not to have the exam taken on the road, I would be happy to assist in
making other arrangements.

By Sunday evening, we will know if the women will proceed or not,
and have more information regarding travel.

Thank you,

“Shawn” (name changed to protect the original author)

Academic Advisor & Tutorial Coordinator
Support Services for Student-Athletes
1237 University of Oregon
Eugene, OR 97403

I wonder if $197,278 FTE is the going rate for proctoring exams? Don’t GTF’s earn $12,000? I wonder if we paid her travel expenses too? This is what they mean when they say the athletic department is financially self-supporting? Somehow I don’t think Interim AD Lorraine Davis is going to be spending a lot of time getting to the bottom of that question! I guess the good news is that after she starts collecting the $30,000 a month AD salary, these payments will go back toward real academic purposes – at least temporarily. 

From: Susan Peter
Sender: owner-deans-dirs@lists.uoregon.edu
To: deans-dirs@lists.uoregon.edu
ReplyTo: Susan Peter
Subject: deans-dirs: Heads Up Alert: Interim Athletics Director selected
Sent: Mar 26, 2010 11:20 AM

The following message is forwarded on behalf of president Richard
Lariviere –

Today, I am announcing that I’ve appointed Lorraine Davis to be the
interim Athletics Director. She will begin April 20 and serve on a
month-by-month basis until a permanent Athletics Director is selected in
a national search. Lorraine has a long, distinguished history with the
university. She started on the faculty in 1972 and retired in 2006 as
the vice president for academic affairs. She is an excellent
administrator who already works closely with the athletics department
team in her current role overseeing the academic support services for
student-athletes. She also chairs the vice provost for enrollment
management search, which is expected to be completed soon, and is deputy
administrator of the E.C. Brown Foundation and Trust, a philanthropic
health education organization. I am confident that she’ll be a strong
leader at this important time for the Athletics Department.

Attorney General reviews Lariviere’s deal with Bellotti

3/29/2010: More on the verbal contract is here. Rachel Bachman of the Oregonian reports:

The Oregon Department of Justice is reviewing the resignation agreement between Mike Bellotti and the University of Oregon, a handshake-based deal that calls for $2.3 million in payments to the former Oregon athletic director.

The agreement was first reported by the Eugene Register-Guard on March 19, the day Bellotti announced he was leaving to take a job at ESPN. Oregon president Richard Lariviere signed it that day; Bellotti had signed it March 16.

Bellotti, who was to be paid $675,000 annually, did not have a written contract during the nine months he spent as athletic director. The departure agreement apparently also was unwritten until shortly before Bellotti resigned.

“A lot of issues, that among them, have been raised in the media,” said spokesman Tony Green of the Oregon Department of Justice. “At this point the attorney general doesn’t have any firsthand information about it, so that’s the purpose of the review.”  

 Mark Baker of the RG has a story on this as well.

As we wrote earlier, UO’s General Counsel Melinda Grier, who approved this sham, is also an Oregon Special Assistant Attorney General. Her husband Jerry Lidz is the Oregon Solicitor General. And Dave Frohnmayer is a former Oregon Attorney General. So it’s pretty safe to say current AG John Kroger is not going to do anything to clean up the situation here at UO.

3/25/2010: Steve Duin of the Oregonian gets the Oregon Attorney General’s office to comment on UO’s deal with Bellotti:

“As a general principle, the attorney general believes oral contracts are inconsistent with government transparency.”

No kidding. Of course UO’s General Counsel Melinda Grier, who approved this sham, is also an Oregon Special Assistant Attorney General. Her husband Jerry Lidz is the Oregon Solicitor General. And Dave Frohnmayer is a former Oregon Attorney General. So it’s pretty safe to say current AG John Kroger is not going to do anything to clean up the situation here at UO.

Athletic Department Transparency

3/29/2010: Now that President Lariviere has apppointed Lorraine Davis as Interim AD it will be interesting to see if we can get more information from the athletic department’s financial situation. Davis’s own salary is a case in point – she’s been getting paid out of the academic budget, while working in large part for the athletic department. I doubt she’s the only person doing this.

Meanwhile Rachel Bachman of the Oregonian reports on the new Nike contract. Looks like a little new money, but nothing close to what it will take to cover the new expenses. Melinda Grier is hiding some details, apparently just because:

The contract, released to The Oregonian after a request under Oregon’s public-records law, shows the athletic department receiving a cash payment from Nike of $500,000 in 2008-09. Nike also was to provide Oregon teams with $1,950,000 in gear that year, and up to $150,000 in extra gear as requested by athletic-department officials.

The new agreement supersedes a seven-year deal with Nike that ran from 2003-2010, and shows significant increases in each category in 2008-09: up $250,000 in cash, $550,000 in team gear and $50,000 in extra gear.

But the value of the nine final years of the contract isn’t known, as UO officials blacked out the dollar amounts on the contract.

It was not clear Friday why Oregon would release to The Oregonian a full copy of the previous deal, as general counsel Melinda Grier did in Year 4 of the seven-year agreement, and a redacted copy of this one. But in recent years, Oregon has argued that its marketing and endorsement deals with private companies are trade secrets.

 And finally (from a comment, thanks!) there’s this sensible letter in the RG today: 

Bellotti payout answers needed

As a Duck Athletic Fund supporter and alumnus, I am greatly troubled by the $2.3 million payout to Mike Bellotti. In my profession (city-county management) it is a serious breach of ethical conduct to voluntarily leave a managerial position less than two years after acceptance of the job. In addition, the only time that severance payments come into play is if the manager is fired. Also, it is highly irregular to pay any form of severance in the public sector when the individual is moving on to other lucrative employment. Coaches and athletic directors may fall into a different category, but as role models in the state’s flagship public university, they should abide by similar ethical, if not legal, standards of openness and fairness to the public they serve.

I had great respect for Bellotti as a football wizard and public relations master, but we should take into account that he was already the highest paid public official in the state of Oregon’s history. As a beneficiary of the Public Employees Retirement System, taxpayers will already be footing the bill for his unprecedented retirement benefits for the remainder of his life. Shouldn’t those benefits also be made public as part of this golden parachute?

The fact that this agreement was never reduced to writing or made public also raises serious questions that should be investigated by the attorney general’s office. Supporters of the University of Oregon deserve better. I certainly will be looking for better answers before I write my next check to the UO.

Steve Bryant
Albany

Green Power or Education?

3/29/2010: From Bill Graves in the Oregonian:

Oregon leaders expressed frustration and anger Friday after learning that thousands of college students will not get need-based state scholarships because grants awarded this year exceed the state budget by millions of dollars more than expected.

The Oregon Student Assistance Commission reported to the Legislature in February that it had committed $9.7 million above its $57 million budget this year to scholarships known as Oregon Opportunity Grants. This week it reported that overcommitment has swollen by $5 million to $9 million more.

Gov. Ted Kulongoski expressed his exasperation in a stern letter to the commission, which he appoints.

“The belated revelation of another over commitment of this magnitude is disturbing to me,” he wrote in the letter, dated Wednesday. “I am also concerned about its impact on the credibility of the program — with the Legislature, our educational institutions and the public.”

Last year Kulongoski vetoed a bill to cut back on his Green Energy, after it went $165 million over budget. Then of course there’s spending $250,000 on signs for the Pape Beltine. Odd priorities.

Diversity Resources

Suggestions welcome:

AAU/AAAS Handbook on “legally sustainable diversity programs”
http://www.aaas.org/news/releases/2010/0507diversity.shtml

With the help of an extensive appendix outlining key legal opinions, the handbook “provides examples of field-tested tools for diversifying faculties and student bodies,” Chubin said during the teleconference.
The tools expand the notion of diversity beyond race or gender, said Keith, by considering factors such as socioeconomic status and a person’s success in working with and fostering participation by people from a broad range of backgrounds.
With this new focus, she said, campus administrators can build diversity by recruiting people “who have either scaled barriers themselves or broken down barriers for others.”

New Union info:

3/26/2010: It’s been a while since we heard much from the OA/Faculty Union folks, but recently they have posted 3 informative pieces on their website. These deal with three of the more controversial issues: merit pay, shared governance, and what will happen if the union includes faculty and OA’s. From the Union website:

Examples of How Merit Pay is Treated in Collective Bargaining Agreements. Many Collective Bargaining Contracts preserve merit pay as was documented in the book Managed Professionals; Unionized Faculty and Restructuring Academic Labor by AAUP General Secretary Gary Rhoades. In this article by Craig Flanery, AAUP Senior Program Officer, examples of how merit pay is treated in several contracts are given. The institutions cited have AAUP or AAUP/AFT as their Collective Bargaining (CB) agents. Flanery also includes language in the contracts about sharing salary information for salary studies. To view the article click here.
Examples of How Shared Governance is Treated in Collective Bargaining Agreements
This article, created by Craig Flanery, AAUP Senior Program Officer, gives several examples of how shared governance is treated in collective bargaining contracts. To view or download the file click here.
This article discusses who is included in the collective bargaining unit at SUNY Buffalo, SUNY Stony Brook, Rutgers University, and the University of Florida.

Good old boys at play

3/24/2010: I’ve always thought Frohnmayer’s golden parachute gig was pretty corrupt. OUS Chancellor Pernsteiner and his lawyer Ryan Hagemann kept the negotiations secret, and when they finally released the contract showing that UO would pay Frohnmayer $245,700 for 35 hours of teaching – per year – it left out many of the other perks he would get, like another $186,000 for “expenses”. More info is here.

But it turns out Frohnmayer and Pernsteiner are amateurs. Greg Bolt of the RG has an amazing story about Bellotti’s $2.3 million parachute:

The UO had no signed agreement with Bellotti on the terms of his employment or departure when he took over the job of athletic director last summer, yet the UO says it will pay the former football coach $2.3 million to fulfill unspecified “commitments” that were never put on paper.
Bellotti negotiated the terms of his employment orally with UO President Richard Lariviere last July, when both of them were beginning their new jobs, a UO spokeswoman said. Those terms are not being made public. Less than nine months later, the two settled on the details of a deal allowing Bellotti to leave for a television job with the multi-million-dollar payout.
Only the resignation agreement was committed to paper. That document states that the UO will pay Bellotti $2.3 million “to fulfill commitments made to Bellotti at the time of his employment as intercollegiate Athletics Director,” but it does not say what those commitments were.
Lariviere was preparing for a trip to Asia and was not available for comment this week. Reached by phone Friday, Bellotti referred questions about the financial terms of his employment agreement back to the university administration.

There are many more strange details in Bolt’s story. And thanks for posting the contract Greg!

You guarantee him 7%? The money will apparently come from Knight’s $100 million donation pledge. When he was selling the legislature on the $200 million arena bond package, Frohnmayer said this money would be used to guarantee the $18 million annual bond repayments that start next year.  Lariviere has some explaining to do. Avoiding Bolt’s questions is pretty chickenshit.

Why doesn’t Knight simply give Bellotti the $2.3 million himself? Taxes. By going through the UO Foundation, the donations are tax deductible to Knight, saving him 35% on Federal and 12% on Oregon taxes. Bellotti will have to pay, but he avoids the 10% federal gift tax. Nice scam.

Will UO have an open search for the AD and BB Coach?

3/23/2010: So far I haven’t seen much on how Oregon House bill 3118 will impact hiring for the new coach and AD. This bill took effect Jan 1, the text is here. The official summary:

WHAT THE MEASURE DOES: Requires public institutions of higher education to interview qualified minority candidates when hiring head coach or athletic director unless institution is unable to identify qualified minority candidate willing to interview for position. Sunsets January 2, 2020.

BACKGROUND: According to the 2006-2007 Racial and Gender Report Card that is published annually by the Institute for Diversity and Ethics in Sports based at the University of Central Florida, whites held 90.6 percent, 89.5 percent and 93.4 percent of all National Collegiate Athletics Association (NCAA) head coaching positions for men’s sports in Divisions I, II and III, respectively. In 2008, there were four African-American head coaches out of 119 in the Division I Football Bowl Subdivision schools. On women’s teams, whites held 89.6 percent, 89.9 percent and 92.9 percent of all head coaching positions in Divisions I, II, and III, respectively. The overall percentage of white male and female student-athletes in 2004-2005 was 61.7 percent and 70.1 percent respectively. 

House Bill 3118-B was modeled on the “Rooney Rule” that was adopted by the National Football League (NFL). That rule, named after Pittsburgh Steelers owner Dan Rooney, specifies that NFL teams must give fair interviews to minority candidates whenever a head-coaching position comes open. 

Actually, George Schroeder in the RG had a good column on this last week:
… But seriously, keep in mind the last three high-profile openings at Oregon were filled by white guys, and essentially without a search. Bellotti moved up to athletic director. Chip Kelly moved up to head football coach. Paul Westhead was hired as women’s basketball coach as a friend of Pat Kilkenny. Each hire was justifiable. Each guy was qualified, and might have been the best fit. But there wasn’t a traditional search, or much chance provided to any other qualified candidates.

I wonder what UO’s VP for Diversity Charles Martinez is going to do about this?

More on coaches

3/23/2010: Ron Bellamy of the RG has a story explaining how UO will soon be paying over $2 million per year to former athletic staff, at the same time they look for a new AD and basketball coach. Presumably the money to cover this is going to come in the form of tax deductible contributions to the UO Foundation. (But apparently this time not from Kilkenny). Meaning taxpayers will pay about 50% of the cost. Maybe these stories will give a little momentum to Senator Grassley’s bill to remove the tax deductions for athletics.

Red Ink for athletics

3/20/2010: Bellotti has now resigned – giving UO 2 weeks notice to find a replacement. He and Kilkenny left the athletic department over budget and with no financial reserves. There will be an easy $20 million per year in new expenses coming on line – arena bonds, new basketball coach, new high salaries for all the assistants, etc. Knight is committed to $20 million per year in donations for the next 5 years, but other donors are apparently not coming through as planned. Good time to split, I guess. And according to Ron Bellamy of the RG, President Lariviere has agreed to pay Bellotti another $2.3 million after he steps down, apparently on the basis of verbal promises made by Frohnmayer and Kilkenny.

Ken Goe of the Oregonian writes:

So, who is running the show? Knight? University President Richard Lariviere? Former interim athletic director Pat Kilkenny, a wealthy, retired insurance executive and still an athletic department adviser? General Counsel Melinda Grier?

Grier seems to have her fingerprints on any number of controversial decisions, including that $2.3 million gift Bellotti will take with him as he walks away. 

3/7/2010: Greg Bolt of the RG has a story on the athletic deficit today. Bolt’s story avoids the logical followup questions. For example, when Bellotti says:

At this point we’re doing OK,” he said. “Are we out of the woods? No, simply because of the economy. And we had some tuition increases, and all those things affect our bottom line.” The athletic department pays the UO the value of scholarships the athletic department awards, so when tuition goes up, that increases the department’s costs.

The logical followup would be “Yes, those economists really screwed you over – not to mention all those people who lost their jobs – with that recession thing.  But tuition costs went up by $820,000, $230,000 of which was covered by a one time increase in what you are given from state lottery funds. Your overall spending, however, is up by $3.2 million. How much did coaches salaries increase? How much will they increase in the current budget? Can I see your current budget? Do you have one?”

Similarly, when OUS Finance VP Jay Kenton says:

“This is not indicative of a problem, and in no way, shape or form is this a major issue,” he said. “It’s kind of a minor timing issue.”

It might be good to remember that Kenton is not going to say he screwed up and let the athletic department break the rules. Contrast Kenton’s statement with what the State Treasurer’s report on the Arena (prepared by Bill McGee of the DAS) says:

“The scenario leaves the Department with a annual cash balance of less than one percent of projected expenditures through 2031, which is low for a department that is expected to be self- sustaining. By comparison, Board of Higher Education policy sets a goal of five to fifteen percent for total institutional cash balances.”

Emphasis added – because actually the balance is now negative 1% before they have started paying any of the arena bonds. The State is saying the athletic department would need to set aside ~$6 million in cash reserves to meet the standard the OUS Board uses.

Bolt’s overall conclusion seems pretty reasonable though – with the $20 million per year in Knight donations, athletics can cover this deficit and its other new costs, but barely. Their plan seems pretty transparent and perfectly normal – spend every penny they can bring in on higher salaries for themselves. They just went a bit too far this year is all. Next year they’ll be replacing Kent. This is going to be just fine, I’m sure. Just like those economists told us about the housing bubble.

None of these stories have reported on whether or not the athletic department has actually been setting aside the $1 per ticket surcharge for Arena repayments that Frohnmayer told the legislature he would institute. Does anyone know about that?

3/4/2010: From Bill Graves at the Oregonian:

Despite winning football seasons in recent years, sports finances for Oregon State University and the University of Oregon both fell in the red by the end of the last fiscal year, according to a report the State Board of Higher Education’s finance committee will review Friday.

Oregon State intercollegiate athletics’ ending balance, what the board calls working capital, was $5.9 million in the hole as of June 30, 2009, and the University of Oregon’s sports programs posted a $642,000 deficit.

State Board policy requires universities to keep their ending balances positive. The board probably will ask administrators from each university to come up with a plan to bring working capital, current assets minus liabilities, into the black. …

The university attributes its negative ending balance last year to the recession and, as with Oregon State, problems collecting on $2.2 million in pledged donations. One factor in the Ducks’ favor in the next budget period — appearing in last season’s lucrative Rose Bowl, which was played on Jan. 1.

Oregon’s athletic department officials did not respond to requests for comment on Wednesday. But in the report to the State Board of Higher Education university officials wrote, “Due to the weakened economy, the cash for all of the pledges had not been received prior to year end.”

The deficit is old news but there are many odd things here. This report ends in June 2009. At that point UO’s athletic department had increased its spending $5 million compared to the previous year. So some but not all new spending – e.g big raises for the coaches – is in the budget. This $5 million in new spending – not $ 2 million in missing pledges – is the obvious cause of the deficit, not “the weakened economy”. More of a problem, there’s lots of new spending coming that is not in this report: like the Arena bond repayments, at $15 million a year and Kelly’s new contract. There’s some revenue too of course, from the Rose Bowl. Meanwhile, why haven’t Knight’s “Athletic Endowment” funds been tapped? Are they here yet? The AD plan for dealing with this deficit – which will be a public record – might be pretty revealing. Meanwhile some info is available in the OUS Board meeting agenda – see p 93, here, highlights below:

Summary

The UO Athletics working capital, as of June 30, 2009, was a negative $642,000, a decrease of $1.4 million from prior year. The UO Athletics ended FY 2009 with negative working capital and is not in compliance with the Board’s directives relating to deficits. The deficit reflects a cash flow issue. The UO Athletics is addressing this issue and ensures compliance with Board policy. The UO Athletics continues to operate without any direct institutional support.

The UO Athletics departmental debt burden for FY 2009 is 5 percent. Although this ratio is typically used on an institution-wide basis, a higher debt service ratio indicates that an entity has less flexibility to manage the remaining portion of the budget and to fund other strategic initiatives. The UO’s 5 percent debt burden ratio for FY 2009 is lower than the generally accepted threshold of 7 percent for an institution, as a whole. It is noted when the arena project full debt payment begins in FY 2012, the debt burden ratio will be approximately 25 percent.

UO ATHLETICS RESPONSE TO FY 2009 WORKING CAPITAL DEFICIT

As with nearly all sectors of private and public industry, the UO Athletics was negatively affected by the recent and ongoing downturn in the national economy. The Net Operating Loss shown on these financial statements is reflective of that. At June 30, 2009, nearly $2.2 million in pledges made to the Duck Athletic Fund, a component of the UO Foundation, remained outstanding. In prior years, these pledges were realized in a timelier manner and the cash transferred to UO Athletics prior to year-end. Due to the weakened economy, the cash for all of the pledges had not been received prior to year end, but was in-hand at the UO Foundation prior to August 31, 2009, and was transferred to UO Athletics in October 2009. This timing difference related to pledge fulfillment was both unprecedented and unanticipated. It also reflects a misunderstanding between UO and OUS about how pledges to be paid to the UO Foundation could be reflected on the UO Athletics books.

Meet the Pres

3/16/2010: If anyone learns anything interesting from these sessions, please post a comment or send an email to uomatters@gmail.com. I can’t make them. I remember Frohnmayer used to hold these regularly, until the questions got too pointed.

Good morning,

This is a reminder that today President Lariviere is holding two sessions to meet with faculty and staff.  The first is at 10 a.m. in Gerlinger Lounge and the second is at noon in the EMU Fir Room.  There is no formal agenda, this is simply an opportunity to sit down and talk with the president, to ask questions and express your views.  We will schedule a third session after spring break, specifics to be determined.  At any time you can contact the president at pres@uoregon.edu.

Office of the President