UO won’t release auditor’s instructions for upcoming athletics audit

9/17/2015: Move it along professor, nothing to see here. Really?

From: “Thornton, Lisa” <[email protected]> Subject: Public Records Request 2016-PRR-078
Date: September 17, 2015 at 11:04:14 AM PDT
To: [email protected]
Reply-To: [email protected]

09/17/2015

Dear Mr. Harbaugh-

Records responsive to your request made 9/15/2015 [for a copy of the instructions to the auditor showing what he will examine, etc.] are exempt from disclosure under ORS 192.501 (37).  However, the university has chosen to provide you with the preliminary objectives of the upcoming athletics risk assessmentt, which you can find below.

The Objectives

•  To gain an understanding of the athletics program in order to identify inherent risks.

•  Identify systems and processes along with related controls that are intended to mitigate these risks.

•  The results of this work will be used to develop a multiple year, risk based audit plan. 

The office considers this to be fully responsive to your request, and will now close your matter. Thank you for contacting the office with your request.

Sincerely, Lisa Thornton, Office of Public Records

The DOJ’s Public Records Manual says, regarding ORS 192.501 (37):

Enacted in 2011, this exemption allows, but does not require, public bodies to decline to disclose documents and information related to audits of the public body (or audits the public body is conducting with respect to other public bodies) while the audit is ongoing. In order to qualify for this exemption, the auditor or audit organization must be operating under “nationally recognized government auditing standards,” and the audit must still be ongoing. An audit is ongoing when it has not been abandoned, and the final audit report in accordance with nationally recognized government auditing standards has not been issued. Note that this exemption expressly states that it “does not prohibit disclosure of a draft audit report that is provided to the audited entity for the entity’s response to the audit findings.”

9/10/2015: Page down for latest email from UO auditor Brenda Muirhead.

5/20/2015: Audit of athletic dept risks due this fall – and another cut to Duck subsidies?

The last audit cut the subsidy for the Ducks by $555,227, recurring. How much will this one save?

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Students want jocks to pay more for band

Rob Mullens is not having a good year. First Chip Kelly left him. Then Jamie Moffitt raised his overhead $500K, thanks to our persistent questions. Then Kitzhaber announced he would shift the $900K subsidy the lottery gives him for athletic scholarships to the academic side. And now student government wants him to pay the $150K subsidy for the marching band. On the plus side, he’s saving $1.7M a year on Helfrich’s contract, and Kelly owes him $3.5M for leaving early. So stop bitching about money, Rob.

On the other hand, read this ODE letter from the Head drum major, explaining all the non-athletic stuff the band does.

Chip Kelly to leave UO for Eagles, Mullens to pay off overhead bill.

12/1/2012: That’s the rumor from the coaches’ hot tub. If true, Kelly’s contract requires him to pay UO $2.5 million. VPFA Jamie Moffitt will make sure this goes directly to the academic side, to cover the AD’s 3 years of overhead underpayments, and reimburse our students for half this year’s Jock Box costs. Right, Jamie?

If Kelly leaves soon enough, he might even avoid having Rob Mullens dock his pay for the costs we’ve had to pay for the Willie Lyles investigation, and any NCAA fines:

UO Matters cuts athletics subsidy by $555,227 a year

11/9/2012: Forgive me for bragging a bit: I want this in my service report for post-tenure review. Starting last fall I posted a series of stories on the UO athletic department’s overhead rate, using documents obtained with public records requests and petitions.

While athletics had originally been scheduled to pay 7%, instead they were only paying 3%. Eventually I traced this to a secret agreement between Dave Frohnmayer and his athletic director Pat Kilkenny, signed 2 weeks before Frohnmayer stepped down as Pres. Steve Duin had a good column about it in the Oregonian. Jamie Moffitt knew about this deal, but she and AD Rob Mullens kept the Senate IAC in the dark until the public records requests made her reveal it.

I started digging into overhead after hearing Mullens and Moffitt (at the time in charge of athletics finances) tell the IAC that the athletic department is “self-supporting” – and then finding out their math depended on sticking the academic side with the bill for the Jock Box and the NCAA lawyers. Made me wonder what other crawly things were hiding under that rock. Overhead turned out to be one, though there are plenty of others. 

Bob Berdahl tried to shut down the IAC over these sorts of questions. But now UO has a new president, Mike Gottfredson, who has as of today gone up several points in my book, though not a full letter grade. OUS rules forbid overhead subsidies and require that overhead rates be established using an “auditable” procedure. So Moffitt had no choice but to revisit the calculations – especially with a president who wouldn’t look the other way. Today her report came out, here:

Athletics will have to pay $555,227 in new money to UO every year – funds now available for the university’s other functions. Yippee. Of course, this means that they owe us $1,665,681 for the past three years. Not to mention the other millions in subsidies we have paid them and are still paying them. The Mac Court deal, for example, is costing us $467,000 a year. Jock Box tutoring $1,830,000. And there are some other expensive problems with how the new rates are calculated, and what they exclude – mostly things that benefit athletics and cost other units.

But this is a start. And a big payoff for UO’s academic side. So next time you hear Dave Hubin complaining about the $50,000 that my public records requests have supposedly cost UO – he still won’t let me see that list – ask him about the benefits. 

student vs. athletic department overhead rates

3/13/2012: Always a thrilling topic. This Emily Schiola story in the ODE argues UO has overcharged the student government by $100,000 on overhead rates.

Here’s a little history. The assessment on the student government ASUO expenditures (Incidental Fees) has been increasing from 2% to 7%. Athletics pays 3%, nominally. Their effective rate is more like 2%, because many of their expenditures are exempt.


Steve Duin’s column in the Oregonian in November covered the basics:

As Laura Hubbard, associate VP for Budget & Finance, noted at the time, those changes were necessary to meet Oregon University System “guiding principles” in allowing indirect costs that are “reasonable, properly allocable, auditable and applied consistently across campus.” 

None of that applied to the jocks, of course. Athletic’s low rate was the result of a secret deal between Frohnmayer and Kilkenny, signed two weeks before Frohnmayer retired. That contract is here and is full of unusual things, amounting to several million dollars in subsidies for athletics. I wonder what Frohnmayer got in return for signing it?

It was so secret even UO’s VP for Finance Frances Dyke never saw it – or so she claims. Guess who has to pay the rest of these costs for them. And what do they do with this ~$3 million subsidy? First thing, everybody gets a car! Then more fat raises.

New CFO Jamie Moffitt is now redoing the overhead rate setting process to try and follow the OUS rules that rates be “reasonable, properly allocable, auditable and applied consistently across campus.” 

 So, I wonder if she will include the athletic department’s unusually high legal costs, set-asides for future MTBI liabilities, their portion of public records costs, the $200,000 or so for NCAA representative Jim O’Fallon’s salary and office costs, the $2 million jock box subsidy, and a fair proportion in the $2 million UOPD budget increases in her calculations?

sorry, more athletics overhead subsidy

10/18/2011: I’m tired of this too, but there’s big money at stake: About $3.2 million a year. More than the $2.8 million faculty raises will cost, more than the $2.4 million Frances Dyke spent remodeling Johnson Hall, more than the $2 million we spend on the Jock Box, more than the $1 million extra we’re now spending on the campus police.

Thanks to the Internet Archive’s Wayback Machine, I’ve now pinned the date for the decision to give athletics this $ multi-million break to sometime between Dec 2010 and Oct 2011. The old rate plan is described at http://web.archive.org/web/20101229003844/http://ba.uoregon.edu/content/department-assessments while the new plan, with the special athletic department only discount, is at http://ba.uoregon.edu/content/department-assessments. The special deal for athletics is the only big change. Yesterday I asked VPFA Frances Dyke, whose office is in charge of setting these rates, if she had any documents explaining this. Her response:

This switch was made sometime after April 2010, when Jamie Moffitt was appointed to clean up the athletic department’s finances. It looks to me like she cleaned them up by passing costs off to the rest of the university.

Given the OUS rule that the procedure used to set these rates must be “Auditable – recalcuable based on documented principles and procedures” I’m guessing that somewhere there is an explanation better than “I do not.” So I’ve asked Ms Moffitt to search her files for the documents. We’ll see what comes up.

"loss of institutional control" of athletic budget

10/17/2011: (revised) Two weeks ago we wrote how Duck athletics pays just half what other UO units pay towards UO’s administrative costs. How did this happen? In late 2007 a UO task force chaired by AVP Laura Hubbard recommended all “Auxiliary” units (a term which is explicitly defined to include athletics) pay according to this schedule: (Full report here.)

This policy was announced and posted on the BAO website. Then suddenly the numbers got changed. They added two new categories, one for incidental fees students pay to fund the EMU, etc. The new policy is here, and the chart below from it makes it explicit the students will pay the 7% rate as other auxiliaries. 

The other new category is Athletics. They get a permanent 3% rate. This one special subsidy for athletics costs the rest of UO about $3.2 million a year. For comparison, the recent faculty raises cost $2.8 million. 

 
We started digging into this after hearing Jamie Moffitt and Rob Mullens claim that the athletic department is “self-supporting” – and then finding out their math depended on sticking the academic side with the bill for the Jock Box and the NCAA lawyers. Made me wonder what other crawly things are hiding under that rock.  
As it turns out there’s an OUS policy on overhead rates. A very specific policy, which I’m guessing came down because of some IRS ruling:

.170 GUIDELINES FOR DEVELOPING INDIRECT COSTS ALLOCATION METHODS
Allocation of indirect costs should be based on a process that is reasonable relative to the activity and the related costs. OUS institutions will each develop their own methodologies for allocating indirect costs within the guiding principles listed below:

  • Reasonable – costs which are applicable to the overall operation of the activity
  • Properly allocable – costs are allocated in accordance with the relative benefits received by the auxiliary enterprise
  • Simple and easy to understand
  • Auditable – recalcuable based on documented principles and procedures
  • Objective – Based on relevant and reliable financial and other information …
I love that word “Auditable”. As usual, we got the brushoff from the athletic department’s Executive Senior Associate Athletic Director for Finance and Administration Jamie Moffitt when we asked for an explanation for why athletics gets a break. The administration is claiming there are no public records explaining the change from 7% to 3%. This could only be true if it was some sort of verbal backroom tit-for-tat deal. Between whom, and for what?
We’ll keep poking around, and post whatever comes crawling out. Probably not going to be pretty though.