Secret Frohnmayer deal on athletics subsidies

11/5/2011: Details in this Steve Duin column in the Oregonian, coming out in print Sunday:

The memo sets out the hoops the university jumps through to maintain the illusion (that athletics is self-supporting). The administration, for example, generously “allows” athletics to bank revenue from above-ground, off-street parking in designated lots during sporting events.

Yet the administration is required to pay athletics each year “for exclusive use of the presidential suite and 80 Club Level seats at Autzen Stadium for each home football event.” In the last three fiscal years, that cost the administration $375,000 annually.

The 3 percent assessment cap is buried at the bottom of the memo, and flies in the face of UO’s 2008 restructuring of assessment rates. 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.”

The new rate schedule required auxiliaries — which include university housing and the health center (and athletics) — to pay overhead rates that escalate from 3 percent in 2009 to 7 percent in 2013. Less than a year later, however, Kilkenny and Frohnmayer signed off on a deal to cut athletics a break through 2012.

The secret agreement between then President Frohnmayer and Athletic Director Pat Kilkenny, signed two weeks before Frohnmayer retired, is here and is full of unusual things, amounting to several million dollars in subsidies for athletics. It was so secret even UO’s VP for Finance never saw it – or so she claims. And what did Kilkenny give Frohnmayer? About $500,000 for the Fanconi Foundation. It’s a very sad story on many dimensions.

Scholarships: $6 million for academics, $9 million for athletics

10/20/2011: Institutional Research reports that last year the UO Foundation spent ~$6 million on Academic, merit, and need scholarships.

Puts that $3.2 million overhead subsidy for athletics into perspective. Oh yeah, the Foundation spent almost $9 million on athletic scholarships. And of course the athletic department spent $2 million of general funds on the Jock Box tutoring. Athletes only.

athletics subsidies

10/19/2011: I’m still getting the runaround on how the athletic department’s overhead assessment got cut from 8% to 3%. Jamie Moffitt, Frances Dyke, Brad Shelton, and Laura Hubbard are all claiming they have no documentation on what was supposed to be an “Auditable” process. Actually, Moffitt is being a little cagier – she won’t say if she does or doesn’t. Huh?

Meanwhile it seems that one reason for the increases in parking fees has been to subsidize the underground arena parking and the new athletes-only lot across Franklin from the Jock Box. If anyone has any tips on this, please put in comments or email to [email protected] As usual, I will not post comments that start with “do not post”.

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 while the new plan, with the special athletic department only discount, is at 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:

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.

UO’s "self-supporting" athletics department

pays half what other UO activities pay towards UO’s administrative costs:

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. 10/6/2011.  
As someone pointed out, the assessment on the student government ASUO expenditures (Incidental Fees) is increasing from 2% to 7%. Athletics pays 3%, and apparently always will. Why do the students pay more than Rob Mullens?

Athletic transparency

7/27/2011: George Schroeder of the RG calls for more of it, regarding the NCAA investigation. The Maryland Board of Regents wants more too, after they discover their athletic department is a few million in the red – about as much as Oregon would be if not for the costs Mullens and Moffitt are keeping off the books. From Libby Sander in the Chronicle. One proposed solution: cut some of the more heavily subsidized sports. Steve Yanda has more in the WaPo.

Mullens and Moffit and "zero-based budgeting"

7/24/2011: Ron Mullens and his Executive Senior Associate Athletic Director for Finance and Administration Jamie Moffit brag about “zero-based budgeting” for the athletic department in today’s George Schroeder piece. Where did I last hear about zero-based budgeting? Oh, yeah, right. Jimmy Carter.

Get real. The AD budget has grown 50% over 4 years, you are going to increase it again this year, and you have increased the amount you take from the tuition of regular students for your athlete-only tutoring program to nearly $2 million. Now you are making the academic side pay for your NCAA cover-up. Let’s not get into parking. And you are still talking about sustainable self-sufficiency?

If you go by what people do, not by what they say, the plan is to loot every dollar possible from the Ducks for athletic department salaries. Then the people in charge will move on to another university and repeat.

Should athletics return $10 million to $15 million to the general fund?

7/22/2011: That’s the question a former Board of Regents president is asking, in Iowa:

All university revenue should come into one pot, and every department should have to justify its spending. The University of Iowa takes in $66 million in athletic revenue, but that doesn’t mean the department should have the unsupervised right to spend that. How can it justify paying the women’s basketball coach a sum more than three times the revenue of the sport? Why shouldn’t it return $10 million to $15 million to the general fund? Is it right that the four highest-paid state employees are coaches at Iowa and Iowa State? (One way of looking at it: The Iowa athletic department spends about $100,000 per athlete every year.)

The student editors of the student paper agree:

Some may view the idea of demanding more from a successful athletics program to be counterintuitive. Critics will call it “punishment” or claim there is no way to share revenue without hurting current athletics operations. But all at an institution should understand it’s their responsibility and job to operate in real-world economic realities. For the University of Iowa, that means being as cost-effective as possible on a campuswide level.

The entire Gartner op-ed is interesting – maybe too interesting:

The pleasant-sounding concept of “shared governance” should be scuttled. Shared governance once meant that faculty ran curricular matters and administrators ran management matters. Now, faculty political leaders insist they should help manage the institution — but woe to the administrator or regent who wants to have a say in the classroom.

The concept has outlived its usefulness and is a roadblock to planning, to change and to effective administration. It institutionalizes mediocrity, stymies change and intimidates presidents, and it is a misuse of faculty time and energy. Professors should teach or do their research. Presidents and provosts and deans should manage. Regents should govern.