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Solutions
set for University
athletic budget crisis
On May
20-21, the Board of Regents accepted the report of the special panel
charged to investigate The University of Montana athletics deficit.
In addition, with some modifications, the Regents approved the deficit
reduction plan proposed by the University. The report itself makes
clear the difficulty of assigning blame for the problem, with a multiplicity
of potential culprits. However, I will not seek to thrust the blame
on others. As the President of the University, I accept that responsibility
and apologize to the dedicated professionals and student athletes
in Intercollegiate Athletics and all the Griz supporters across the
State.
Even so, I want to underscore the absence of “evidence that
anyone intentionally ‘cooked the books’” or engaged
in wrongdoing, as the panel concluded. In fact, the University personnel
assigned to the task discovered and reported the accounting errors
and overspending in athletics. Moreover, the panel confirmed the accuracy
of the timeline of discovery and public announcement of the deficit,
finding no basis to conclude that anyone conveyed false or misleading
information. The problems occurred not because of wrongdoing or corruption,
but rather because of a failure to maintain fiscal discipline and
some unfortunate accounting errors that compounded the problem. We
at the University can and will make the changes to prevent a recurrence.
The lack of discipline is the root of the problem. But the absence
of discipline does not equate to free and unlimited spending. No person
or program in the University has that luxury.
The report suggests, however, that the deficit resulted in part from
too much emphasis on raising money and not enough on controlling expenditures.
In my testimony and other comments, I have stated that I expected
the athletic director to raise funds in the private sector to support
the programs and also to control costs. The funds raised went to support
facilities and scholarships, not routine operations. In the panel’s
view, a “structural” imbalance developed as a direct result,
since funds to support ongoing operational costs did not materialize.
The private funds made a great difference in athletics, but nonetheless
left the gap in the operations budget. The search for alternative
revenues failed to bridge that gap, despite the best intentions.
In response, the panel urged the establishment of a budget based on
success in the past and reasonable estimates of all revenues, including
donations. The responsible people at the University conducted a zero-based
budget-building process to bring revenues and expenditures into balance,
including cost reductions wherever possible, while still maintaining
the programs at a competitive level. New sources of revenue came from
increased ticket prices, increased dues, concessions, collegiate licensing
royalties, sky box rentals, license plate sales, institutional funds,
and moderate fee increases for students. These revenues will assure
a balanced budget in the future.
To pay off the accumulated deficit, the University will dedicate a
portion of the increased revenues from ticket sales, concessions,
royalties, and the campus beverage contract. Fee increases will not
contribute toward the elimination of the deficit, as I stated on earlier
occasions, but only to the prevention of any future deficit. The Regents
approved the fee increases on the condition that the deficit prevention
plan must remain on track. Any deviation resulting in additions to
the deficit will terminate the fee increases. We will make certain
that the plan succeeds.
However, at the same time we will continue to do all we can to raise
funds in the private sector to support all of our programs, academic
as well as athletic. The University must depend to a considerable
extent upon the willingness of alumni and friends for the margin of
excellence. I regard that dependence not as a weakness but as a strength
and a necessity, and I view the responsiveness of alumni and friends
as evidence of their loyalty to and support for the University. But
I also understand that we will have to control spending. In general,
the University’s record for accountability in the past indicates
the competency to balance revenues and expenditures. The deficit occurred
in only one of several hundred accounts, not for the University as
a whole. We did not do as well as we should have in controlling expenditures
in athletics, or in raising funds to compensate. We must and will
do one or the other — or both — in the future, but we
will maintain a balance and avoid a deficit.
In response to the 42 findings and 27 recommendations of the panel,
all accepted by the Regents and the University, we will strengthen
and make our budget development processes more inclusive and reliable.
We will also tighten the fiscal controls and establish a monitoring
process to make certain that we have the discipline necessary to maintain
the balance between revenues and expenditures in the future. In addition,
we will clarify and simplify our internal processes and procedures
and charge a group of faculty, students, staff, administrators, and
student athletes to monitor our progress and make certain that we
remain on track. The lessons of the past indicate clearly the consequences
of failure, and we have learned those painful lessons well.
Thank you.
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