Athletics Department May Be in Violation of State Policy

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Analysis: Intercollegiate Athletics financial support

University News Editor Zach Williams talks to reporter Emma Anderson about how campus financial support for the department of Intercollegiate Athletics may be in violation of university and state policies. 

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While UC Berkeley departments are "sharing the pain" of campus budget cuts, the Department of Intercollegiate Athletics has received millions of dollars in campus support in possible violation of university and state policy and has yet to indicate when it will escape the red.

But the controversy that has enveloped the department does not center around legalities alone. In a year shadowed by the July 2009 $209 million reduction in state funding, central campus support for the department--including the use of student registration fees--may have taken precedence in fiscal year 2008-09 over supporting more than 30 other campus units such as University Health Services.

For at least the past decade, intercollegiate athletics has received tens of millions of dollars from the campus--including approximately $13.5 million from the central campus in fiscal year 2008-09 alone, according to the NCAA. Despite being an auxiliary enterprise, which according to university and state policy must be financially self-reliant, Athletic Director Sandy Barbour projects the department will incur a deficit of $6.4 million by the end of this fiscal year.

"Auxiliary Enterprises are non-instructional services provided to individuals, primarily students, in return for specific user charges," Gov. Arnold Schwarzenegger's 2010-11 proposed budget states. "Auxiliary Enterprises are self-supporting and are not subsidized by the state."

Yet Barbour said campus support for athletics is justified because the department does not receive state funds from the campus.

In an Oct. 26 letter to the campus division of the Academic Senate, she said UC policy "provides Chancellors with the ability to subsidize auxiliaries from the University Registration Fee or other non-State revenue sources."

However, UC Berkeley Chancellor Robert Birgeneau may not have the authority to steer registration fees toward any campus auxiliaries with two exceptions, according to the UC Office of the President.

"On an exceptional basis, Chancellors may subsidize, from the University Registration Fee or other non-State revenue sources, student/ASUC-operated enterprises and/or child-care centers if the operation of the enterprise requires subsidy," the UC business affairs policy states.

For eight out of the past 10 years, intercollegiate athletics has incurred deficits, which the campus subsequently cleared. Campus officials said the department "broke even" in fiscal years 2006-07 and 2007-08.

While the department did not request a loan from the campus those years-like the $5.8 million loaned last year-athletics still received a total of about $17.2 million between 2006 and 2008 from registration fees and funds at the discretion of Birgeneau.

Former Vice Chancellor of Administration Nathan Brostrom made the decision last year to cover the department's budget deficit with the $5.8 million loan on top of the approximately $7.7 million in "institutional support."

"They had no funds to wipe out the deficit," he said.

Athletics was the only department under Brostrom's authority that required a loan exceeding $2,600 in fiscal year 2008-09, according to Assistant Vice Chancellor of Budget Teresa Costantinidis.

No formal deadline for repayment of the loan has been set, though Brostrom said it will eventually be repaid. According to Laura Hazlett, associate director for the department's business office, the outstanding loan may take five to 10 years to settle.

In 2007, the campus forgave the department's cumulative $31.4 million deficit, which took years to accrue.

Barbour said in the Oct. 26 letter that because she and Birgeneau were hired in 2004-05, they "should not be held responsible for decisions and actions of their predecessors (that are) consistent with campus practice regarding academic units."

The Academic Senate voted 91 to 68 on Nov. 5, 2009 to pass a non-binding resolution urging Birgeneau to end campus support for athletics. A faculty task force working with the department is developing a proposal, expected by April 22, describing how athletics can be financially self-sufficient.

But efforts to create a more self-sustaining athletics program are not new. At the end of the 2005-06 year, members of the Academic Senate proposed a 10-year plan for athletics to ultimately provide for itself.

"Every dollar that our administrators take out of their discretionary funds to bail out what is nothing more than over-spending by the Intercollegiate Athletics auxiliary is one dollar fewer that is available to fund the needs of our financially beleaguered academic programs," said Brian Barsky, a professor of computer science who authored the Nov. 5 resolution.

According to campus officials, when campus units come up short at the end of any fiscal year, the deficit can be covered by funds from a higher level of management. But such action is only taken if the unit has no other means to make up for the deficit.

"You can't leave it on the books," Costantinidis said. "That's bad financial management."

However, officials from many other units under Brostrom said their strict "no deficit" polices precluded them from incurring a deficit. The only other unit under Brostrom that incurred a deficit--Business and Technology Solutions--was granted a $2,600 loan from the campus that was quickly repaid, Costantinidis said.

Kim LaPean, communications manager for University Health Services, said the possibility of a financial shortfall and reimbursement from the campus is not a consideration when planning the budget for the unit.

"There is no deficit clearance," she said. "We have to take measures that can cover a deficit."

A $2 million budget cut this year caused health services to lay off 28 staff members and use reserve funds that are generally only used for maintenance and technology improvements, LaPean said.

The cut also led to two psychologists being laid off at the Tang Center and the cancellation of three planned hires, according to Jeff Prince, director of Counseling and Psychological Services at the center.

"Here we are in these hard economic times ... where counseling for students is needed more than ever," he said. "We need to make (counseling) a priority."

Bryn Jura, Claire Perlman, Mihir Zaveri and James Zhao of The Daily Californian contributed to this report.


Emma Anderson covers academics and administration. Contact her at [email protected]

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