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Higher Ed department to UNM athletics: Pay your debt

Another state agency has jumped into the financial fray of Lobo athletics.

And this time, it appears it won’t go away until the University of New Mexico’s athletic department repays its main campus the $4.7 million it has borrowed from reserve funds while failing to balance its budget in eight of the past 10 fiscal years.

Such a repayment process has already been in place at the state’s other Division I level athletics department, New Mexico State University. Aggie athletics has balanced nine of its past 10 budgets and been on a deficit reimbursement plan with its main campus since 2009 to pay down what was once a $9.5 million deficit from its main campus reserves.

It appears UNM athletics will have to do the same, but now with supervision from the New Mexico Higher Education Department.

On Oct. 3, NMHED Secretary Barbara Damron sent a letter to UNM Interim President Chaouki Abdallah informing the university it was being placed on an “Enhanced Fiscal Oversight Program.” It is a relatively new designation (it’s been around since 2014) that has thus far only been implemented twice after financial concerns arose at Luna Community College in Las Vegas and Northern New Mexico College in Española.

Damron’s letter stated, among other things:

• UNM athletics’ annual budget has had “significant differences” between what was approved before the fiscal year “and the actual deficit reported” at the end of the fiscal year,

• “Salaries, benefits and transfers … have consistently exceeded budgeted amounts and continue to compound net losses,” and

• Scrutiny of UNM athletics by the state auditor and the Legislature require NMHED “to enact its due diligence” and conduct oversight of its own.

In 2009, when NMSU was facing a similar situation with a $9.5 million athletics deficit, former regent and current Santa Fe Mayor Javier Gonzales wrote to the then-NMHED cabinet secretary of that school’s plans to pay back its main campus debt. Included, he wrote that NMSU athletics budgets moving forward had to include revenue projections that were “conservative” and “attainable” and also that the department “was not authorized to spend more than it would take in.”

NMSU’s original repayment plan was to have the debt paid by June 2018. But in 2015 it was restructured to be paid off in June 2021.

NMSU athletics has met monthly with its president and main campus chief financial officer since 2009. Last year, NMSU transferred to main campus $1.6 million — a figure that was taken out of its budget — to bring its existing deficit to $4.1 million. It is scheduled to pay $823,036 this year and has already unofficially earmarked the $800,000 check it received when its football team played Arizona State earlier this season for that transfer. The final three scheduled payments are $903,246 in 2019, $1.8 million in 2020 and $564,654 in 2021.

UNM, meanwhile, replied to Damron’s Oct. 3 letter asking that she reconsider. Abdallah wrote in an Oct. 6 response that while the university takes seriously all the financial concerns she stated in her letter, UNM’s appointed regents who are tasked with financial oversight have already been working with UNM Executive Vice President David Harris, new athletic director Eddie Nuñez and the university’s internal audit office.

“As always, I welcome increased communication between the NMHED and the university, but this may not be the best way to accomplish that,” Abdallah wrote.

Damron wrote back saying that while she is “certain” UNM is taking the matter seriously, the EFOP is still in play and staff from her office would be meeting with UNM soon to outline the procedure that will have to take place.

She added: “While the University may in fact have a deficit reimbursement plan in place, the financial statements provided to the Department do not seem to indicate such a plan is being followed, as evidenced by the marked increase in the athletics budget deficit over the past several fiscal years.”

The Journal has reported those increased deficits each of the past five years. In asking former athletic director Paul Krebs and Board of Regents members, a reimbursement plan was never mentioned. There has also never been inclusion of such a line on the budget documents UNM has released to the Journal each year through Inspection of Public Records Act requests.

The Journal has asked to see whatever deficit reimbursement plan is in place. Thursday, UNM’s chief marketing and communications officer Cinnamon Blair said the athletics department and the UNM budget office meet at least once a year on reimbursement.

“As they have run a deficit over multiple years, the department has not been able to meet the obligation,” Blair said. “Monthly BOR Finance & Facility meetings reflect the ongoing status of the UNM Athletics budget. This fiscal year will see an emphasized effort on a successful reduction plan.”

Blair said athletics “has a $350K commitment” toward the deficit this fiscal year and projected payments of $500,000 annually thereafter.

Damron was in the running to be UNM’s next permanent president until recently being informed she was not among the five finalists. She told the Journal the two matters are not related.

“I actually was not informed of my status for the UNM President position until after this decision to put UNM of EFOP was made,” Damron wrote. “Regardless of my status for that position, it is my responsibility in my current capacity as Cabinet Secretary for statewide Higher Education Department to follow the standard operating procedure for what determines whether an institution should be placed on EFOP. I had to make the decision regardless of any impact on me personally.”

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