The University of New Mexico administration is proposing the elimination of multiple sports and other cost reductions to balance future athletics department budgets and to pay down $4.7 million of the department’s 10-year deficit accumulated through last year.
But the plan would tap $1.7 million in regent-controlled funds to cover much of this year’s and next year’s projected deficits to give the department time to implement the cost-saving measures.
During a two-hour discussion in a regents committee meeting Tuesday, committee members directed numerous questions at athletics officials and determined they were not ready to make a recommendation until the department could provide more answers. In the end, UNM’s Board of Regents Facilities and Finance Committee gave athletics administrators about a dozen questions it wanted answered by Friday, so it could be better prepared when the proposal goes before the full Board of Regents, which meets next week.
“I believe in the value of athletics programs as part of the breadth of programs that are offered a major universities,” new UNM President Garnett Stokes said in remarks at the beginning of the presentation. “… (But) balancing this budget will not be possible without making some extremely tough decisions.”
Unfortunately, she added, she has learned in her short time on the job that years of financial mismanagement of the athletics department budget that makes up only about $33 million of the university’s $3 billion budget “has also led to a widespread loss of trust in the university’s leadership.”
Given the department’s high-profile financial challenges, Stokes took the unusual step of leading the athletics budget presentation – a task usually handled by someone from the department or the university’s budget office. It represented the recommendations from a campus-wide task force Stokes assembled. The group, including athletic director Eddie Nuñez, created a plan meant to appease the state’s Higher Education Department – which has demanded a deficit repayment plan – and also demonstrate some long-term financial sustainability.
To get there, everyone at Tuesday’s meeting seemed to be in agreement that the budget could no longer be built on years of overprojecting revenue such as ticket sales and underestimating personnel, scholarship and travel costs.
“I can tell you moving forward we are looking at things as realistically as we can,” Nuñez said. “That is one of the things I’ve been saying since Day 1 (as AD), we’re going to do things a lot differently.”
The committee consists of three regents, although most of the rest of the board listened in by telephone.
The athletics department entered this year with $4.7 million in accumulated deficits.
The department announced Tuesday that it expects to overspend this fiscal year’s budget by a projected $2.1 million, which is less than the $3.3 million it had projected just two weeks ago. (The regents in November already voted to cover $1.3 million of those costs with reserves.)
The discrepancy drew strong criticism from regents, who demanded an explanation as to why the deficit number shifted so much.
The proposal also anticipates another $2.3 million deficit for the 2019 fiscal year, which will require additional subsidies.
And balancing the budget in FY 20 and beyond will still require some significant university help. The proposal includes new annual subsidies totaling nearly $1 million, including $725,000 in tuition waivers and $250,000 in room and board discounts for student-athletes.
The budget also assumes $400,000 in cost savings via “shared services,” essentially relying more on centralized advising and fiscal management functions.
And starting in 2020, the plan calls for a 10-year repayment plan of $487,329 annually through 2029 in addition to the elimination of yet-to-be-determined sports.
“We’re better off supporting fewer sports but doing it well than we are stretching ourselves too thin and compromising the high quality experience our student athletes should expect from this institution,” Stokes said.
The proposal is expected to save $1.9 million annually through cutting sports, but Nuñez said no decision has been made on which sports will be cut. He has until July 1 to make that decision on cuts and said student-athletes will “have a voice” before the decision is made.
He said no sport will be eliminated without at least one year’s warning.
UNM currently sponsors 22 varsity sports, the most in the Mountain West Conference (not counting the Air Force Academy, which has different budgeting criteria than the rest of the league members). The league averages about 17 or 18 sports.
There were several other topics that drew serious discussion on Tuesday.
The regents want to explore taking the Pit renovation debt off the athletics department books, noting other departments on campus aren’t responsible for paying for their own facility upgrades as they are usually covered by the university at large. UNM refinanced the debt in 2016 so that it is $2.4 million per year.
Regent president Rob Doughty also called again for a sport-by-sport breakdown of revenues and expenses, something the Journal has asked for and has a pending Inspection of Public Records Act request for that is due this week.
Fundraising fell far short of the budget for the current fiscal year, as did ticket sales – a line that has been over-projected consistently for several years for the primary sports of men’s basketball and football.
UNM Foundation Vice President for Development Larry Ryan was asked why the $2.2 million in actual fundraising missed projections by $900,000 for this year.
Doughty asked: “Who ultimately made that projection?”
Ryan answered quickly: “Not the fundraisers.”
Pressed further, Ryan said the projection was made “by the athletics administration … who puts the athletics budget together.”
Regent Tom Clifford at one point in Tuesday’s meeting said the department’s budget problems aren’t as bad as the “hysteria” caused by recent media coverage of the matter.
Doughty publicly suggested last month that ticket sales projections were inflated to enable athletics to present a budget that appeared balanced. But Clifford said Tuesday the department wasn’t actually off by an alarming amount.
“I’m reacting a little bit to that accusation that we were somehow naive in this forecast,” Clifford said. “I think mis-estimating ticket revenue by 8 percent is not a naive forecast,” pointing out that a winning football season would make a big difference.
UNM has missed on ticket revenue projections the past three fiscal years for men’s basketball, football and women’s basketball by 13 percent this year (short $837,804 from projections), 23.8 percent for FY 17 ($1,719,499) and 11.4 percent in FY16 ($846,322).