A Budgeting Crisis at Little State University: Case Study

Introduction

This case study is about Little State University and its pending budget crisis. Little State University has a total enrollment of sixteen thousand students who are mainly focusing on the undergraduate level of education with a smaller percentage enrolled under master's degree programs. The athletic program participates in the National Collegiate Athletic Association's (NCAA) Division I classification which involves some colleges with a very high athletic budget. The university's athletic program competes in Football Championship Subdivision (FCS) under Division I.. The schools under this subdivision are allowed a maximum of sixty-three football scholarships according to the FCS rules. Currently, there are twenty varsity sports sponsored by Little State University within the athletic department; however, they are all organized into sixteen sports programs since men's, and women's tracks and filed programs count as six. Fifteen coaches head these sixteen sports programs with both men's and women's gymnastics programs assigned under one coach, though they do maintain NCAA compliance through Bylaw 11.01.5 of the NCAA Division I rulebook (NCAA, 2018). This paper analyses the athletic department's budget crisis and determines how best to make the necessary cuts while preserving a strong department and minimizing the impact on student-athletes.

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Problem Overview

The success of any athletic program is mostly determined by their financial strength, which is the primary problem of Little State University. This is as a result of the legislature decreasing the overall university's annual allocation for the upcoming year resulting in an immediate financial crisis. When this happens, most departments in the university will have their budgets significantly cut down including a loss of $800,000 to the university's athletic department. This adds up to ten percent of the departments entire budget. The budget reduction, in this case, may cause a number of problems to the department; for instance, it might result into a potential reduction in athletic staff salaries which can impact the department negatively in terms of the staff morale. Similarly, a reduction in the budget can mean some sports programs are cut off entirely from the school's athletic programs which can be traumatizing for students taking part in these activities prompting them to quit the university altogether. Little State University athletic department, therefore, has a tough decision to make as it involves not only the affairs of the students but also the livelihood of their coaches and staff.

Along with the direct problems to athletes and staff, the department has to make a decision on which of the six building projects to while maintaining their mission statement. Some of the six capital projects such as fixing leaky roofs and re-seeding fields with the poor surface condition are imperative as they involve the safety athletes, their coaches as well as the fans. Other projects such as renovating the football locker rooms and purchasing a stylish new court surface, though considered as luxury items, can be crucial in the recruitment of better athletes, thereby helping improve their squads which might result in an increased revenue generation in the future. Additionally, the department faces a challenge of upholding their mission statement which is to compete successfully at all levels, to train and educate its student-athletes and to diversify both on and off the field of play.

Information Gathering

To accurately make a decision in the case of Little State University budget crisis, one must thoroughly analyze the financial information of the department, the Equity of Athletics Disclosure Act (EADA) financial reports and the NCAA Division I rulebook. For instance, the university's athletic department budget spreadsheet that is included in the case study will be analyzed as it has both the department's revenues and expenses over a period of time. Some of the expenses included in the spreadsheet are the operating expenses of the department, capital project expenses and the salaries of both coaches and the department staff. The Equity of Athletics Disclosure Act financial reports is crucial as they help indicate if the budget solutions made by the department are realistic especially when considering other colleges of the same competitive level and stature (EADA, 2018). These documents are easily available through the website of the US Department of Education. Lastly, the NCAA Division I rulebook is vital in the decision making the process as it helps to indicate if the solutions made are in line with the NCAA Bylaws. The Division I rulebook is also publicly available under the NCAA website and ensures that the university maintains the NCAA compliance when making a vital decision that involves athletes' affair and staff employment.

Factors Considered

As indicated in the case study, the budget situation at Little State University is a complex one; therefore, any solution made must adhere to certain factor considerations. One such factor is the compliance with Title IX. Any institution, either privately owned or public that relies on federal and state funds must adhere to Title IX which extends the principle of the 14th amendment to all schools and states that; " no student with the borders of the United States shall on the basis of sex, be disbarred from the participation in, be denied the benefits of, subjected to any form of discrimination under any educational program or activities receiving federal support" (American Civil Liberties Union, 2016). Ideally, the providence of Title IX holds that institutions receiving federal assistance are accountable for giving students of both gender same athletic advantages and opportunities and observes three requirements. For instance, in terms of proportionality, Title IX requires that with a five percent grace period, academic institutions must provide athletic opportunities to its students that are proportional to the undergraduate enrollment. Similarly, as a Title IX requirement, academic institutions must fully accommodate the interests and abilities the female athletes who are the underrepresented gender. Moreover, the university must indicate through different athletic programs, a constant increase in the athletic programs and opportunities for the lesser represented sex. Additionally, considering the principle of gender equity in Division I rulebook, the NCAA through its legislation dictates that member institutions must comply with federal and state laws regarding gender equity (NCAA, 2018). For an institution to be considered as Division I FCS, the university must have 14 programs of which at least half the number must be female and the remaining seven males and mixed gender teams (Silbaugh, 2015).

Another area that needs to be considered is the success of each individual team and the revenue it generates. With this kind of major decision, one must consider the entire athletics department including teams and their respective coaches in terms of their success over the years. When it comes to performance, the individual salaries, as well as the success of coaches and staff within their programs, must be considered. For example, a program can be considered more critical if it has a history of improved performances. If a program is to be entirely cut from the department, it has to be a program that does not perform well and does not benefit the institution either in terms of revenue collection. To evaluate this, the institution needs to take into consideration a program's winning percentage, the amount it generates compared to its expenses and the popularity of the program within the institution and the local community.

Considering the case study, it is essential to consider the efficiency of the two positions that were left vacant and could either be filled or left as they are. The success of the institution's athletic department depends highly on the efficiency of each administrative position. In the case study, the two vacant positions are the communication coordinator and the compliance coordinator. Since both jobs need to be thoroughly done, it is important to ensure that both the positions are covered efficiently or have a replacement who is knowledgeable and competent enough in order to accomplish what needs to be done. This process should be done without overwhelming one individual employee who has another task to attend to.

Finally, in the case of eliminating an entire sports program, the department must put into consideration the impact of the decision, either personally or professionally on the student-athletes and the coaching staff. As indicated in the case study, the decision of eliminating an entire sports program can result into a student considering quitting to favor participating in that sport or remain at Little State University while forgoing his or her dreams which can be traumatizing. In addition, completely cutting off an entire sports program eventually leads to program coaches together with the program staff losing their jobs.

Situation Analysis

The information in the case study highlights some of the strengths and weaknesses of the Little State University athletic department. To start with, the university's athletic department benefits heavily from men's basketball program more than any other program in the department in terms of success and revenue as well as television coverage. Despite having a slightly lower revenue compared to the football team, the program generates $ 1,014,000 in revenue and has a net profit of ($ 60,100) more than any other program in the department. Television coverage is also important as it creates more recognition for the program and in extension the entire athletic department, thereby attracting new recruits who may not have been previously aware of the existence of the project in the university. Additionally, in regards to exposure, Little State University can potentially benefit from taking part in Football Bowl Subdivision in terms of scheduling opportunities. The scheduling opportunity in FBS can be crucial for teams in the lower division since the games in this division are broadcasted on larger television networks and radio stations; therefore, bringing more attention to such teams. The teams in the FBS have huge budgets and can pay a substantial amount of money for teams in the lower division like Little State to play against which eventually adds up to additional revenue.

One major drawback in the success of Little State University's athletic department is the meager budget. According to the EADA report, schools in the mid-lower division like Little State are often having a budget of approximately fourteen to eighteen million dollars which are usually insufficient (EADA, 2018). With this kind of budget, these smaller universities find it hard to compete effectively because it reduces the competitive nature of the athletic departments. Sufficient budget is needed to invest in new players, quality coaching staff and facility upgrade which are significant for programs to improve.

Solution Scenarios

Balancing the Little State University athletics department's budget minus the loss of income from the state legislature while considering all the factors is a complex task; therefore certain sacrifices must be made. For instance, the budget of all the department's sports teams will be cut; however, this will include a five percent cut on the overall budget of sports that generate revenue to the department and a seven percent cut on the overall budget of the sports that do not generate revenues. This will be done to improve revenue-generating teams which will increase their attention from the local communities, therefore generating an even higher income for future use....