photo by: Nick Krug

Kansas head coach Bill Self applauds the Jayhawks as they widen their lead during the second half on Saturday, March 19, 2016 at Wells Fargo Arena in Des Moines.

Bill Self’s taxes — or more specifically, the lack of taxes he pays — are drawing attention after a report highlighted that the Kansas University men’s basketball coach is legally avoiding state taxes on about 90 percent of his annual earnings.

A report by public radio station KCUR noted that Self for years has had the bulk of his compensation paid into a limited liability company. Since 2012, that arrangement has become a tax perk, as Gov. Sam Brownback and the Kansas Legislature approved a new tax law that exempts Kansas income taxes on LLCs and other pass-through businesses. In total, about 334,000 Kansas business are receiving the tax break.

While the practice is legal, it has been the subject of some disagreement.

Self is generally considered the highest paid state employee in Kansas, although his compensation is paid with private dollars. KU, of course, is a public institution that relies on tax dollars for a portion of its funding.

“I like Bill Self,” Kansas Senate Minority Leader Anthony Hensley, of Topeka, told KCUR. “He’s a great coach. KU people, obviously, like him very much. But it’s bad policy when you’ve got the highest paid state employee in the state not paying any income taxes into the state of Kansas.”

In response, KU officials differentiated between employees of the university and employees of Kansas Athletics Inc., a not-for-profit corporation affiliated with KU.

Self is one of three KU coaches partially compensated through an LLC, university spokesman Joe Monaco said. He said head football coach David Beaty and women’s basketball coach Brandon Schneider have similar arrangements.

All KU coaches are employed by and paid from operating revenue of Kansas Athletics, Monaco said. He said paying some of coaches’ compensation to LLCs was not unusual among peers.

“Generally speaking, this is done in light of the tremendous amount of educational, public relations, and promotional duties those coaches are assigned by the athletics director that fall outside their normal coaching responsibilities,” Monaco said. “This is common practice nationally among universities and their football and basketball coaches.”

Self formed his LLC — called BCLT II LLC — long before Brownback and the Legislature approved the tax cuts. According to documents on file with the Kansas Secretary of State’s office, BCLT II LLC was organized in 2000 in Illinois, when Self was coach at University of Illinois, and registered in Kansas in 2003, the year he was named head coach at KU.

The tax breaks Self has received from the change in law, though, have been significant.

Self earns a base salary of $230,000 per year, according to a contract extension he and KU agreed upon in 2012.

In addition, Kansas Athletics pays Self’s LLC a minimum of $2.75 million per year for “professional services” rendered by the coach, according to the contract. Those services may include “educational, public relations and promotional duties” as assigned by the athletics director. The payments began in 2012 and are set to continue through 2022, under the contract.

Before Brownback signed the tax cuts into law, the top tax bracket was 6.45 percent. At that rate, Self would have owed up to $177,375 annually in Kansas income taxes. Even under the current reduced top rate of 4.6 percent, he’d have owed up to $126,500, according to KCUR.

Beaty receives a salary of $225,000 a year and “not less than” $575,000 annually through his LLC, DB Sports LLC, for “multimedia activities and services,” according to KCUR. Records with the Kansas Secretary of State’s office show DB Sports LLC was formed in March 2015, days before Beaty signed his multimedia services agreement with KU.

Information about Schneider’s LLC was not readily available Tuesday, as his name is not listed as a resident agent of any company in the Secretary of State’s business entity database.

The KCUR report noted that Kansas State University football coach Bill Snyder gets paid $1.22 million through a separate corporation, SSM Inc. But it was unclear, the report said, whether that portion of Snyder’s pay is subject to Kansas income tax.

Wichita State University men’s basketball head coach Gregg Marshall and K-State men’s basketball coach Bruce Weber earn $3 million and $1.9 million per year, respectively, but neither gets paid additional money through an LLC or pass-through business and presumably pay state income taxes on their salaries, according to KCUR’s report.

Some lawmakers said the information didn’t change their opinion about the value of the tax law changes.

“The overall tax strategy is to lower taxes and have a way to stimulate the economy,” Rep. Ron Ryckman Jr., a Republican from Olathe who chairs the House Appropriations committee, told KCUR.

“We are very fortunate to have Bill Self as the coach at KU and not the head coach of the Oklahoma Thunder,” he said. “I don’t know his motivation for staying, but I do know that tax policy does drive decisions.”

— Journal-World reporter Sara Shepherd and the Associated Press contributed to this story.