Kansas Athletics largely exempt from KU budget cuts; other details about budget murky

photo by: Nick Krug

The pregame men's basketball crowd at Allen Fieldhouse is shown in this file photo from Dec. 2, 2009.

As departments across the University of Kansas campus are being ordered to make budget cuts of about 6 percent, the budget for Kansas Athletics Inc. is expected to grow by about 6 percent, leaders were told Wednesday.

But other details about the budget of the nonprofit corporation Kansas Athletics Inc. were hard to find at the Wednesday meeting of the organization’s board of directors. At the meeting, the board approved the organization’s budget for fiscal year 2019, which begins on July 1. But as part of the public meeting, neither the board nor athletic department staff shared key details of the budget — such as the total dollar amount of the budget or any line item information about the budget.

During a brief presentation, the board was told the athletic department budget would increase by 6 percent, but no dollar amount was mentioned. The Journal-World asked to see documents related to the budget — such as a basic summary of revenues and expense totals — but it was told such documents weren’t immediately available.

It was unclear whether board members had even seen such documents prior to their vote. No such figures were shown as part of the public meeting.

The Journal-World filed a request under the Kansas Open Records Act to see the documents. Late Wednesday afternoon, the athletic department provided a one-page summary of the budget.

It showed budgeted expenses of $99.86 million, which is up from the 2018 budget total of $93.66 million, which is about a 6.6 percent increase.

That is in contrast to what is happening at many departments across the Lawrence campus. Earlier this month, Interim Provost Carl Lejuez directed departments on the KU campus to cut approximately 5.9 percent of their budgets to help KU bring its finances into better alignment. The cuts are expected to total about $20 million campuswide.

Following the meeting, the Journal-World asked Chancellor Douglas Girod — who chairs the Kansas Athletics Inc. board — whether the athletic department had been exempted from those campuswide cuts. Girod said the athletic department for the most part had been exempted from the cuts. The finances of the athletics department are different from most other departments because Kansas Athletics Inc. is its own separate nonprofit, although it is wholly controlled by the university.

Girod said that revenue the athletic department receives from its own operations — everything from ticket sales to donor contributions to Big 12 television revenue — wasn’t subject to the across-the-board budget cuts that other departments were facing.

However, Kansas Athletics does receive some direct financial support from the university’s coffers. In past years, that “direct institutional support” has totaled about $1.5 million to $1.6 million, according to documents that KU is required to file with the NCAA. When asked about the status of that funding, Girod said Kansas Athletics would see a reduction in that direct support amount. Girod said he didn’t know the dollar amount that would be reduced, but said it would be commensurate with the approximately 6 percent reduction taken by other departments.

However, the 2019 budget documents that the athletic department subsequently provided to the Journal-World created a question about whether the athletic department’s 2019 budget actually reflects that reduction in direct institutional support.

The 2019 budget document shows direct institutional support budgeted for $1.5 million. That is the same amount budgeted for 2018, according to a budget document the department provided to the Journal-World earlier this year. A university spokesman was not immediately available Wednesday evening to offer an explanation.

Details that were released about the budget on Wednesday included:

• Revenues and expenses are expected to balance as part of the 2019 budget.

• The department is budgeting to collect about $1 million less from donors, largely as a result of federal tax law changes. Congress approved legislation that calls into question whether certain types of donations to athletic departments — those that are made as part of ticket purchases — can be tax deductible. Pat Kaufman, chief financial officer for Kansas Athletics, told the board that KU can no longer assure donors that such donations will be tax deductible. Instead, they are advising donors to have conversations with their tax advisers.

Kaufman said the department decided to decrease the budget for donations in case donors pulled back some due to the new tax laws.

KU is expected to pay about $1 million in an excise tax that Congress has mandated nonprofits pay. The tax is related to nonprofits that have employees who make more than $1 million per year in compensation. KU is subject to the tax due to basketball coach Bill Self’s and football coach David Beaty’s compensation packages.

• The department expects to pay $35.35 million in salaries and benefits in fiscal year 2019, up 6 percent from 2018 budgeted figures.

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