Who foots the bill for public universities' athletic programs?

 

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CHAMPAIGN — The athletic program at the University of Illinois benefits from indirect state subsidies of more than $8 million a year for employee pensions and benefits, on top of several million dollars from student fees — part of which ultimately comes from state grants for low-income students, a new report says.

Those numbers, UI faculty researcher Jay Rosenstein said, challenge the common assertion that multimillion-dollar coaching packages and other costs are covered by athletic department income, not taxpayer or university money.

Rosenstein, a documentary filmmaker and professor of media and cinema studies, has published his findings in a four-part series entitled "The Multimillion-Dollar Head Fake" at theheadfake.org and the Huffington Post. He plans a documentary on how public universities finance college sports, primarily football and basketball.

"I think the system by which big-time sports is being financed by universities is completely broken. It's basically completely backwards," said Rosenstein, who is also a long-time Chief Illiniwek opponent. "In order for public universities to survive, that relationship is going to have to change or be repaired."

UI athletic officials dispute his conclusions, say the numbers are incomplete and point out that the athletic department pays the campus almost $10 million a year for tuition waivers, utilities and other services. They also say student fees make up a small part of the athletic department's revenue overall, compared to most Division I schools.

"I'm proud of the revenue model that we have for athletics," UI athletic director Josh Whitman said. "I understand that some people want to take issue with the funding of intercollegiate athletics. That holds more weight for schools funded much differently from ours."

Among Rosenstein's findings:

— The state covers nearly $6 million a year in health insurance and other benefits for athletic employees, as it does for most UI workers.

— The State Universities Retirement System is paying out about $2.6 million annually for the pensions of 18 retired UI coaches and athletic staff, a number likely to rise because of 3 percent annual cost-of-living increases. While some of that is covered by the employees' own pension contributions, payouts eventually exceed those amounts and taxpayers end up footing the bill.

— Former Athletic Director Ron Guenther, who retired in 2011, earns a pension of $473,094 a year, fourth highest of all state university retirees. His annual contributions to the retirement system, $614,247, were used up by 2015, meaning the state now covers that cost.

(The DIA kicked in $97,400 for Guenther's pension in 2012, under a state law requiring employers to cover any share related to a pay increase more than 6 percent above the previous year. His salary jumped $75,000 in 2008, from $525,00 to $600,000.)

— While students pay no athletic fee per se, they shell out $68 a year through the campus general fee to pay off bonds used to finance two Memorial Stadium projects, one in the late 1990s and a $121 million renovation in 2006-08. Another $50 of the general fee goes toward the recent $170 million revamp of the State Farm Center, which is shared by athletics and student affairs. Students also pay $84.50 annually through the service fee to cover operating costs at the State Farm Center, though that money stays with the center's budget, officials said.

— Because of those fees, a share of the $30 million the campus gets each year in state Monetary Award Program grants, to cover tuition and fees for students in need, technically goes to athletics. Rosenstein calculated that number at $282,000, though Whitman disputes his math.

Whitman counters that athletic department staff members are state employees just like any other UI worker. Other campus units that receive generous outside income, such as the College of Engineering, don't pay for their employee benefits or pensions; neither do other auxiliary units such as the Krannert Center, he said.

Besides paying for utilities, IT support and other services, athletics pays the campus for the 258.5 scholarships awarded to roughly 350 student athletes (including out-of-state or international tuition rates if applicable) — a total of $7.6 million in 2016 for tuition/fees and $374,000 for room and board. It paid another $4.2 million to cover food and housing for scholarship athletes who lived off campus. The combined total is closer to $12.5 million this year, Whitman said.

Of course, the money isn't a gift to campus; it goes toward the expense of teaching, housing and feeding those athletes.

The campus used to provide up to $1 million in tuition waivers, dating back to the 1970s when eight women's varsity sports were added with scholarships to comply with Title IX. But that subsidy was phased out, with the final $260,000 payment last year, according to the athletic department.

Regarding pensions, Rosenstein said that even if athletic income covers big salaries and raises, such as Guenther's in 2008, that ends up costing taxpayers later because it pads their pension. Employee pensions are based on years of employment, age at retirement, and the average of their highest four consecutive years of salaries.

That cost has been growing as the UI athletic program, like many of its peers, added staff in recent years, fueled by huge increases in TV revenue from the Big Ten Network, Rosenstein said. The athletic department's overall revenue has more than doubled since the network's creation in 2006, when it totaled about $44 million.

This year, the Division of Intercollegiate Athletics expects to receive $49.9 million from its Big Ten TV contract — nearly half of its $99.7 million budget.

Over the last 20 years, the number of employees grew from 88 in 1997 to 143 in 2007 to 196 in 2017, according to UI data — a 123 percent increase, Rosenstein said.

"New hires add to the total benefit costs that Illinois taxpayers have to pay," he wrote.

Whitman said the $2.6 million that went to athletic pensions last year is a fraction of the $17 billion paid out statewide, the $2.3 billion that went to all retired public university employees, or the $367 million paid to retirees from the Urbana campus.

There are more than 17,000 state pensions that exceed $100,000 annually, he noted, and of the top 500 only three — Guenther, Lou Henson and his former assistant, Jimmy Collins — are from UI athletics.

The state has also moved to limit big pensions in recent years, capping the amount that could be applied toward retirement at $270,000 in 1996. For employees hired since 2011 — including Lovie Smith, for example — the cap is significantly lower: $106,800.

If public university athletic programs across the state were forced to pick up the benefit costs for their employees, Whitman said, some would likely have to close.

UI President Tim Killeen has acknowledged that the UI may have to take on some of that cost, given the state's huge pension shortfall.

"If that happens, I'm sure we'll be a part of that," Whitman said.

Rosenstein took particular aim at the student fee money allocated to athletics, which he said is "hidden" inside other fees and likely goes unnoticed by many students.

Trustees approved the $68 addition to the general fee in 1997 — over strong student objections — to help fund athletic facilities and erase a $1.4 million athletic budget deficit. The income, now more than $3 million a year, was later pledged to the 2006-08 Memorial Stadium renovation, with little public debate.

Students had asked back in 1997 for a sunset provision, so the fee could be reduced or eliminated if the athletic department's fortunes improved. A trustee at the time promised the board would consider that if the department had a surplus for five years. Rosenstein pointed out that the department had a surplus for nine years, from 2005 to 2013.Students did approve the $50 annual fee for the State Farm Center renovation in a 2013 campus referendum. It generates about $2 million annually.

Applying MAP grant funding to those fees, Rosenstein argues, means the state is indirectly funding the luxury suites and premium seating provided by the renovations of the stadium and basketball arena.

"In general students are to a certain degree being exploited, to help pay for this monstrously wealthy enterprise, and I think it's not just offensive but it's immoral," he said.

Athletics officials point out that students benefited from those projects, too, in terms of ticket discounts, better seating and the like. Student tickets at Illinois ($60 for a season pass) are the cheapest in the Big Ten, other than Northwestern, Whitman said.

Students are paying 16 percent of the cost of the 2006 stadium renovation, while income from premium seating is funding 50 percent, athletics officials noted.

Whitman said revenue from any scholarship is applied toward fees — not just athletic fees but those for the Krannert Center, the Illini Union, study abroad programs and Campus Recreation.

"The whole fee structure represents things that the university has decided have value to the student experience," he said, even if a particular student may not use all those services.

While athletics shares the State Farm Center 50-50 with student affairs, he noted, it pays about 80 percent of the costs. "It's probably a fairer statement to say that we've subsidized the student portion of that building."

Whitman said the UI's athletic-related fees are "far and away" the lowest in the state. State and national reports show other public universities — including Maryland and Rutgers in the Big Ten — use student fees or campus subsidies to cover 25 percent or more of athletic expenses.

Whitman said the fees aren't a secret, and he's tried to be open about the department's finances in presentations to the campus senate. He said he's grateful for student support and believes the fees should remain "nominal."

Whitman and Rosenstein differ on the benefits athletics brings to the larger university, each citing research to support his view.

"I think people think that de-emphasizing athletics could be this silver bullet," Whitman said. "If somebody decided it would be better for the University of Illinois to have a Division III athletic program, the university would pay more money and would get less benefit. I know that, because I've been the AD at two Division III schools."

Rosenstein said he hopes his report will "be one little link in a long chain that maybe will lead to some real discussions" about how athletic finances need to change.

Of the 34 retired state employees with annual pensions above $300,000, 25 have ties to the University of Illinois:

RANKNAMEPOSITIONPENSION
1.Leslie HeffezUIC oral surgeon$581,227
2.Tapas Das GuptaUIC cancer surgeon$494,773
3.Edward AbrahamUIC orthopedic surgeon$480,762
4.Ronald GuentherUIUC athletic director$473,094
5.Joseph FlahertyUIC med school dean$433,290
6.Peter MaggsUIUC law professor$429,646
7.Mahmood MafeeUIC radiologist$429,095
8.James StukelUI president$402,293
9.Herand AbcarianUIC physician$392,682
10.Ronald AlbrechtUIC physician$391,199
13.James AusmanUIC neurosurgeon$359,252
14.Arthur KramerUIUC Beckman Institute director$349,560
15.Lou HensonUI basketball coach$347,058
16.Andrew WilburUIC radiologist$346,533
17.Robert EasterUI president$341,018
18.Jacob WilenskyUIC opthalmologist$334,872
19.Phillip FormanUIC medical school dean$326,441
20.James FeldUIC anesthesiologist$322,847
22.Joel SugarUIC opthalmologist$317,752
27.Jesse DeliaUIUC dean/acting provost$309,932
28.Craig BazzaniUI vice president$307,894
30.George HonigUIC pediatric oncologist$305,557
32.Indru PunwaniUIC pediatric dentist$300,882
33.Ross SolaroUIC physiology/biophysics professor$300,703
34.Thomas LaydenUIC internal medicine head$300,032

Reporter/Columnist

Julie Wurth is a reporter covering the University of Illinois at The News-Gazette. Her email is jwurth@news-gazette.com, and you can follow her on Twitter (@jawurth).