A Budgeting Crisis at Little State University
Name
Sport Administration- Dr. Mathner
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Summary
This case study is about Little State University (LSU) and it’s pending budget crisis. LSU
is a university that has an enrollment of 16,000 students. They have a male to female student
ratio of 1:1 and are primarily focused on undergraduate education while maintaining some
graduate level programs. LSU competes in National College Athletic Association (NCAA)
Division I Football Championship Series (FCS) athletics. There are currently twenty sports
sponsored by LSU, which are organized into sixteen sports programs. This is due to the men and
women’s track and field programs being the consolidation of six sports. In terms of scholarship
athletes, LSU gives awards to the maximum allowed by FCS rules, sixty-three. They do not give
out high amounts of awards past this, but do maintain NCAA compliance through Bylaw
20.9.3.2 of the NCAA Division I rulebook (NCAA, 2016).
Problem Overview
The primary problem for LSU stems from the mandatory cut of $800,000, which makes
up ten percent of their entire budget. This budget reduction raises the problem of having to
potentially cut salaries, building projects, and possibly even entire sports programs. These
decisions are paramount to LSU’s athletic departments because they will not only affect
students-athletes, but coaches and administrative staff as well. Along with the primary problem,
the athletic department must find solutions to two secondary problems. The first secondary issues
is to decide which of the six proposed capital projects are necessary for the safety and well being
of the athletes, fans, and coaches. The next secondary issue is the challenge to uphold the
mission statement of the athletic departments which is, “to compete successfully in athletics on a
conference, regional, and national level, to educate and graduate it student-athletes, and to
exemplify integrity, character, and diversity both on and off the field of play.’
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Information Gathering
To accurately understand industry norms and have the ability to compare LSU to other
similar universities, the Equity of Athletics Disclosure Act (EADA) financial reports will be
used. These reports are publically available through the U.S. Department of Education’s website
and are important to the decision making process because they help show if the potential
solutions are realistic when compared to universities of similar size and competitive level.
In order to determine financial information for the department, LSU’s Athletic
Department Budget spreadsheet that was attached to the case study will be implemented. This
spreadsheet shows the financial information for LSU such as coach and administrator salaries,
capital project expenses, and operation expenses for the athletic department. This will aide the
process of morphing LSU’s budget into a more sustainable and realistic financial report.
The NCAA Division I rulebook will be used as well when deciding what should be cut
from the budget. This rulebook can be found by the public online through the NCAA website or
through the NCAA’s applications section with proper clearance. The primary usage of this
rulebook will be to make sure LSU maintains NCAA compliance when making decisions on
cutting programs or scholarships.
Factors
In order to properly handle the budget crisis, there are certain factors that must be taken
into consideration. Remaining compliant with Title IX is a crucial factor to take into
consideration. Title IX extended the principles of the 14th Amendment to all schools, public and
private, that rely on federal and state funds. Title IX states, “No person in the United States shall,
on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected
to discrimination under any education program or activity receiving Federal financial assistance”
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(American Civil Liberties Union, 2016). It consists of three prongs, which prove that an
institution is compliant. These prongs hold institutions accountable for providing equal athletic
opportunities to male and female students. The first prong of Title IX is proportionality. This
means the institution must provide athletic opportunities that are proportionate to the
undergraduate enrollment, with a five percent grace period. The second prong states the
institution must demonstrate a continual expansion of athletic opportunities for the
underrepresented sex. The third and final prong says the institution must fully accommodate the
interests and abilities of the underrepresented sex (American Civil Liberties Union, 2016).
Title IX would also play a factor in remaining Division I. According to bylaw 20.9.3.2 of
the NCAA Division I rulebook, in order to be considered Division I FCS, the institution must
have 14 sports programs, at least seven of which must be all female and seven that must be
comprised of all male or mixed gender teams (NCAA, 2016). Although eliminating an entire
program is not an ideal situation, it must at least be considered to meet the new budget; however,
we must make sure the number of men’s to women’s participation opportunities remain
proportional.
It is important to factor in the efficiency and success of the athletic department as a
whole. With this major cut, it is vital to take into consideration the success of each individual
team and coaching staff. If entire programs must be cut, it should be a program that does not
benefit the institution as a whole. In order to determine this, the athletic department would take
into consideration the winning percentage, revenue generation, and the involvement and
popularity of the team within the community. When it comes to coaches and staff, individual
salaries and success within their program must be evaluated. The aesthetics of the facilities are
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also important for the well being of the students and fans. This must factor this into our decision
making for the six capital projects that have been proposed.
With that being said, efficiency goes beyond the playing field. Throughout the study we
became aware that two positions were open and could either be filled or left vacant. One of the
positions was within compliance and the other was a communication director (McEvoy). This is
a major factor when making decisions because it is important to make sure each administrative
position is covered efficiently. Although it might be possible for those positions to remain
vacant, it could potentially become a problem by overwhelming one individual instead of having
those extra hands to accomplish what needs to be done to the best of their ability. As an athletic
department, LSU needs these jobs to be done thoroughly.
With the possibility of eliminating entire sports programs, we must also take into
consideration how this would personally and professionally affect the student athletes and
coaching staffs. With the loss of an athletic program it forces the student athletes to choose
between remaining at LSU or transferring to another university in order to continue participating
in that sport. Eliminating programs would also result in the entire coaching staffs facing
unemployment.
Situation Analysis
One of the major strengths of LSU’s athletic department is the success and revenue
generation of the men’s basketball program. This program alone brings in $1,014,000 in revenue.
The net profit of this team is ($60,100) which is the highest of every other team at LSU. This
team also gets more televised recognition than any other sport on campus, including football.
The addition of televised games creates more recognition for the team and athletic department as
a whole, while also creating new recruiting opportunities for student-athletes who may have not
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previously been aware of the program. Another strength for LSU is the large student population
of 16,000. With this large number of students, the awareness and support for the university and
its athletic programs is increased. It also benefits the athletic department due to a portion of
student fees being allocated into the athletic budget.
The major weakness of LSU is the miniscule budget it is allotted for athletics. According
to the EADA schools similar in size to LSU have a budget of approximately $14-$17 million.
This clearly affects the competitive nature of the programs that LSU can produce. This low
budget makes it significantly harder to invest in new players, coaches, and facility upgrades,
which in turn makes it more difficult for the programs to improve.
A major opportunity that presents itself to the LSU athletic department comes from
potential Football Bowl Subdivision (FBS) schools providing scheduling opportunities for the
football team. These competition dates are very beneficial for multiple reasons. Competitions
such as this bring more attention to smaller universities like LSU by broadcasting the games on
larger television networks and radio stations. These larger universities will also pay a substantial
amount to LSU in order to play them, which would be considered revenue towards the athletic
department.
Some external threats that LSU could possibly face would involve the other teams within
their conference and geographic region. These other programs would increase competition on
and off the playing field. Television broadcasting, recruiting, and on field success can all be
affected negatively if other programs within the conference are improving and LSU remains the
same. As stated previously it is harder to grow and improve with such a small budget, which
makes it more of a threat for LSU to fall behind par of the other universities.
Solution Scenarios
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In order to properly meet the new budget, while considering each important factor,
certain cuts must be made. To begin, the salary of the administrative Graduate Assistants and
Intern will be cut by 25 percent, which initially will cut $33,604. The vacant position of
communications coordinator will remain vacant, which leaves an extra $29,000 in the budget.
The responsibilities of this position will then be split between other administrative positions.
Next, only two of the six capital projects will be put into action. The two projects are considered
imperative because they involve the safety and well-being of the athletes, coaches, and fans. The
first project will be fixing the leaky roof on the arena, which will cost $47,000. The second
project will be re-seeding the softball field because it is currently in poor condition, which will
cost $19,000. By choosing these two projects it will initially cut $252,000 in the budget. Another
large cut that will be made will be cutting three percent of every sport programs overall expense
budget. Three percent was chosen in order to maintain equality throughout every program. Each
head coach will be responsible for allocating the funds within their budget. Unfortunately, the
largest cuts that must be made are two entire programs. In order to remain compliant with Title
IX, the Men’s swimming program and Men’s golf program must be cut, which would initially
cut $286,950. These programs were chosen in order to lower the disparity of participation
opportunities that are allocated to females versus males from 6.28 percent to 5.14 percent. Also,
this keeps LSU’s athletic scholarship program in compliance with the NCAA through bylaw
20.9.3.2, which says that there must be 50 total scholarships given out to athletes that do not
participate in football and men’s and women’s basketball. Twenty-five of these scholarships
must be given to women athletes (NCAA, 2016). In total, this will equal $800,090.50 in cuts.
There are certain pros and cons that come along with the new budget changes. Luckily,
the two must crucial capital projects will still be completed which will benefit the overall
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campus. Along with this, administrative salaries were not affected, which eliminates the risk of
losing employees. Unfortunately, 33 student athletes will have to make the decision to remain at
LSU without their sport, or transfer to another University. Also, not completing the recruiting
based capital projects could negatively affect recruiting in the long run.
Another possible solution for handling the new budget involves making cuts from other
areas of the athletic department. To begin, administrative salaries will be cut by three percent,
which results in a savings of $30,150. By doing this, there will be enough money in the budget to
tackle three of the six capital projects. The two projects mentioned in scenario one will be
completed, along with resurfacing the arena and stadium parking lots. Completing only three of
the six projects will cut $222,000. Next, the men’s tennis coach will be cut and the men and
women’s programs will now share a head coach, cutting $34,000 in the budget. This will be
possible due to the fact the program is already designated a graduate assistant so the
responsibility will not fall on one person. Also, both teams travel together, which makes it
possible for one person to take on both roles. Two scholarships will also be cut. Both of these
cuts will be from football, with a total number of scholarship players now equaling 61. The total
amount of money that this action will cut is $36,000. This will not put LSU within the five-point
margin for Title IX, but will lessen the margin from 6.28 to 6.05 which is a move in the right
direction for the program. The next move that will be made is to cut sports that generate revenue
overall budgets by five percent and the sports that do not generate revenue by seven percent. The
five percent cut would result in eliminating $238,385 from the budget and the seven percent cut
would result in cutting $143,440. These percentages were chosen in order to prevent entire
programs from being cut. The Graduate Assistant salary will be cut by 25% and will cut $36,604.
The intern salary will then be cut by 25%, and will cut $2,500. The cuts will make the GA and
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intern salary line up with those of other similar universities. The two vacant positions,
compliance and communications coordinator will remain open, which will cut $61,000. The
responsibilities of each position will be divided among other administrative positions. In total,
this will save $800,579.
There are pros and cons to this scenario as well. On a positive note, no entire sports
programs were cut. No student athletes will be forced to make the decision to stay at LSU or
transfer and no coached would face unemployment. Also, a third capital project will be
completed, on top of the original two that are imperative. Unfortunately, with the vacant
positions being left open, the responsibility must be divided among other individuals in
administrative positions.
The final scenario for dealing with the new budget is compiled of choices within the first
and second scenarios. Administrative salaries will be cut by three percent and would cut
$31,020. The two imperative capital projects (softball field and leaky roof) will be completed,
but the other four possible projects will not be completed. This will initially cut $252,000. The
five revenue-generating sports overall budget will be reduced by five percent, cutting $238,385.
The non revenue-generating sports will be cut by seven percent, which will save $132,475.
Lastly, the men’s swimming program will be cut, leaving an extra $156,900. In total this solution
would cut $809,892 in the budget.
A major pro of this solution is the extra $9,000 on top of the original $800,000, which
could act as a safety blanket if error occurred. Another positive aspect of this solution would be
filling both vacant positions (compliance coordinator and communications coordinator). The
major disadvantage of this scenario is the loss of an entire sports program and the student
athletes that will face a decision of staying at LSU or transferring.
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Recommended Solution
The best solution for handling the budget cuts would be the scenario in which $809,892 is
cut from the budget (Scenario 3). With this solution LSU will remain complaint with Title IX, as
well as NCAA Division I bylaws. The two most important capital projects will be able to be
completed within the new budget, which benefits LSU as a whole and not just the athletic
department. The five percent and seven percent cuts that were taken from the overall budget of
each athletic program will be at the discretion of the head coach and director of operations for
each program. The men’s swimming program will be cut specifically in order to lower the
participation disparity of female versus male sports from 6.28 to 5.39, which is in the five-point
margin of error. Cutting the administrative salaries by three percent will allow LSU to keep the
communications coordinator salary within the budget, which will prevent the responsibilities of
this position from being distributed among other positions. Overall, the pros outweigh the cons in
this scenario, which will benefit the university as a whole.
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References
American Civil Liberties Union. (2016). Know Your Rights: Title IX and Sexual Assault.
Retrieved March 08, 2016, from https://www.aclu.org/know-your-rights/title-ix-andsexual-assault
McEvoy, Chad D., & Gray, Dianna P. A Budgeting Crisis at Little State University. Case Studies
in Sport Management, 1(3), 1-8.
National Collegiate Athletic Association. (2016). NCAA Division I manual. Overland Park, KS:
NCAA
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