Virginia Bill to Micromanage Athletics Funding Hurts Smaller Schools

James Madison vs. Virigina Tech (HamptonRoads.com)

This article from the Virginian Pilot-Online might have escaped your attention, but it could be something that has deep-ranging effects on collegiate athletics.

While the bill only affects schools in Virginia, if other state houses take up similar legislation across the country, it could deeply impact and potentially hurt smaller public universities across the country.

The article, written by Harry Minium, says it like this:

Old Dominion, Norfolk State and many other state schools will have to depend more on fundraising and ticket sales and less on student fees to fund their athletic budgets under a bill signed into law by Gov. Terry McAuliffe Sunday night. 

McAuliffe signed HB 1897 without any amendments. The bill, sponsored by Del. Kirk Cox, R-Colonial Heights, sets limits on the percentage of athletic budgets that can be funded through student fees. 

“I am very happy to see that Governor signed the bill,” said Cox, the House Majority Leader. 

Cox said he introduced HB 1897 to try to slow the increase in student athletic fees, which he said has been one of the major drivers behind a 122 percent increase in tuition and fees since 2002.

At first glance, this bill might seem to have a worthy goal - an attempt to halt the reliance on certain public institutions on reliance on soaking students in order to fund their athletics departments.  Look at the bill more closely, though, and you start to wonder if that was the intent of the legislation at all.

The contents of the bill had been debated for months on the many message boards of fans of athletic programs in the state of Virginia, with a mixed feeling on what the real outcome would be.

The bill only affects public universities, like James Madison, not private ones, like Liberty University.  But the impact is large nonetheless.

Here's the text from the final draft of original legislation as to what student fee subsidies will be.:

C. The subsidy percentage shall not exceed:

1. 20 percent for NCAA Division I-A institutions affiliated with the Atlantic Coast Conference, Big Ten Conference, Big 12 Conference, Pac-12 Conference, or Southeastern Conference;

2. 55 percent for NCAA Division I-A institutions affiliated with conferences other than the Atlantic Coast Conference, Big Ten Conference, Big 12 Conference, Pac-12 Conference, or Southeastern Conference;

3. 70 percent for NCAA Division I-AA institutions;

4. 78 percent for NCAA Division I-AAA institutions;

5. 81 percent for NCAA Division II institutions that operate intercollegiate football programs;

6. 85 percent for NCAA Division II institutions that do not operate intercollegiate football programs;

7. 89 percent for NCAA Division III institutions that operate intercollegiate football programs; and

8. 92 percent for NCAA Division III institutions that do not operate intercollegiate football programs.

Already, though, you have to start asking questions.  Like how, praytell, did Virginia's house come up with those particular limits on spending?

Start by looking at that 78% number for Division I schools that don't offer football.  Why is that number 78%?

According to Longwood University's student newspaper,

Cox has said his bill is based on reports of the rising cost of education produced by the Joint Legislative Audit and Review Commission (JLARC), the watchdog agency for the General Assembly.

But the JLARC report doesn't mention anything about specific numbers about which athletics fees to cut - which rate would be sustainable, how much the cost savings might be, or anything.

The primary driver of institutional spending growth has been auxiliary enterprises. These non-academic functions are funded through mandatory non-[Education and General] fees paid by students. Five institutions in particular increased these non-E&G fees while also having basic operating funding shortfalls: UVA-Wise, Christopher Newport, Norfolk State, Longwood, and ODU. 

Across all institutions in Virginia, mandatory non-E&G fees have increased substantially and now represent one-third ($3,502) of total tuition and fees. There have been two primary drivers of this fee growth. The first is intercollegiate athletics. The second is a variety of facilities and services provided in response to on-campus enrollment growth and student demand for amenities. 

On average, athletic programs generated only 31 percent of revenue needed to cover program expenses in FY 2012. Students funded the remaining 69 percent of expenditures. The funding provided by students to subsidize this shortfall equated to, on average, 12 percent of total tuition and mandatory fees (or 31 percent of mandatory non-E&G fees). Mandatory athletic fees are not directly related to core academic mission, and in many cases the athletic programs benefit a relatively small number of students.

Of course, the text neglects to really say what was happening - though this graphic, helpfully embedded in their report, does:

Over the 14 years of the study, state funding for education fell by about $3,000 on average, while tuition went up by about $4,000.  Yet rather than attempt to account for this gap by, oh, I don't know, increasing the state funding to the old level, the study instead recommends telling schools how much money they should spend in athletics fees.

When I looked at the fine print of the legislation, I saw percentages hardcoded into the final legislation - 28% for "Power Five" members in big-money college conferences like Virginia Tech and Virginia in the ACC, 55% for non-"Power Five" FBS members, 70% for FCS schools, 78% for Division I schools that don't support football.

How on earth did they get those particular percentages?

To understand that you need to look at the original legislation.

The orginal draft of the bill looked largely the same as the final draft, but with one key difference - it did not make any distinction between FBS "Power Five" and FBS "Non-Power Five" conferences.

Old Dominion, who just left the CAA to join Conference USA and FBS football, had basically no chance to meet that 28% number for FBS schools.

The Monarchs, according to Minium and the collegiate spending athletics database at the USA Today, fund 73% of their athletics budget through student fees.

You could imagine the panic in that district.

As a result, an "Old Dominion exception" was inserted into the legislation, creating the 55% number for non-"Power Five" schools (of which Old Dominion is the only member in the state of Virginia), and defining the Monarchs as an "FCS school" in regards to this legislation until 2020, giving Old Dominion ten years to comply.

So clearly strings were pulled in order to get ODU to some makeable threshold.

But again, why 55% for them?  Did some NCAA or Knight report study say that 70% is bad, while 60% is good, and 55% is ideal?

If there was some rationale, it hasn't been made public.

It's clear who the losers are, however.  Minium from the Virginian-Pilot:

Power conference schools Virginia and Virginia Tech are limited to 20 percent, although both already are under that threshold. 

Football Championship Subdivision schools such as Norfolk State and James Madison can fund a maximum of 70 percent of their budgets with student fees, and both NSU and JMU may have to restructure their budgets to meet that standard. According to USA Today, Norfolk State funded 80 percent of its athletic budget and JMU 79 percent through student fees. 

More established FCS schools with more affluent alumni, such as William and Mary (56 percent) and Virginia Military Institute (38 percent) will have no problem meeting that threshold, even though student fees at both are among the highest in Virginia. 

Division I schools that don't offer football can fund 78 percent of their budgets through student fees. Virginia Commonwealth (68 percent) is well under that limit, but George Mason (84 percent), Radford (88 percent) and Longwood (87 percent) may have to adjust.

Ah, Longwood University - which perhaps may explain the genesis of this bill.

The state representative who introduced the bill, Kirk Cox, explains in his own op-ed to the Richmond Times-Dispatch.

Blessed with four sons, my wife, Julie, and I have experienced many happy moments as parents. The milestones our sons have achieved in education rank near the top of the list. 

Lane, our oldest, graduated from Longwood University. Carter is a sophomore at James Madison University. Blake is headed off to college next year. Our youngest, Cameron, is a high school sophomore thinking about where he wants to earn his bachelor’s degree.

...

It would be hard to find a bigger sports fan than me. I am a former high school basketball coach and have coached youth baseball for many years. My son Blake has committed to playing college volleyball. 

Athletic programs are an important part of the college experience. Virginia is fortunate to have competitive college athletic programs that make students and alumni proud. But we simply cannot ask students who will never play a minute of college sports to bear such a disproportionate share of the costs associated with these programs. 

Can it be coincidence that the 70% FCS threshold was almost a 10% cut of athletics fees from James Madison, and the 78% D-I no football threshold was basically a 9% cut of athletics fees from Longwood?  Two schools where his own sons either attended or are attending?  Two schools where his checks went?

We have no way of knowing that for sure.

But we do know that the percentages in the bill are not based on any study saying exactly what level of subsidy is healthy or acceptable for a school - nor is it based on any study linking lowering student fees and lowering tuition.  That's because no such report exists, and though the conclusion is implied in the JLARC report that limiting athletics fees will help, no evidence is offered that this will be the case, nor is it mentioned in the bill.  (Though the report helpfully puts three big checkmarks in the columns "Improve affordability", "Prioritize academics", and "Limit institutional autonomy" next to their recommendation, the report offers no reasoning as to why on earth this would be the case".)

Either the numbers were plucked out of the air - or whomever on Rep. Cox's staff who came up with the numbers looked at the percentages from, say, the USA Today database, and made their numbers correspond to the universities they wanted to actually "punish", effectively, by putting on the spending cuts.  Viriginia and Virginia Tech - come up with numbers they safely meet.  Less-favored Longwood University and James Madison University - sock them needing to find a way to reduce their fee by 10%.

There's always a danger on the bill relying on percentages, something that Longwood University's student paper accurately points out.

During the 2013-2014 academic year, Longwood Athletics’ budget was $9.4 million, which according to USA Today ranks in the bottom 25 Division I programs in the country. “If you look at schools our size, ours is probably the lowest,” said [Longwood athletics director] Troy Austin. “Athletics at Longwood were generated to promote school spirit, raise the profile of the institution, and raise an environment for student athletes. This bill would be detrimental, and our ability to build a competitive program would be stunted greatly,” he added. 

Speaking on what the bill would most directly influence, Austin said, “It would obviously affect the student athletes, and the way in which we operate our program, team travel, and some smaller things that may go unnoticed.”

So Longwood might be relying on athletics fees to fund its program, and to give its school an identity.  But the net number of raised fees - $7 million -  is just about the same as the overall subsidy that the University of Virginia receives in student fees.

In other words, the overall costs to the "taxpayer" will be the the same, but a smaller University will always need to have a larger fee to cover the expense because the number of students are smaller.  You have to charge Longwood's 4,500 students 10 times the number you charge a school with 45,000 students to get the same dollar amount.

So the bill makers could have mandated that the University of Virginia could spend $0 on athletics fees for its students - and gotten the same "cost savings".  Not to mention Virigina, as a member of the ACC, gets money hand over fist from their conference and bowl payouts.  Longwood cannot possibly rely on money like that.

Is that fair, then, to go by percentages?  Especially when the numbers, in Longwood's case, are so small?

Rep. Cox and Governor McAuliffe may believe that this legislation, now written into Virginia law, will decrease tuition for students for everyone in the state.

The more likely effect, though, is to squash any plans James Madison had in regards to moving to an FBS conference, further squeezing HBCU's such as Norfolk State whom are already struggling nationally for a variety of reasons, and making institutions like Longwood, who by all accounts seem happy to pay for the privilege of having a Division I athletics program, look long at hard towards reclassifying to Division II.

In other words, they are micromanaging the athletics programs of their state and forcing them to adhere to what seem to be arbitrary spending caps, which deeply affects many schools not named Virginia or Virginia Tech, but won't work at all towards reducing tuition costs.

Maybe the goal of the bill is to make it harder for schools not named Virignia or Virginia Tech to have a strong athletics presence in the state.  And maybe it would have been right to just call it the "Virginia and Virgina Tech Athletic Hegemony Bill" instead of trying to claim that it will save anyone any money.

At least, then, it would have been honest.