Another line of inquiry for auditors: University of Arkansas athletic spending doesn't match budget | Arkansas Blog

Sunday, October 27, 2013

Another line of inquiry for auditors: University of Arkansas athletic spending doesn't match budget

Posted By on Sun, Oct 27, 2013 at 7:55 AM

MISMATCH: UA athletic budgeting misses the actual resuls by a wide margin. - ACADEMIC DAYLIGHT
  • Academic Daylight
  • MISMATCH: UA athletic budgeting misses the actual resuls by a wide margin.

A new post recently on on a blog titled "Academic Daylight: Transparency at the University of Arkansas," is worth a look.

The anonymously written blog posts links to public documents and comments about the degree of transparency available at the state's flagship university. It has been inspired by the running controversy over overspending in the university advancement division, a situation first uncovered by Arkansas Business, but since developed by the Arkansas Democrat-Gazette and others and now under review by both the Legislative Audit and a prosecuting attorney (for allegations of destruction of records, made by a fired employee who has criticized the university and its chancellor David Gearhart for resisting openness.)

Academic Daylight ventures in its latest post to grab hold of the third rail of Arkansas politics — athletic spending at the UA. It's a good time to do it. When the Hog football team is winning, no one dare utter a word about the sloppy, secretive and sometimes shady practices in the athletic kingdom. As I've written before the Athletic Department is much like the Advancement Division, except worse. A big chunk of its money is laundered through the secretive Razorback Foundation, just as advancement money is laundered through the secretive UA Foundation. The money wouldn't exist but for the university and its athletic department. But it is often spent in ways out of reach of public inspection. And sometimes, the numbers don't match up.

By the way: The Razorback Foundation rarely responds at all to questions about its business. The UA Foundation at least will issue a formal "no comment. "This gives you some idea of the Fayetteville pecking order. This new information suggests practices in jockdom much like those in advancement. The public employees spend whatever they think necessary and the secretive private moneybags ship over cash to cover.

Reports Academic Daylight:

* UA reported spending $88 million on athletics in 2013, up 30 percent from 2010.

* The actual revenue and spending figures, reported to Higher Education, are $12 million more than the amount in UA state budget documents.

Why are budget makers so wide off the mark?

For example, about 3 million are spent every year for game guarantees ($3.6 million in 2013). Yet these amounts never appear in the budget. Could this be related to the UA’s attitude that game guarantees constitute a trade secret? Somewhat bizarrely, the line item for ‘Facilities’ is under-budgeted every year – by seven million in 2013 and a whopping 12 million in 2012. Can you picture the financial officer preparing the budget: “Let’s see, last year we budgeted 3 million but spent 15 million on facilities, so this year we are going to budget 4 million, that should fix it”. On the revenue side, most of the unbudgeted revenue appears in the “Other Income” category (12 million in 2013, up from 9 million in 2010). The same line item, which is said to include “investment, rental, endowment income”, is budgeted as zero ($0) every year. Is this related to the UA’s habit of keeping Razorback Foundation finances in the dark? Or is it another result of the sloppiness built into the UA’s accounting practices, as recently revealed and criticized by the Legislative Audit report?

The blog provides links to all the relevant documents.

The item follows a relevant earlier post relating to an op-ed written by emeritus law professor John Watkins, considered an authority on the state's Freedom of Information Act. He advocated bringing both the UA Foundation and Razorback Foundation activities clearly under reach of the sunshine law.

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