To the editor:

I am writing to clarify the discussion that occurred at Wednesday’s University Senate in regard to the Big East Exit Fee. As the former chair of the Senate Budget Committee who with Audie Klotz and John Petosa negotiated the agreement with Lou Marcoccia, Executive Vice President and CFO, and Gwenn Judge, Budget and Fiscal Affairs Director, I believe it to be my obligation to clarify the agreement that was reached.

The basic agreement that was reached was that the athletic department would bear responsibility for 25 percent of the cost Big East Exit Fee with the remaining 75 percent borne by the other university responsibility centers — primarily the schools and colleges. The agreement replaced the previous decision by the Board of Trustees that the exit fee would be covered by the entire university.

We also negotiated a provision to deal with any unrestricted windfall revenues. This is where the discussion at the Senate became confusing, in no small part because of my want of memory and failure to clearly articulate what had been agreed. Here is the language that is in the agreement:

. . . require Athletics to pay an additional 15 percent of any windfall unrestricted revenues beyond taxes and participation. The overall effect of the additional 15 percent of windfall unrestricted revenues going to non-Athletic Centers combined with other RCM unrestricted revenues assessments and participation would be approximately a 50/50 split. (Emphasis added.)

I think the confusion was related to what the additional 15 percent means. Let me try to explain. Responsibility centers, which include the athletic department, pay “taxes” on gross revenues. These various taxes amount to about 32–33 percent of revenue. In the case of a windfall, these taxes would be applied and an additional 15 percent of the gross amount would go toward central funds. The result would mean that approximately half of the windfall amount would go toward non-Athletic uses.

Lou Marcoccia did attempt to explain this formula at the Senate meeting, but I fear it was lost in the conversation. That I could not remember the details of the agreement, no doubt, added to misunderstanding.

Respectfully,

Craig A. Dudczak
Associate Professor, CRS
Former Budget Committee Chair

Published on January 20, 2015 at 1:32 am