$17m early buyout agreement per Blaud

[CL82]

Well, if we're talking about the exit fee deal, that happened in late 2013 (Louisville to pay $11 million for early exit from AAC to join ACC), so it's 5 1/2 years.

What is interesting in this article is the $11M was all paid by Louisville. None of it was offset by earnings.

 

[upstater]

Let me see if I can explain this to you in a way that resonate with you. You have a college. It has building that it need to maintain. It has faculty that needs to be paid for. It has non-faculty employees it needs to pay for. It has utilities expenses, etc. Now lets say that your cost for all of that, for purposes of this example is $100. Let's say you have to spread the cost over a single class of 10 people who are in a classroom that seats twenty. You want to breakeven, so you charge each student $10. $10 x 10 = $100. You are at breakeven. Another student decides to join the university. He pays for his own books and materials. The prof is already paid, as are the room and electricity and support staff etc. What is the marginal cost to the university of having this student sit in the room? Well in my example it $0.

I fully understand that if you divide your total costs by your total students you will get a per student number. That's not your marginal cost to add the student.

Make sense?

No, it doesn't make any sense at all. Because the extra student requires 10% more labor that needs to be reimbursed, so now you're on the hole.

I am telling you, professors and department budgets are literally paid by butts in seats. Adding extra students means more labor. Universities are corporatized now in the sense that money to fund even raises is distributed according to how many students take classes in a department, how many are majors, how many are serviced for their final projects. When departments are growing and have burgeoning needs to service more students, they need to hire people. That expenditure is taken right out of their limited budgets. Not to mention the caps on classes which literally means the 21st student can't even enroll so he/she needs to be put into a class with similar students who will require yet another instructor.

Let me put it an even easier way. The taxpayer subsidy is reserved for in-state students. If it is generous, as it is in states like Virginia, that will mean that very few OOS students will be admitted. It is leaves the university wanting, the school will push to enroll more OOSs to make up the revenue shortage.

This literally means that the number of OOS students are proscribed ahead of time. They know exactly how many they want/need. If you suddenly convert OOS to INS, there will necessarily be a revenue shortall in the budget.

The North Carolina people, as shown in the article, are hyperaware of this. Which explains why the 2005-2006 experiment was ended a few years later when the school had a big budget cut. They immediately ended the program because they knew it would mean more money for the university.

 

[CL82]

No, it doesn't make any sense at all. Because the extra student requires 10% more labor that needs to be reimbursed, so now you're on the hole.

So there is no minimum for teaching a class. It's not done by ranges 10-20= x 20-30 students =y?

Let's say that teachers are getting paid on a per student basis (this astounds me but I have no reason to doubt that you are correct), Does there electricity go up by 10%? Do non-faculty salaries go up by 10% Does the debt service go up by 10%? No. If faculty pay goes up based upon that number students in their classes then that is a marginal cost increase so is fair to be charged back to the AD, but the rest? Not so much. They don't vary by student.

Can we agree on that?

 

[upstater]

By the way, I was trying to find out how many athletic teams UConn had, how many student athletes on scholarship.

Holy hell is that website a mess.

What happened? The website used to be OK.

Now it's in MySpace territory.

 

[HuskyHawk]

So there is no minimum for teaching a class. It's not done by ranges 10-20= x 20-30 students =y?

Let's say that teachers are getting paid on a per student basis (this astounds me but I have no reason to doubt that you are correct), Does there electricity go up by 10%? Do non-faculty salaries go up by 10% Does the debt service go up by 10%? No. If faculty pay goes up based upon that number students in their classes then that is a marginal cost increase so is fair to be charged back to the AD, but the rest? Not so much. They don't vary by student.

Can we agree on that?

He lives in that world so believes it’s real. I don’t doubt anything he says is accurate in most schools about how money is cross charged and moved around. But it’s all just a way to manage the business. The cost of instruction is not even most of the cost of a student, and faculty pay is the one area of higher ed costs that hasn’t outpaced inflation by 5x. The facilities and buildings are all sunk cost as you noted. UConn can increase class sizes anytime it wants. It costs nothing. UConn could end football tomorrow and cut 120 free students from the roster. They would not lay off any faculty as a resulting having 120 fewer students.

 

[upstater]

So there is no minimum for teaching a class. It's not done by ranges 10-20= x 20-30 students =y?

Let's say that teachers are getting paid on a per student basis (this astounds me but I have no reason to doubt that you are correct), Does there electricity go up by 10%? Do non-faculty salaries go up by 10% Does the debt service go up by 10%? No. If faculty pay goes up based upon that number students in their classes then that is a marginal cost increase so is fair to be charged back to the AD, but the rest? Not so much. They don't vary by student.

Can we agree on that?

Yes, there are ranges. Fall below the minimum and the class is canceled. 65% of the budget is faculty pay, so in your example, the reimbursement is 65%. (Note: I don't really see the point in doing it this way, since schools pay for general upkeep just based on what they expect in revenue, based on number of admitted students, which is carefully calibrated, so we run into the same problem.)

While departments don't pay utilities, you might be shocked to find out that they do pay for things like office space, furnishing, painters to paint the walls, computers, refurbishing a department owned classroom for new technology: these are not utilities but each department is tasked with paying building upkeep. Just to give a few examples: if I want my office painted without having my Chair sigh at the request, I will sneak in on a Sunday and paint it myself with my money. In order to set up a smart classroom (i.e. computer, screen, projector, lighting) we recently shelled out $75k. A rip off. We hold events for a program we run downtown at a performance venue owned by the folk singer Ani DiFranco. She gives it to us for free. We do this because the only suitable venues on campus are owned by other departments, who charge $700 for a couple of hours. So instead, we shuttle students downtown on university buses for $200 for the events. It is madness. I am only trying to emphasize that almost every cost outside of utilities is paid for by departments according to their means, and that money is doled out according to the number of students serviced. Remove asbestos from offices? The department pays.

Also, note, in some schools (smaller ones) the number of athletes make up a big % of the student body. Say UConn has 600 athletes. That's 3-5% of the UConn student body. Pretty small. At other schools, it is 10-15%. At some of the small privates, 30%.

 

[upstater]

UConn could end football tomorrow and cut 120 free students from the roster. They would not lay off any faculty as a resulting having 120 fewer students.

If UConn suddenly got rid of football and then had 170 fewer scholarships to dole out, it would, one, reduce the athletic department budget deficit, and, two, allow the university to admit more students while maintaining its student faculty ratio. It would increase revenue to the academic side, and reduce the deficit to athletics.

Note: I'm not advocating this. Just telling you how an administrator would think of this scenario. Suddenly, you'd have room for 170 more paying students. That's an increase any way you cut it.

 

[Hoophound]

Haven’t been through the details in the thread, but we absolutely got the better end of the exit fee deal.

 

[huskymedic]

By the way, I was trying to find out how many athletic teams UConn had, how many student athletes on scholarship.

Holy hell is that website a mess.

What happened? The website used to be OK.

Now it's in MySpace territory.

For 07/01/17 -> 6/30/18

24 teams (11 male/13 female)

Total participants:
383 male
396 female

Unduplicated Count:
321 male
316 female
(Played on at least 1 varsity team)

Athletically related student aid:
$7,835,100 male
$7,713,412 female
$15,548,513 Total

 

[upstater]

For 07/01/17 -> 6/30/18

24 teams (11 male/13 female)

Total participants:
383 male
396 female

Unduplicated Count:
321 male
316 female
(Played on at least 1 varsity team)

Athletically related student aid:
$7,835,100 male
$7,713,412 female
$15,548,513 Total

Thanks. So UConn has roughly 4% of the student body playing sports.

 

[David 76]

How are they related?

Part of our story has been we don't t have money. As in 10 million.
But now we have 20 million.
If KO's case is decided totally on the merits, it should have no effect. But if a settlement is being brokered???

 

[HuskyHawk]

If UConn suddenly got rid of football and then had 170 fewer scholarships to dole out, it would, one, reduce the athletic department budget deficit, and, two, allow the university to admit more students while maintaining its student faculty ratio. It would increase revenue to the academic side, and reduce the deficit to athletics.

Note: I'm not advocating this. Just telling you how an administrator would think of this scenario. Suddenly, you'd have room for 170 more paying students. That's an increase any way you cut it.

Yep and that’s what they’d do. I think it’s really opportunity cost more than actual expense. I totally agree with that. But those 170 wouldn’t all be full freight out of state students with zero aid.

Even in your example of department A charging department B $700 for a room, that’s all just accounting. The cost of using that room is zero. It simply moves from one place as a credit and is debited elsewhere. Paying the $200 downtown is an actual cost, so your university is mind bogglingly stupid to structure things in this way.

When I talk about costs, I don’t mean credits on one P&L and debits on another P&L within the same university. That’s not an actual cost to the school. I mean you cut a check/EFT that went outside of the university. There is no way in the world that an extra scholarship results in an actual external expenditure of the amount that is “charged” to the AD for that student. I’m sure a whole lot of it is some pro-rata internal service charge despite no or minimal actual increase in utilization.

I also completely accept your premise that the marginal true cost of athletic scholarships is higher at a smaller private school than it is at UConn. I imagine at a school like Ohio State with 55K undergrads it’s very low. It’s probably pretty high at Duke.

 

[Duncan Idaho]

What is interesting in this article is the $11M was all paid by Louisville. None of it was offset by earnings.

They also left less mouths to feed. 8, I believe. We left 11.

 

[upstater]

Yep and that’s what they’d do. I think it’s really opportunity cost more than actual expense. I totally agree with that. But those 170 wouldn’t all be full freight out of state students with zero aid.

Even in your example of department A charging department B $700 for a room, that’s all just accounting. The cost of using that room is zero. It simply moves from one place as a credit and is debited elsewhere. Paying the $200 downtown is an actual cost, so your university is mind bogglingly stupid to structure things in this way.

When I talk about costs, I don’t mean credits on one P&L and debits on another P&L within the same university. That’s not an actual cost to the school. I mean you cut a check/EFT that went outside of the university. There is no way in the world that an extra scholarship results in an actual external expenditure of the amount that is “charged” to the AD for that student. I’m sure a whole lot of it is some pro-rata internal service charge despite no or minimal actual increase in utilization.

I also completely accept your premise that the marginal true cost of athletic scholarships is higher at a smaller private school than it is at UConn. I imagine at a school like Ohio State with 55K undergrads it’s very low. It’s probably pretty high at Duke.

We'll just have to disagree. Your argument is, what's 4% extra kids in the classroom? Whereas there are people employed who live to account for every single one of those bodies. And they don't ever want to run afoul of the student/faculty ratio that keeps them ranked in USNWR.

Theoretically you're right. Every faculty member could teach 5 classes of 200+ and still receive the same income. It doesn't really matter (other than the fact you need new classrooms). But where it hurts is the time/labor of the employee and the measurables that allow a school to retain its reputation.

There's even another way to look at this. Many schools are talking about REDUCING incoming admissions in order to pump up the reputation scores. This tells you that while your theory may be correct, the reality of it is entirely opposite, and there are plenty of administrators who are employed to precisely to make it so.

 

[upstater]

They also left less mouths to feed. 8, I believe. We left 11.

Actually the latest additions were already in the conference after Louisville left.

You have to remember that ridiculous agreement UConn made to not only allow the new entrants in for free, but to let them also have some of the exit fees from the earlier departures of Syracuse and Pitt and the like.

I will never understand what went down there.

 

[navery12]

I agree with what they did, just don’t think we pulled a fast one on the league. The agreement was reasonable for both sides. The people acting like the checks the league held back don’t count are the ones being unreasonable

It's not that those checks don't matter, it's that those checks were being held the next 2 years as the standard exit fee. That was non-negotiable

 

[Duncan Idaho]

Actually the latest additions were already in the conference after Louisville left.

You have to remember that ridiculous agreement UConn made to not only allow the new entrants in for free, but to let them also have some of the exit fees from the earlier departures of Syracuse and Pitt and the like.

I will never understand what went down there.

I thought they came in as louisvile was leaving and not eligble for the buyout monies from them and cuse. Louisville declaring the prebious year?

 

[David 76]

He lives in that world so believes it’s real. I don’t doubt anything he says is accurate in most schools about how money is cross charged and moved around. But it’s all just a way to manage the business. The cost of instruction is not even most of the cost of a student, and faculty pay is the one area of higher ed costs that hasn’t outpaced inflation by 5x. The facilities and buildings are all sunk cost as you noted. UConn can increase class sizes anytime it wants. It costs nothing. UConn could end football tomorrow and cut 120 free students from the roster. They would not lay off any faculty as a resulting having 120 fewer students.

No. They would replace those students with paying students and generate about a half a million dollars. They could then lower costs or add more to the student experience with the $500,000 dollars. Plus, relieved of the title requirement, the number would be 240 students and $1 million dollars.

 

[CL82]

Yes, there are ranges. Fall below the minimum and the class is canceled. 65% of the budget is faculty pay, so in your example, the reimbursement is 65%. (Note: I don't really see the point in doing it this way, since schools pay for general upkeep just based on what they expect in revenue, based on number of admitted students, which is carefully calibrated, so we run into the same problem.)

While departments don't pay utilities, you might be shocked to find out that they do pay for things like office space, furnishing, painters to paint the walls, computers, refurbishing a department owned classroom for new technology: these are not utilities but each department is tasked with paying building upkeep. Just to give a few examples: if I want my office painted without having my Chair sigh at the request, I will sneak in on a Sunday and paint it myself with my money. In order to set up a smart classroom (i.e. computer, screen, projector, lighting) we recently shelled out $75k. A rip off. We hold events for a program we run downtown at a performance venue owned by the folk singer Ani DiFranco. She gives it to us for free. We do this because the only suitable venues on campus are owned by other departments, who charge $700 for a couple of hours. So instead, we shuttle students downtown on university buses for $200 for the events. It is madness. I am only trying to emphasize that almost every cost outside of utilities is paid for by departments according to their means, and that money is doled out according to the number of students serviced. Remove asbestos from offices? The department pays.

Also, note, in some schools (smaller ones) the number of athletes make up a big % of the student body. Say UConn has 600 athletes. That's 3-5% of the UConn student body. Pretty small. At other schools, it is 10-15%. At some of the small privates, 30%.

Interesting. I always appreciate discussing this area with you because of your background and your willingness to share it.

Keep in mind any chargeback for student athlete tuition is merely debiting one account and crediting the other. There is no incoming money. It is entirely illusory. So in the end whether it’s accounted for by making it a larger offsetting credit and a debit or a smaller offsetting credit and a debit, it’s really irrelevant. it doesn’t add a dollar to the total budget or take away about a dollar from the total budget.

So practically speaking whether it’s represented as the University subsidizing the athletics department which then pays full freight forward student athletes or whether the university pays athletic department less money in the athletic department pays the University back less money, it’s still a net nothing.

Doing it based on marginal cost, rather than on discounted out of state cost, however, creates a much better narrative for athletic department in there for a much better narrative for the university as a whole. Everyone wins.

 

[CL82]

No. They would replace those students with paying students and generate about a half a million dollars. They could then lower costs or add more to the student experience with the $500,000 dollars. Plus, relieved of the title requirement, the number would be 240 students and $1 million dollars.

That assumes that out of state students don’t receive any merit incentives or grants. In this competitive environment, I believe that to be unlikely. Note that I am not talking about federal need based grants.

It also completely ignores the value that athletics bring to the university. Jim Calhoun, and later Susan Herbst, both described athletics as the front porch and the mansion that is the university. The notion of if we eliminate the athletic department, then the university makes more money because all those empty seats can now be sold disregards the fact that many of those filling the empty seats are looking for a diverse student experience that includes attending competitive athletic events.

 

[upstater]

I thought they came in as louisvile was leaving and not eligble for the buyout monies from them and cuse. Louisville declaring the prebious year?

Once Louisville declared they were leaving, it had to be renegotiated. Cincy, USF and UConn gave up old exit fee money to the newcomers. Prior to that, the newcomers were not going to get anything.

 

[upstater]

So practically speaking whether it’s represented as the University subsidizing the athletics department which then pays full freight forward student athletes or whether the university pays athletic department less money in the athletic department pays the University back less money, it’s still a net nothing.

Doing it based on marginal cost, rather than on discounted out of state cost, however, creates a much better narrative for athletic department in there for a much better narrative for the university as a whole. Everyone wins.

Yes, indeed. I've said the same. The Academic side would then become responsible for the lost revenue, instead of the Athletics side. The UNC article also makes this crystal clear. For them, this means that suddenly the academic side has $17m less just as the athletic side's budget increases by $17m.

From my point-of-view, this is actually almost preferable for administrators and presidents since they can further hide the true cost of athletics from their #1 customers, that being the paying parents of regular students.

The sports media has it reversed IMO. They keep claiming that administrators are hiding sports revenue so they don't have to pay it to the athletes. In reality, administrators are much more afraid of being caught upcharging their true customers to the tune of $500-$1,000 a year in sports student fees. They'd rather hide the sports losses than show them.

The problem with this particular issue, OOS vs. In-State, is that a change runs afoul of the corporate bean-counting that every other department in the university has already agreed to.

I won't even get into the graduate school side which is even more mercenary and money driven.

 

[Chief00]

If UConn suddenly got rid of football and then had 170 fewer scholarships to dole out, it would, one, reduce the athletic department budget deficit, and, two, allow the university to admit more students while maintaining its student faculty ratio. It would increase revenue to the academic side, and reduce the deficit to athletics.

Note: I'm not advocating this. Just telling you how an administrator would think of this scenario. Suddenly, you'd have room for 170 more paying students. That's an increase any way you cut it.

Wild guesses without using a pencil. That would reduce the AD deficit $10 -11 million with travel and coaches reductions and probably add at least $5 million on the academic side.
I think it’s a bad idea long term but it would save money instantly.

 

[Husky25]

Part of our story has been we don't t have money. As in 10 million.
But now we have 20 million.
If KO's case is decided totally on the merits, it should have no effect. But if a settlement is being brokered???

That's a lot of words for where, "they're not related," would have been just fine.

 

[AZHuskiePop]

2014 wasn't 7 years ago.

Louisville also signed on with the new BE/AAC contract. Louisville received its invitation after the BE had reconstituted. In other words, after Rutgers had gotten its invitation. For some time, Louisville was stuck just like UConn, and it was on board as an AAC member.

I think It was Maryland unexpected and tumultuous exit from the ACC that opened that spot. That position was expected to go to UConn but Louisville received it.
Louisville left as NC since vacated , so I’m not sure how much they paid.
Rutgers fought for every penny.