… which is a start, but the story of Missouri State University’s long-term lies about its finances should be on the front page of the New York Times.
What seems a quiet story about a provincial public campus having lied to the state, the NCAA and its own university community about how much money it’s losing to sports, and about how it’s making up the difference by soaking students, is in fact not merely a national scandal in itself, but a story powerfully symbolic of the pourriture (for this degree of degeneracy, only the French word will do) big-time sports has brought to so many of America’s universities.
Before I quote from the two stories – one local, one Associated Press – let me direct you to various posts on this blog starting in 2010, when a baffled UD (numbers not being her strong point) wrote to an economist on MSU’s faculty – Reed Olsen – who has been insisting on the financial corruption of his university for the last fifteen years, during which he has been ignored and reviled.
So here’s Olsen pointing out that MSU’s new stupid unaffordable basketball arena was not in the black (as the school was thrilled to announce), but deeply in the red. Among the tricks MSU played, Olsen singled out this one:
They [are] hiding costs by allocating costs to the old arena, whose costs more [than] doubled when it quit being used. So on net it seems that the arena [is] losing about 2 M.
In ’01, with the money hemorrhage on full boil, boosters proposed that “the accounting of the [new] arena be combined with Hammons Student Center and Plaster Sports Complex,” which would make things look ever so much better. But
Former State Auditor Susan Montee last year specifically warned against mixing the finances of JQH Arena with other university sports facilities.
“In that way, it would not be transparent and nobody would be able to tell,” she said then.
Fuck transparency! says desperate, desperately stupid Missouri State, which, it now turns out, has been for years sending bogus athletic spending numbers to the NCAA.
This is from the brief AP report:
[A] multimillion dollar discrepancy [between what MSU says it’s spending on sports and what it’s really spending] stems from sports-related expenses, mostly facilities and administrative support, that Missouri State didn’t include in the athletics department budget. For a decade, the university also left out those costs and related sources of revenue, such as various student fees, when filing annual reports with the NCAA.
And here’s the headline on the more detailed local report:
$16 million? Try $25 million: New Report Reveals True Scope of MSU Athletics Spending
If MSU hadn’t systematically shut down Reed Olsen year after year, this wouldn’t have been much of a revelation.
Anyway. Let’s look a bit closer.
In the reports [to the NCAA] covering the fiscal years from 2005 to 2013, the only facilities costs MSU reported to the NCAA were lease payments for baseball at Hammons Field, which averaged a little less than $200,000 a year.
For 2014, the university reported $0 — an error, according to [University president Clif] Smart, who said the baseball lease, about $210,000, was mistakenly lumped into the “other expenses” category on the report.
And:
Prior to the report for the 2015 fiscal year, the information reported to the NCAA was taken primarily from the athletics department’s operating budget, which does not include administrative support offered by other university departments, or — most significantly — the millions of dollars the university spends each year on bond payments, maintenance and utilities for athletics facilities.
Anyway. Ahem! Today is a new day:
[T]he new report from MSU makes clear just how much of the bill is being subsidized by students and the university. Of the $25.2 million spent last year, $15.9 million came from student fees and university general revenue.
The president of this quintessentially provincial, regional school, puts it all in perspective:
“The kind of university we see ourselves as plays Division I sports — we’re not Division II, we’re not a regional school.”
March 22nd, 2016 at 7:47AM
Check out MSU’s website — http://www.missouristate.edu — and notice that every item under “Current Activities” is about athletics. Every item. And this is not the Athletics website; that’s http://www.missouristatebears.com/
Apparently nothing else is going on there, currently.
March 22nd, 2016 at 9:14AM
But that money is so well invested in branding, allowing athletics to be the front porch to the university!
Here is the problem with that front porch argument in this case — I am a big sports fan. Really big. Sports make up a part of my professional portfolio as well, in my teaching and scholarship, in my faculty member service duties, etc. And if given twenty guesses I would never have told you that Missouri State is the Bears. I could not tell you one thing about them other than (and even here I’d be guessing) their conference affiliation. I don’t know anything about the university’s location. I don’t know anything about even their “major” sports teams, never mind any other programs. So what bang are they getting for this buck? It’s absurd.
And we’re not talking loss-leader type numbers here — we lose almost a million a year but we believe having an athletic program both brings in student-athletes and other students who want college environment. Ok. I guess. No — we’re looking at expenditures in the tens of millions, and lies about expenditures in the millions. That isn’t a loss leader. That’s just flat-out taking.
March 22nd, 2016 at 11:58AM
So, don’t existing laws provide criminal penalties for university administrators who publish fraudulent financial statements? Or do such penalties exist but the crimes are never actually prosecuted?
March 22nd, 2016 at 12:08PM
david: I think they can talk their way out of this, with the help of lawyers who specialize in the small print, ambiguity, and the like.
March 22nd, 2016 at 4:57PM
In addition to whatever legal consequences these revelations might have for certain individuals, they could also do some serious damage to the institution as a while. The Higher Learning Commission (MSU’s accreditor) is presumably going to be interested in (1) the lack of transparency and honesty in financial reporting practices, (2) long-term institutional financial sustainability questions, and (3) general credibility quesions (i.e., an institution that could lie so brazenly to the NCAA might also have lied to the HLC in a self-study report). In addition, Moody’s might downgrade MSU’s bond rating. All this on top of the current bad PR.
March 22nd, 2016 at 6:56PM
Wow, just wow. Who was the outside auditor for this clown show? Those financial statements are a major part of the school’s credit rating. Given the numbers were junk, Dr. Doctorstein has it right. Moody’s isn’t going quietly into that good night. If the bond ratings slip below legal mandates, how is that problem going to be solved? Betcha it’ll be the academic side that gets the brass knuckles…
March 23rd, 2016 at 5:05AM
“Betcha it’ll be the academic side that gets the brass knuckles” — yup. But increasingly doesn’t this truism almost seem like a feature and not a glitch from the vantage point of the athletics side of things? They are capitalists when it comes to profit, socialists when it comes to losses.
March 23rd, 2016 at 8:34AM
HLC has had the sturdiness of a bent reed. They accepted a pile of flagrant and fragrant lies from Pres. Backslapper’s administration the last time they were here; we’ll see if they toughen up the next time around. I suspect that the admin of MSU is not trembling about them.
One hopes the whole branding fad implodes soon. A group of us did an internal study of our own employees about their perceptions of other institutions within about four hours’ drive time. What clearly emerged is that other than places very close to us, the state flagships, and a couple of privates we often play, “no opinion” is the most common common “brand,” even for institutions that have objectively spent big bucks promoting themselves.
March 24th, 2016 at 6:21AM
Derek: “They are capitalists when it comes to profit, socialists when it comes to losses.”
Bingo! You got it! I’m a longtime Libertarian voter, too, and worked on incentive pay for years, and somewhere deep down think the Ohio of 1816 was pretty good for personal liberty and freedom of enterprise.
Most all the mumbo-jumbo I hear about “market-based solutions” to some problem is blather.