Outside Topic U of Arizona likely to cut athletics budget - Printable Version
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U of Arizona likely to cut athletics budget - TonyLima - 11-09-2023
Cash on hand less than expected
RE: U of Arizona likely to cut athletics budget - 82lsju - 11-09-2023
(11-09-2023, 11:50 AM)TonyLima Wrote: Cash on hand less than expected
probably similar info that doesn't require signing up
https://tucson.com/news/local/education/college/university-of-arizona-tucson-budget-cuts/article_1dd77a46-7d96-11ee-ac38-ef7fe0919160.html
RE: U of Arizona likely to cut athletics budget - Softball Fan - 11-09-2023
It looks like financial cuts being considered in all aspects of the university. Very sad.
“
Quote:If you look at the band from 3.75 GPA to 4.0, there are a lot of students here that pay nothing,” he said. “We lose money on every one.”
Currently, the UA has 23 sports teams. Robbins said other teams in the Big 12, which the UA is joining, have an average of 17 and indicated that cutting sports teams is a strong possibility.
“Everything is on the table in terms of dealing with athletics,” he said. “This is an issue that is going to require a lot of tough decisions.”
I have empathy for Arizona athletics/administration wanting to get the best financial deal they could in conference re-alignment.
RE: U of Arizona likely to cut athletics budget - PersonalLegend - 11-09-2023
(11-09-2023, 12:10 PM)paloalto Wrote: “If you look at the band from 3.75 GPA to 4.0, there are a lot of students here that pay nothing,” he said. “We lose money on every one.”
What a dumb statement. Maybe they should stop admitting students with good grades?
RE: U of Arizona likely to cut athletics budget - SkiBum80 - 11-09-2023
There but by the grace of God go we
RE: U of Arizona likely to cut athletics budget - OCcardinal - 11-09-2023
(11-09-2023, 12:54 PM)PersonalLegend Wrote:Or rather stop giving generous merit scholarships to students with good academics. When my kids were applying to college I was shocked with how much $$ some schools pay to induce academically strong students to matriculate. If you are a national merit semifinalist applying to Stanford, Admissions is like "meh, that's not going to do much to get you admitted." By contrast, Arizona residents who are national merit semi finalists pay no tuition at Arizona. Even at USC, national merit semifinalists automatically get their tuition cut in half (with a chance at a full scholarship).(11-09-2023, 12:10 PM)paloalto Wrote: “If you look at the band from 3.75 GPA to 4.0, there are a lot of students here that pay nothing,” he said. “We lose money on every one.”
What a dumb statement. Maybe they should stop admitting students with good grades?
RE: U of Arizona likely to cut athletics budget - Mick - 11-09-2023
(11-09-2023, 02:44 PM)OCcardinal Wrote:(11-09-2023, 12:54 PM)PersonalLegend Wrote:Or rather stop giving generous merit scholarships to students with good academics. When my kids were applying to college I was shocked with how much $$ some schools pay to induce academically strong students to matriculate. If you are a national merit semifinalist applying to Stanford, Admissions is like "meh, that's not going to do much to get you admitted." By contrast, Arizona residents who are national merit semi finalists pay no tuition at Arizona. Even at USC, national merit semifinalists automatically get their tuition cut in half (with a chance at a full scholarship).(11-09-2023, 12:10 PM)paloalto Wrote: “If you look at the band from 3.75 GPA to 4.0, there are a lot of students here that pay nothing,” he said. “We lose money on every one.”
What a dumb statement. Maybe they should stop admitting students with good grades?
USC heavily incentivizes outstanding students with 100%, 50% and 25% packages, depending on the student. They also selectively admit substandard performers, as long as they matriculate in the spring (and don't hit the fall admission statistics) and are able to pay full fare. I know one such student, played ball with my son. Nowhere close to an academic genius, but always put forth a strong effort and was likely to end up in sales (like his father, who runs global sales for a large spirits company). He graduated from USC and did well enough to get his MBA from Michigan's Ross school, now he has a great position with one of the Big Five tech companies.
RE: U of Arizona likely to cut athletics budget - Sakibomb25 - 11-09-2023
I think the professor is correct is questioning how do you make a $240 million mistake and still have a job?
RE: U of Arizona likely to cut athletics budget - 76lsjumb - 11-09-2023
Sakibomb25 dateline='[url=tel:1699568375' Wrote: 1699568375[/url]']
I think the professor is correct is questioning how do you make a $240 million mistake and still have a job?
Be in government…
RE: U of Arizona likely to cut athletics budget - Goose - 11-09-2023
(11-09-2023, 03:19 PM)Sakibomb25 Wrote: I think the professor is correct is questioning how do you make a $240 million mistake and still have a job?FWIW, I can't imagine it was a $240 million "mistake". Either the financial people weren't reporting the truth to "management" (i.e. lying) or they were telling the sad truth and management elected to hold off reporting it, hoping it would somehow "go away". There are financial forecasts on at least a monthly basis, if not more. When things stop going according to projections, it needs to be dealt with. They knew. Who knew what when is an issue, but it wasn't a surprise. RR is, to this point, Teflon man. This one will be "interesting".
RE: U of Arizona likely to cut athletics budget - norcard10 - 11-09-2023
(11-09-2023, 03:14 PM)Mick Wrote:(11-09-2023, 02:44 PM)OCcardinal Wrote:(11-09-2023, 12:54 PM)PersonalLegend Wrote:Or rather stop giving generous merit scholarships to students with good academics. When my kids were applying to college I was shocked with how much $$ some schools pay to induce academically strong students to matriculate. If you are a national merit semifinalist applying to Stanford, Admissions is like "meh, that's not going to do much to get you admitted." By contrast, Arizona residents who are national merit semi finalists pay no tuition at Arizona. Even at USC, national merit semifinalists automatically get their tuition cut in half (with a chance at a full scholarship).(11-09-2023, 12:10 PM)paloalto Wrote: “If you look at the band from 3.75 GPA to 4.0, there are a lot of students here that pay nothing,” he said. “We lose money on every one.”
What a dumb statement. Maybe they should stop admitting students with good grades?
USC heavily incentivizes outstanding students with 100%, 50% and 25% packages, depending on the student. They also selectively admit substandard performers, as long as they matriculate in the spring (and don't hit the fall admission statistics) and are able to pay full fare. I know one such student, played ball with my son. Nowhere close to an academic genius, but always put forth a strong effort and was likely to end up in sales (like his father, who runs global sales for a large spirits company). He graduated from USC and did well enough to get his MBA from Michigan's Ross school, now he has a great position with one of the Big Five tech companies.
That's a better outcome than most Stanford grads so that's that.
RE: U of Arizona likely to cut athletics budget - TonyLima - 11-09-2023
(11-09-2023, 03:44 PM)Goose Wrote:(11-09-2023, 03:19 PM)Sakibomb25 Wrote: I think the professor is correct is questioning how do you make a $240 million mistake and still have a job?FWIW, I can't imagine it was a $240 million "mistake". Either the financial people weren't reporting the truth to "management" (i.e. lying) or they were telling the sad truth and management elected to hold off reporting it, hoping it would somehow "go away". There are financial forecasts on at least a monthly basis, if not more. When things stop going according to projections, it needs to be dealt with. They knew. Who knew what when is an issue, but it wasn't a surprise. RR is, to this point, Teflon man. This one will be "interesting".
Bookkeeping ain’t that hard. I smell fraud.
RE: U of Arizona likely to cut athletics budget - Goose - 11-09-2023
(11-09-2023, 05:47 PM)TonyLima Wrote:I am not sure that I could call it "fraud" exactly. I have seen several examples first hand where costs were higher than expected and revenues were lower than expected. The "bad news" was reported with estimates going forward that said it was all going to be solved before the next reporting period. Nobody wanted to accept the idea the original estimates were wrong. They also had no idea how to "salvage" the situation, so they just made vague reports to their superiors and hoped that somehow the situation would fix itself.(11-09-2023, 03:44 PM)Goose Wrote:(11-09-2023, 03:19 PM)Sakibomb25 Wrote: I think the professor is correct is questioning how do you make a $240 million mistake and still have a job?FWIW, I can't imagine it was a $240 million "mistake". Either the financial people weren't reporting the truth to "management" (i.e. lying) or they were telling the sad truth and management elected to hold off reporting it, hoping it would somehow "go away". There are financial forecasts on at least a monthly basis, if not more. When things stop going according to projections, it needs to be dealt with. They knew. Who knew what when is an issue, but it wasn't a surprise. RR is, to this point, Teflon man. This one will be "interesting".
Bookkeeping ain’t that hard. I smell fraud.
Eventually the problems got so big their superiors decided to look into it. At that point, most of the people involved started streaming for the exits and the ones that didn't were asked to do so. Contrary to my expectations, several of those asked to leave went on to bigger and more responsible jobs elsewhere where they did just fine. This was not because they had learned from experience, but rather because lots of "management" really does nothing but report what is happening. They really don't "control" anything and don't even attempt to do so. This is called the "black bag" theory of management, where management spends each reporting period with their head inside a black bag. At the end of each reporting period, they remove the bag, look around, and report to the next level that things are "good" or that things are "bad" based on how they feel at the moment. They then replace the black bag over their head and repeat. You might be surprised at how commonly this theory is employed.
RE: U of Arizona likely to cut athletics budget - Mick - 11-09-2023
(11-09-2023, 05:47 PM)TonyLima Wrote:(11-09-2023, 03:44 PM)Goose Wrote:(11-09-2023, 03:19 PM)Sakibomb25 Wrote: I think the professor is correct is questioning how do you make a $240 million mistake and still have a job?FWIW, I can't imagine it was a $240 million "mistake". Either the financial people weren't reporting the truth to "management" (i.e. lying) or they were telling the sad truth and management elected to hold off reporting it, hoping it would somehow "go away". There are financial forecasts on at least a monthly basis, if not more. When things stop going according to projections, it needs to be dealt with. They knew. Who knew what when is an issue, but it wasn't a surprise. RR is, to this point, Teflon man. This one will be "interesting".
Bookkeeping ain’t that hard. I smell fraud.
Coin flip between fraud and simple incompetence. The UofA is not audited by a Big Four accounting firm, they're audited by the Arizona Auditor General. In looking at the qualifications of the individuals involved, I would not be filled with confidence. On the UofA side, the VP of Financial Services has an undergrad degree in Criminal Justice, and a Master's in Applied Sociology and (unaccountably) a Master's in Accounting. An odd mix. The Chief Budget Officer has worked for UofA for just under 20 years, starting out as a library assistant, got his master's in accounting at UofA, progressed through the ranks, was named CBO three years ago. CFO has been there for 20 years. The Director of Business and Finance makes less than $100k. On the Arizona Auditor General side, the chief auditor lists no background at all, and you can't find one with a cursory search (her name is on the opinion). I don't see any public accounting in the background of any of these individuals (doesn't mean it's not there, just that I can't find it).
They tested 195 high risk transactions (out of 10k +/-) and made recommendations for improvement on the March 2022 report
https://www.azregents.edu/sites/default/files/reports/UA-Senior-Administration-Accounts-Mar-2022.pdf
$240 million is about 10% of their annual budget. That is a massive, massive miss. Here's the June, 2023 Annual Report and clean opinion:
https://financialservices.arizona.edu/sites/default/files/2023-10/acfr2023web.pdf
The last paragraph of the auditor's report is a little ominous...references that most information is provided by management, that they'll compile a separate analysis and publish it separately. That was a month ago. Haven't been able to find that analysis.
RE: U of Arizona likely to cut athletics budget - TonyLima - 11-09-2023
(11-09-2023, 06:32 PM)Mick Wrote:(11-09-2023, 05:47 PM)TonyLima Wrote:(11-09-2023, 03:44 PM)Goose Wrote:(11-09-2023, 03:19 PM)Sakibomb25 Wrote: I think the professor is correct is questioning how do you make a $240 million mistake and still have a job?FWIW, I can't imagine it was a $240 million "mistake". Either the financial people weren't reporting the truth to "management" (i.e. lying) or they were telling the sad truth and management elected to hold off reporting it, hoping it would somehow "go away". There are financial forecasts on at least a monthly basis, if not more. When things stop going according to projections, it needs to be dealt with. They knew. Who knew what when is an issue, but it wasn't a surprise. RR is, to this point, Teflon man. This one will be "interesting".
Bookkeeping ain’t that hard. I smell fraud.
Coin flip between fraud and simple incompetence. The UofA is not audited by a Big Four accounting firm, they're audited by the Arizona Auditor General. In looking at the qualifications of the individuals involved, I would not be filled with confidence. On the UofA side, the VP of Financial Services has an undergrad degree in Criminal Justice, and a Master's in Applied Sociology and (unaccountably) a Master's in Accounting. An odd mix. The Chief Budget Officer has worked for UofA for just under 20 years, starting out as a library assistant, got his master's in accounting at UofA, progressed through the ranks, was named CBO three years ago. CFO has been there for 20 years. The Director of Business and Finance makes less than $100k. On the Arizona Auditor General side, the chief auditor lists no background at all, and you can't find one with a cursory search (her name is on the opinion). I don't see any public accounting in the background of any of these individuals (doesn't mean it's not there, just that I can't find it).
They tested 195 high risk transactions (out of 10k +/-) and made recommendations for improvement on the March 2022 report
https://www.azregents.edu/sites/default/files/reports/UA-Senior-Administration-Accounts-Mar-2022.pdf
$240 million is about 10% of their annual budget. That is a massive, massive miss. Here's the June, 2023 Annual Report and clean opinion:
https://financialservices.arizona.edu/sites/default/files/2023-10/acfr2023web.pdf
The last paragraph of the auditor's report is a little ominous...references that most information is provided by management, that they'll compile a separate analysis and publish it separately. That was a month ago. Haven't been able to find that analysis.
I'm an economist, not an accountant. But I do have an MBA. And I know enough statistics to say that a sample of 195 out of 10,000 is ... inadequate. Let me look into the AZ auditor's background. I have sources ...
RE: U of Arizona likely to cut athletics budget - Goose - 11-13-2023
https://news.azpm.org/p/news-articles/2023/11/13/218171-ua-president-addresses-financial-crisis-saying-they-overinvested/
As many have suspected, the $265 million purchase of an online university is a significant driver of the cash flow problem. The operating costs of said purchase are also much higher than anticipated. The article blames the model used to predict expenses and asserts that problem has been corrected. However, that doesn't square with the operating cost underestimate. Things are stinking here more and more. The online university purchase was an attempt to emulate ASU and it's great success in creating an online presence. UofA tried to shortcut the process and appear to have failed spectacularly.
RE: U of Arizona likely to cut athletics budget - Mick - 11-14-2023
I talked with a former Big Four audit partner last night re: the Arizona governmental auditors. He reassured me that they were top-level people and that the problems likely didn't reside with them.
RE: U of Arizona likely to cut athletics budget - Mick - 12-30-2023
U of A fired the CFO, or rather she resigned. I haven't seen any other resignations or firings...none have been made public. But based upon a cursory review of their qualifications, I would be shocked if that department otherwise remained intact.
Steps they are taking over the next six months:
- Implementing hiring and compensation freeze.
- Freezing international travel for senior administrators.
- Restricting purchasing.
- Deferring nonessential capital projects.
- Concluding strategic initiatives funding.
Steps they are taking over the next 18 months
- Implementing FY 2025 base budget reductions with focus on units spending in deficit, overhead and administrative functions.
- Delaying FY 2025 Salary Increase Program.
- Conducting individual reviews of all budget units; ensure ongoing financial accountability.
- Rebalancing undergraduate non-resident merit aid for new students.
- Eliminating tuition guarantee in fall 2025 for new students.
- Eliminating Activity Informed Budgeting (AIB) model; implement centralized planning budget model.
- Reorganizing administrative services in: Information Technology, Human Resources, Marketing & Communications, Business & Finance, and University Advancement. This is big. Administration had grown by 69% over the past 10 years.
Steps they are not taking:
- Reducing need-based aid for Arizona resident students.
- Reducing need and merit-based aid for any current or accepted students throughout their time at the University of Arizona.
- Eliminating tuition guarantees for any current or accepted students.
- Instituting furloughs.
- Reducing retirement benefits.
- Permitting overspending of budgets.
A little more info from the UofA site: https://www.arizona.edu/financial-updates/action-plan
From the school paper: https://wildcat.arizona.edu/151595/news/n-abor-financial-crisis/
Lots of funding for athletics that they hadn't anticipated. They are firing people in the AD, and season ticket prices for both MBB and football will increase 25%.
Some interesting inside baseball: https://tucson.com/news/local/education/college/university-arizona-financial-crisis-presidentrobertrobbins/article_31c28ade-9310-11ee-a4d6-eb8f86562ff6.html
Most in-depth article I've seen. Will require a one-time signup: https://www.chronicle.com/article/how-the-u-of-arizona-found-itself-in-a-financial-crisis-of-its-own-making?emailConfirmed=true&supportSignUp=true&supportForgotPassword=true&email=clientsciences%40gmail.com&success=true&code=success&bc_nonce=69ri3y8ltojst4vadg9y6
This was a problem in the making for years.
(11-13-2023, 09:45 PM)Goose Wrote: https://news.azpm.org/p/news-articles/2023/11/13/218171-ua-president-addresses-financial-crisis-saying-they-overinvested/
As many have suspected, the $265 million purchase of an online university is a significant driver of the cash flow problem. The operating costs of said purchase are also much higher than anticipated. The article blames the model used to predict expenses and asserts that problem has been corrected. However, that doesn't square with the operating cost underestimate. Things are stinking here more and more. The online university purchase was an attempt to emulate ASU and it's great success in creating an online presence. UofA tried to shortcut the process and appear to have failed spectacularly.
Incidentally, Robbins says the $265 million purchase wasn't actually $265 million...but he won't say what it actually was. The fired/resigned CFO said it was less than $200 million...so...still too much.
https://news.azpm.org/p/news-articles/2023/12/4/218376-senior-vp-of-uagc-steps-down-six-months-after-acquisition/
RE: U of Arizona likely to cut athletics budget - BigJohn043 - 12-31-2023
(11-09-2023, 05:47 PM)TonyLima Wrote:(11-09-2023, 03:44 PM)Goose Wrote:(11-09-2023, 03:19 PM)Sakibomb25 Wrote: I think the professor is correct is questioning how do you make a $240 million mistake and still have a job?FWIW, I can't imagine it was a $240 million "mistake". Either the financial people weren't reporting the truth to "management" (i.e. lying) or they were telling the sad truth and management elected to hold off reporting it, hoping it would somehow "go away". There are financial forecasts on at least a monthly basis, if not more. When things stop going according to projections, it needs to be dealt with. They knew. Who knew what when is an issue, but it wasn't a surprise. RR is, to this point, Teflon man. This one will be "interesting".
Bookkeeping ain’t that hard. I smell fraud.
Bookkeeping is pretty hard. Big businesses have big well paid organizations to make sure it is done well.
10% misses happen all of the time. This doesn't indicate fraud at all.
The miss here seems to be in the cash forecast. It is much easier to miss a cash forecast than a budget. Lots of things make cash move up and down that will work themselves out in future months. Even experienced business people often don't focus enough on cash until the miss becomes really big.
Blaming the auditors for a miss in the cash forecast is bizarre. Auditors look at the historical financial statements. They don't look at cash flow forecasts at all. They confirm that the cash on the balance sheet was actually true on the date of the balance sheet. But there is no indication here that the financial statements were wrong. This doesn't seem to be an auditor issue at all.
Of course the CFO is responsible for cash forecasting and rightly was fired. Not sure who else in the department should be fired but this wasn't a one person issue.
Finally, part of the problem here is the leaders of these universities. The President of UofA is a doctor. He has lots of training in being a doctor. He has no MBA or any training in managing an organization of any size. I am not sure he has ever taken even a basic introduction to accounting course much less has the type of experience to manage a multi-billion dollar budget. A person with this type of background is going to be completely reliant on the CFO and will have almost no ability to detect an issue before it becomes a real problem.
As we look for our next President we should think carefully about what background we are looking for....
RE: U of Arizona likely to cut athletics budget - Goose - 12-31-2023
(12-31-2023, 09:26 AM)BigJohn043 Wrote: Bookkeeping is pretty hard. Big businesses have big well paid organizations to make sure it is done well.True, but the "timing" of the transfer of assets (cash) from the UAGC where it would count in the "end of year" cash and later transferring the accompanying liabilities is troubling. At the very least this should have been noted within the financial planning department and taken into consideration in the forecast. Apparently it was not.
10% misses happen all of the time. This doesn't indicate fraud at all.
The miss here seems to be in the cash forecast. It is much easier to miss a cash forecast than a budget. Lots of things make cash move up and down that will work themselves out in future months. Even experienced business people often don't focus enough on cash until the miss becomes really big.
Quote:Blaming the auditors for a miss in the cash forecast is bizarre. Auditors look at the historical financial statements. They don't look at cash flow forecasts at all. They confirm that the cash on the balance sheet was actually true on the date of the balance sheet. But there is no indication here that the financial statements were wrong. This doesn't seem to be an auditor issue at all.The fact the "model" wasn't using the latest "actuals" is also very bizarre. It might make sense if the to date financials were hard to get at, but they weren't. Why this was being done would make an interesting study. It wouldn't surprise me at all if the CFO and essentially everybody else in the department had no idea how the model actually worked. It was a "black box" to them until it wandered off into fantasy land.
Of course the CFO is responsible for cash forecasting and rightly was fired. Not sure who else in the department should be fired but this wasn't a one person issue.
Quote:Finally, part of the problem here is the leaders of these universities. The President of UofA is a doctor. He has lots of training in being a doctor. He has no MBA or any training in managing an organization of any size. I am not sure he has ever taken even a basic introduction to accounting course much less has the type of experience to manage a multi-billion dollar budget. A person with this type of background is going to be completely reliant on the CFO and will have almost no ability to detect an issue before it becomes a real problem.Well, he may have not had formal training in accounting but he was CEO of the Texas Medical Center (TMC) in Houston for 5 years. That is a 100m+ revenue operation. I would expect he learned a bit doing that. Like him or hate him, RR is extremely competent. One of his main problems is that the creation of UAGC has been much more expensive and returned less revenue than planned. The operating expenses have also been higher, partly due to legal issues. This action was done despite the bitter opposition of much of the faculty. It was largely RR's "baby". It may turn out that in 10 years it looks like a genius move, but right now it isn't looking that way. RR had all kinds of reasons not to push the CFO too hard in reporting financial problems, especially if he believed they were "transient" in nature. To what extent that had an effect it unknown. It is clear there were revenue expectations from "somewhere" that never showed up. I do expect the CFO wasn't good in the "truth to power" framework, especially in so far as departments were actually operating at a deficit while still filing "balanced" budget paperwork every year. How was that done?
One thing that is mostly being missed in the statements by upper management is that all the financial activities going forward will be removed from the departments and transferred to the central administration, obviously to prevent a repeat of this mess. In the midst of said mess, RR is getting more direct control over spending. I smell a burning Riechstag building :-).
Bringing it back to sports, I am told that in response to concerns about Fisch leaving a committee was established by "boosters" to compensate him with money that was outside of the AD and University budget (public visibility) and control. Sort of an NIL for the coach. I don't know where this ended up. Now that the Duke vacancy is filled, it may not be necessary :-).
Quote:As we look for our next President we should think carefully about what background we are looking for....Agree. However, FWIW I seriously doubt the new president will be all that strong in accounting :-). RR is an example of an "entrepreneurial" presidency that is trying to do too much with too little (IMO). He may pull it off. I hope the next Stanford president is more concerned with educating students and less concerned about expanding "the business". BC's recent post about the report on Auburn is IMO very relevant here.