The e-mail came through at 6:47 a.m. last Tuesday. In two terse paragraphs, William E. (Brit) Kirwan, chancellor of the University System of Maryland, broke the news: The University of Maryland at College Park’s athletic program was in the red, had been for several years, and had recently exhausted the cash reserves responsible for staving off far-deeper deficits. (A report in The Washington Post later provided additional details, including $83-million in looming debt service on a basketball arena and renovated football stadium.)
The chancellor’s note came as a surprise to Charles T. (Tom) McMillen, a member of the Maryland Board of Regents whose days on the Terps’ basketball team in the early 1970s were followed by a Rhodes scholarship, 11 seasons in the NBA, and three terms in Congress. Budget holes, of course, are a problem for many athletic programs. But what made this one worse, in McMillen’s view, was that the board was largely unaware of the prolonged fiscal troubles.
Despite receiving annual reports from the athletic department on its finances, the budget gaps were never articulated to the regents, McMillen says. “Those reports didn’t show deficits, nor did they show transfers from reserves. So the board did not have a full look at what was going on,” he says. “If we had had true transparency, we would have seen that. And we didn’t.”
McMillen praised College Park’s new president, Wallace D. Loh, and its new athletic director, Kevin Anderson, for their handling of the situation. (Loh, for starters, has charged a new commission with recommending new sources of revenue and ways to trim expenses.) But he thinks two safeguards could have flagged the problems ahead of time: If the athletic department had been required to submit its budget to the board for approval, or if it had undergone a financial audit each year.
The problem isn’t just Maryland’s. As costs in Division I athletics continue to escalate, the issue of financial transparency will only become more urgent for boards, McMillen says. “All universities across the nation need to make sure that their governance systems are up to speed for the challenges ahead,” he says. “Every board of regents should be reviewing their procedures.”
So what’s the solution for boards keen on strengthening their oversight of athletics and, as McMillen suggests, bringing their protocols in line with recommendations from the Association of Governing Boards?
After looking around at what other colleges are doing, McMillen says he now has a short list of places he thinks are doing it right. The Board of Regents for the University of Hawaii system, for instance, approves salary raises for highly compensated personnel—including football and basketball coaches—according to a range that mirrors compensation trends at similar institutions. Many universities have boards sign off not only on capital budgets for athletics but operating budgets as well. And others, like the University of Colorado’s governing board, have separate committees dedicated to monitoring compliance with NCAA rules and athletes’ academic performance.
As for Maryland, McMillen says the Board of Regents will likely discuss how or whether to change its policies concerning athletics at its next meeting in the fall. In the meantime, he says, “I’m not calling for running the athletic department. I’m calling for common-sense steps that will help ensure that there are no surprises.”
