The Board of Regents Finance and Facilities Committee meeting is on Tuesday — and all eyes are on the Department of Athletics’ accumulated $7.5 million deficit and what the University of New Mexico is going to do with it.
If there’s no plan by May 1, the state’s Higher Education Department is threatening to step in.
In a letter to new President Garnett Stokes sent in March, HED Cabinet Secretary Barbara Damron reiterated the decision to place the University under financial supervision, warning that deadlines for a plan had passed, and HED would be prepared to enforce sanctions against UNM.
“If the corrective action plan is not satisfactorily articulated by that date, HED may
reject the UNM budget, thus delaying allotments of General Fund appropriations authorized by the Legislature for FY19,” Damron said in the letter.
Currently for the 2018 fiscal year, UNM appropriated over $291 million from the State General Fund. The 2019 projected estimate will be $181 million to be appropriated from the State.
Other consequences imposed on the University may include HED withholding 10 percent of UNM’s appropriations from the state General fund.
The state funds could be frozen “(until the) University has demonstrated that it has satisfied the requirements imposed by the HED under the Enhanced Fiscal Oversight Program,” Damron wrote in her letter.
HED placed the University in the Enhanced Fiscal Oversight Program in October of last year. The justifications for additional oversight of UNM included “fraud, waste and abuse;” special audits and poor budget performance.
A 2017 presentation to the Legislative Finance Committee determined that three Higher Education Institutions — UNM, Luna Community College and Northern New Mexico College — required supervision and increased involvement by the HED because of chronic fiscal issues.
New Mexico’s other Division I athletic program at New Mexico State University had a deficit reimbursement plan to pay down a formerly $9.5 million deficit from main campus reserves.
The Department of Athletics was specifically named in UNM’s case.
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The athletics department’s debt to the University began accumulating in 2006. The department has been operating in a deficit for the past nine out of 11 fiscal years, turning a profit in only 2009-2010 and 2014-2015 fiscal years. The deficit ballooned by $3.3 million in the past year, double the 2016-2017 peak.
In October of 2017, the Office of the State Auditor conducted a Special Audit into the budget deficit of the Department of Athletics at UNM. According to the OSA website, seven auditors are in charge of special audits “related to allegations of governmental fraud, waste and abuse.”
In November, the results of the audit stated that the Department of Athletics was mismanaging and misusing public funds.
In the memo to the LFC, HED determined in December to mandate a “governing board-approved plan to eliminate the structural deficit within the Athletics budget.”
Stokes released the following statement to the media in response to Damron’s letter.
“The deficit in our athletics budget has been years in the making, but resolving the financial issues (are) important for our Athletics Department and the University of New Mexico. We want to ensure we are presenting a realistic and sustainable option for the Board of Regents to consider.”
Stokes said she assembled a team for the “creation of a plan to be presented to the Regents Finance and Facilities Committee for consideration at their meeting on April 10.”
BOR President Rob Doughty charged the department to present a balanced 2019 budget before the committee at a dramatic dressing-down at the University Budget Summit last month.
“I need to be convinced now more than anything that we will not have a deficit next year,” Doughty said during the Budget Summit. “We table any discussion on dealing with the past deficit until we get a financially sound transparent budget for 2019.”
The UNM Board of Regents is comprised of seven governor-appointed members who are responsible for determining how UNM spends its money, as well as making official University policies and goals.
The management of the University, though, falls to the president. In the capacity of managing University assets, the board acts as a gatekeeper for departments seeking financial resources.
The next step to balancing the Department of Athletics budget may include cutting sports.
Last April, controversy erupted over the surprise cutting of the successful ski team at UNM. After several protests and community backlash, the Athletics Department reinstated it in December.
Nuñez told regents that while cutting sports is unpleasant, it remains an option — and that may be something to watch for in 2019 and 2020.
“I’m the first to say that I do not want to cut a sport, but we have to look at this,” Nuñez said at the Budget Summit.
In an interview with the Daily Lobo in March, Nuñez said, “There may be more opportunities that we just have to be pointed to (and we) haven’t looked at yet — before we just look at eliminating a debt.”
The Finance and Facilities Committee meeting will be held Tuesday at 12:30 p.m. in Scholes Hall’s Roberts Room.
Danielle Prokop is a freelance reporter at the Daily Lobo. She can be contacted at news@dailylobo.com or on Twitter @ProkopDani.
