National Collegiate Athletic Association

The NCAA News - News and Features

May 19, 1997

II transition continues with budget principles/guidelines

Another phase of Division II's transition into the new governance structure is nearing completion with the implementation of principles and guidelines designed to guide the division's budgetary and financial decisions.

The principles and guidelines were formed by the Budget/Finance Subcommittee of the Division II Presidents Council and Management Council Transition Teams -- a transitional subcommittee that now is wrapping up its work by conducting a survey to determine how to allocate an anticipated annual surplus in the division budget and whether to revise the current method for distributing the $3 million Division II enhancement fund.

The survey was mailed May 15 to chief executive officers at Division II institutions and should be signed by the CEO and returned to the national office June 13. Division II athletics directors, faculty athletics representatives and senior woman administrators will receive a copy of a cover letter accompanying the survey.

The Budget/Finance Subcommittee will review survey results and then turn any resulting recommendations over to the new Division II Budget and Finance Committee, a committee established by the membership at the 1997 Convention to review budget recommendations and advise the Division II Presidents Council and Management Council on fiscal matters.

The recommendations will conclude work that already has resulted in the formation of budget guidelines and principles for Division II and the establishment of annual operational procedures. The subcommittee also created a mission statement that will guide the work of the new committee (see accompanying box).

Survey

The survey solicits CEOs' opinions on how to allocate an anticipated surplus that is estimated at $1.76 million for the 1997-98 fiscal year and is expected to total $11.5 million through 2001-02.

The surplus is unallocated funds that will be available for Division II use after expenses for Division II championships are paid, the Division II enhancement fund is distributed, and a contribution is made to the Division II reserve fund. It already has been determined that at least five percent of the annual Division II budget allocation and at least five percent of any Division II surpluses will be placed in the reserve fund.

Division II institutions' responses to the survey will help determine the manner in which the surplus will be used.

The options suggested in the survey include:

  • Add the entire surplus to the Division II enhancement fund for distribution through either the current method of distributing the fund or through any new methods that may be adopted.

  • Distribute the entire surplus equally to each Division II member as a supplemental distribution.

  • Place the entire surplus in the Division II reserve fund.

  • Distribute half of the surplus equally to each Division II member through a supplemental distribution and place the other half in the reserve fund.

  • Establish a Division II special assistance fund for student-athletes.

  • Spend surplus funds on future Division II championships bracket expansions (beyond $350,000 already allocated annually for bracket expansion in five Division II sports: baseball, women's softball and volleyball, and men's and women's soccer).

  • Spend surplus funds to enhance current championships offerings (through actions such as increasing per diems for championships).

    Survey respondents are being asked to rate the degree to which they favor or oppose each of the options. They also are being offered the opportunity to suggest other uses for the surplus.

    The Budget/Finance Subcommittee considered options ranging from saving to spending all of the surplus funds, but decided it did not have enough information to make a decision without soliciting membership input. Thus, survey results will play an important role in determining how the surplus will be used.

    Any surplus funds that are not allocated in the year in which they occur will "roll over" for use in the following year's budget.

    Enhancement fund

    Division II institutions will continue to receive at least $3 million annually via the currently existing Division II enhancement fund. However, the Budget/Finance Subcommittee -- prompted by results of a spring 1996 survey that indicated significant membership interest in considering changes in the distribution method -- has been studying whether such change is desirable.

    The $3 million enhancement fund currently is distributed to Division II institutions under a formula that calls for half of the amount to be divided evenly among all Division II members (including provisional members) and the other half to be distributed based on participation in the Division II Men's Basketball Championship.

    The Budget/Finance Subcommittee is seeking membership reaction in its current survey to six specific approaches to distributing the fund. All of the approaches are regarded by the subcommittee as sufficiently easy to administer and based on objective criteria -- features that are regarded by the subcommittee as important in any distribution method that may be adopted.

    The methods suggested in the survey include:

  • Maintain the current distribution method.

  • Continue to distribute half of the fund evenly among Division II members and then distribute the other half based on performance in both the Division II Men's and Division II Women's Basketball Championships.

  • Distribute the entire fund based solely on the total number of sports sponsored by an institution.

  • Distribute the entire fund in equal amounts to each Division II institution in good standing and eligible for Division II championships.

  • Distribute half of the fund in equal amounts to each Division II institution and the other half based on the total number of sports sponsored by an institution.

  • Distribute half of the fund in equal amounts to each Division II institution and the other half based on a formula that rewards conferences for membership that exceeds seven institutions and for the number of men's and women's championships that a conference sponsors.

    Survey respondents are being asked to rate the degree to which they favor or oppose each of the options. They also can suggest other distribution methods, keeping in mind the importance of ease of administration and the use of objective criteria for distribution.

    Should Division II institutions indicate support for adoption of a new distribution method, such a formula would not be implemented before the 1998-99 fiscal year. Checks distributing funds based on such a formula would not be issued before spring 2000.

    The subcommittee also has agreed that the impact of any change in the distribution method on conference operations will have to be taken into consideration.

    Final meeting

    The Budget/Finance Subcommittee expects to meet one more time, sometime in July, to review survey results and make final recommendations.

    However, several subcommittee members will continue to be involved in the Division II budget-planning process as members of the new Division II Budget and Finance Committee.

    Subcommittee chair Anthony F. Ceddia, president of Shippensburg University of Pennsylvania, will chair the committee as part of his duties as vice-chair of the Division II Presidents Council. Three other Presidents Council members also will serve on the seven-member committee: Robert A. Burnett of Armstrong Atlantic State College; Marvalene Hughes of California State University, Stanislaus; and Gladys Styles Johnston of the University of Nebraska at Kearney.

    Three Division II Management Council members also will serve on the committee: Clint Bryant of Augusta State University, as part of his duties as Management Council vice-chair;
    G. Jean Cerra of Barry University; and Jerry M. Hughes of Central Missouri State University. Cerra is the only one of the seven committee members who has not served previously on the transitional subcommittee.

    Division II budget/finance
    Mission statement

    The mission of the Division II Budget and Finance Committee is to advise both the Division II Presidents Council and Management Council regarding the division's financial affairs and to monitor the division's budgeting process and financial reports throughout the fiscal year. To ensure prudent fiscal management in the new governance structure, the Division II Budget and Finance Committee will analyze the preliminary and detailed Division II budget each year and make recommendations for consideration by the Division II Presidents Council and the Division II Management Council.

    Efforts to fulfill this mission statement will be guided by the following:

    1. The Division II philosophy statement.

    2. The Division II budget guidelines and principles.

    3. The business principles of financial prudence and fiscal responsibility.

    Budget guidelines/principles

    Budgetary guidelines and principles have been developed to guide deliberations related to the possible use of funds allocated to Division II in the new governance structure.

    These guidelines/principles include the following:

  • That an institution's expenses for participating in championship rounds in an NCAA Division II championship will be adequately covered, and that consistent transportation and per diem guidelines be maintained for all Division II championships.

  • That Division II championships will be the top priority as budget discussions occur and decisions are made.

  • That Division II championships policies will reflect an interest in generating Division II championships revenue to the greatest extent possible consistent with Division II championships principles and guidelines. Further, Division II championships policies will reflect an overall cost-containment philosophy supporting initiatives such as the regionalization concept and geographic proximity of championship sites. For purposes of these budget principles, cost containment encompasses the efficient and cost-effective operation of Division II championships.

  • That, at a minimum, $3 million will be distributed annually to Division II institutions via the current Division II enhancement fund distribution formula or any other formula(s) that may be adopted.

  • That the Division II Championships Committee will be responsible for the mechanics of distributing the enhancement fund and the distribution policies will be developed by the Division II Budget and Finance Committee and ratified by the Division II Management Council and Presidents Council.

  • That, at a minimum, five percent of the annual Division II allocation and, at a minimum, five percent of any applicable surpluses from the previous year will be designated for a Division II membership reserve, beginning with the 1997-98 fiscal year.

  • That annual operating surpluses will be designated for the Division II membership reserve and/or to a supplemental distribution at the end of the year.

  • That care will be taken to avoid funding special interests of various segments of the Division II membership or items that may be more an institution's responsibility than that of the Association.

  • That these budget principles will be reviewed annually by the Presidents Council and Management Council and modified as necessary to ensure that they are reflective of Division II philosophy and direction.