The Division II long-range budget received a course correction during governance meetings conducted January 11 and 13 in conjunction with the 2002 NCAA Convention.

The Division II Management Council recommended and the Presidents Council approved modifications to the division's long-range plan that will assure an annual budget surplus of at least $1 million for the division. At the same time, the changes will assure the initiation and continuation of programs that already have been approved or conceived.

If no action had been taken, the division could have been operating at a deficit in 2005-06 and 2006-07. To address the problem and to create the $1 million in annual net surplus, the Presidents Council voted to reduce the Division II Membership Trust Balance (a rainy-day fund) by 5 percent -- from 30 percent of annual Division II operating revenue to 25 percent. The Presidents Council reduced the reserve based on the following considerations:

When the 30 percent reserve target was set in 1999, Division II's long-term financial security was not established. The division's financial security is now far greater since the Association has television agreements extending through 2013.

Division II set its reserve at 30 percent based on the percentage in Division III's reserve. However, Division III recently lowered its reserve to 20 percent.

The Presidents Council believes Division II championships can be operated for one year with a 25 percent reserve fund in the event of a budget crisis.

The Presidents Council also voted to reduce the second phase of a planned per diem increase in 2004-05 from $10 to $5, meaning per diem at that time would increase from $70 to $75, rather than from $70 to $80.

Taken together, the changes mean that the division can project a budget surplus of $1.5 million in 2005-06 and $1.25 million in 2006-07.

Although the $1 million figure for net surplus is not based on a formula or a formal study, the Budget and Finance Committee strongly believes that the division needs to have significant liquid funds that can be used to deal with unexpected expenses. Although many scenarios are possible, among the most obvious is a confluence of conditions (higher air travel costs, combined with championship sites to which most of the competing teams must travel great distances) that could incur suddenly higher championships expenses. Division III experienced such a scenario in the most recent fiscal year.

The modifications assure funding for the initiatives that are listed in the accompanying table.

Other business

Most of the Councils' attention was focused on legislation that would be considered at the 2002 Convention. However, both groups got a head start on the 2003 Convention by approving concepts related to Bylaw 14 deregulation.

Acting on a recommendation by the Division II Legislation Committee, the Management and Presidents Councils approved 10 concepts relating to Bylaw 14. The proposals would: