Editorial: UNM should borrow Aggies’ financial playbook
By Albuquerque Journal Editorial Board
Friday, April 21st, 2017 at 12:02am
The recent shake-up among head basketball coaches at the University of New Mexico and New Mexico State University highlights not only that both athletics programs are in debt to their respective schools, but the difference in how university officials view that red ink.
Most readers are aware that UNM fired coach Craig Neal on March 31 and days later hired NMSU’s Paul Weir – a play likely to stoke the long-standing rivalry between the two universities for years to come.
The discussion about the firing and hiring included buyouts – UNM owes Neal $1 million that will be paid out over the next two years, and Weir owes NMSU either $375,000 or $500,000, depending on the pending legal interpretation of his contract – as well as the overall fiscal health of the universities’ athletics programs, neither of which is stellar.
New Mexico State University athletic director Mario Moccia said that, prior to his taking the post two years ago, the athletics program’s debts were covered by NMSU.
“Athletics at New Mexico State has a mandate to balance our budget each year from (main) campus. Not an unreasonable request,” Moccia said. “We have done that in my two years here. Athletics also has a debt (from previous fiscal years), which it has been mandated to pay back. At one point, this debt was $10 million. Now it’s down to approximately $4.3 million.”
NMSU athletics, Moccia said, has already made a payment this year of $1.35 million on that debt and plans to have the rest paid off over the next four years.
UNM athletics, which has run a deficit seven of the past nine years, has had its debts covered by UNM – and continues to do so. It has yet to pay down much of the roughly $4.3 million it owes the university. Last year’s deficit was about $1.54 million, and this year’s is likely to be about $450,000, based on a financial report presented to UNM’s Board of Regents last month. That does not include Neal’s $1 million buyout.
“We’ve made payments on some lines of credit or debt, but right now, given the current economy and the challenges we face with our budget, we have not been able to put together a plan that includes repayment of that debt,” UNM athletic director Paul Krebs said recently.
Meanwhile, UNM itself is facing a projected $3.5 million shortfall in its “instruction and general budget” this coming year, due in large part to the state’s declining income from oil and gas revenues. (State funds account for 58 percent of UNM’s I&G budget, according to university officials.) But that’s just an estimate. The university doesn’t know what its state funding will be for the fiscal year that begins July 1, because Gov. Susana Martinez vetoed all higher education funding until she and lawmakers can work out a state budget in an upcoming special legislative session.
Krebs, whose department spends about $14 million annually on salaries and benefits, said he has eliminated a handful of jobs, mostly through attrition, and cut some travel costs. He has “frozen” some open positions and plans to lay off another four or five employees – though that won’t happen until the start of the new fiscal year.
He also just announced cutting the school’s Division 1 ski team, an especially painful move given the success of the program – they won the school’s first NCAA national championship in 2004 and routinely have among the highest athlete GPAs. But for a cash-strapped school that offers more varsity sports than most Mountain West schools, it was the right move.
Krebs is also hoping for a “seven-figure” deal on some facility naming rights, but won’t go into details.
So what if those steps don’t translate to break-even or better?
“We’ll work with them,” said David Harris, UNM’s executive vice president for administration and chief operating and financial officer. “They’ll have to pay it back. There’s not any money in the (instruction and general budget) of the university to square up their budget. They will just have to carry a debt obligation.”
And how is that any different from what UNM has been doing the past several years – covering athletics’ debt and hoping for repayment someday?
Weir will no doubt take some pages from the Aggies’ basketball playbook and refine them for the Lobos.
Krebs and Harris would be wise to take some pages from NMSU’s fiscal playbook and do the same.
This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.