Pederson Reduces Nebraska Athletic Department Budget by $1 Million

Lincoln  -- In his first year preparing the University of Nebraska Athletic Department budget, Athletic Director Steve Pederson eliminated $2.4 million out of the proposed 2004 budget and despite tuition and other necessary increases of $1.2 million, Pederson expects to reduce actual spending by nearly $1 million in the next fiscal year.

Accounting Presentation Shows Dramatic Changes
Beginning with this year's financial statement, Pederson and Chief Financial Officer Nancy Kenny have changed several of the department's accounting and reporting procedures. In the past, the financial statements followed an old model which tracked only those funds spent from athletic operating funds. Revenue and expenses related to debt service, and other expenses paid on behalf of the athletic department, were always included in the audit as footnotes or addenda, but were never incorporated into the athletic department budgets.

"We have always included all funding sources and expenses in our audits," Pederson said, "However, some of the numbershave been listed as footnotes, rather than line items in our financial statements."

Most notably, the 2003 actual financial report as well as the 2004 proposed budget now includes debt service payments of nearly $5 million. This debt service is paid for by athletic funds deposited at the University of Nebraska Foundation. The debt service includes the Memorial Stadium Skybox project, the fan amenities/stadium repair projects and Haymarket Park. In addition to debt service, the financial statements now also show gifts-in-kind, booster club monetary support, and other support from the University of Nebraska Foundation. Performance bonuses (budgeted at the maximum amount) will also be included in the proposed 2004 budget for the first time.

"Ultimately, this reconstructed model is easier to understand and review," Pederson said. "Obviously, adding the debt service at this time results in a difference of nearly $5 million in our 2003 actual and our 2004 budget, but it clearly is a key element in our finances and should be listed along with the rest of our expenses."

2003 Actual Expected to Come in Under Budget
Including the accounting and budgeting changes of more than $7.5 million, the athletic department actual report for fiscal year 2003, which mimics the University's fiscal year from July 1 to June 30, is expected to come in at $54,551,273, approximately $25,000 under budget. The reporting process is not entirely complete, with a few expenses and reports still outstanding.

Unexpected costs associated with severance packages for former football coaches cost the department more than $1 million in 2003. Much of this unplanned expense was covered by a combination of sources, including but not limited to, a stronger than expected revenue share from the Big 12 Conference and by not filling open athletic department positions since Pederson's arrival in January.

"We were fortunate to have some additional income to offset the costs of replacing coaches and staff," Pederson said. "If we had filled our open positions, we would not have made the mark. I appreciate how our staff has stepped up to the plate and that they are doing more with less."

2004 Budget Reflects $2.4 Million in Cuts
After cutting more than $2.4 million from the 2003 budget, Pederson's projected budget for fiscal year 2004 is $53,577,450. Pederson cut nearly $1 million in salaries and $1.5 million in operating budgets by implementing an 8 to 10 percent decrease across the board in controllable operating costs for every department and every sport. Due to planned increases in utilities (estimated 10 percent, $150,000), tuition (15 percent, $450,568), room and board (6.75 percent, $120,408) and fees ($2/credit hour, $50,000), NU will incur an additional $770,976 in University and facility operating costs. Those operating costs together with the higher salaries of the new football coaches and expenses in support of the Cornhusker Marching Band, have increased the 2004 budget by $1,267,323. Netting the savings against the expected increases should result in a cost savings of nearly $1 million for next year.

The 2004 budget shows an overall decrease in salaries of more than a half million dollars, which takes into account the decrease of department staff salaries and benefits of $984,990 (by elimination of 22 full-time positions since December), and the increase of $312,347, which reflects the new salaries and moving expenses for newly hired football, men's and women's basketball and volleyball assistant coaches.

Pederson said decreasing the budget for 2004 was difficult, but necessary. "Even though we face some significant increases in expenses, and a reduction in football income due to one less home game, I felt it was necessary in these difficult times to keep our costs down. We are fortunate to be able to reduce our operating and salary budgets without eliminating sports or reducing any services. I consider this a true complement to our staff."

The 2004 budget is expected to be significantly less in the following four areas: salaries and benefits ($642,894); operating ($431,653); visiting team guarantees ($1,948,810); and facility maintenance and rentals ($491,667). The most significant reduction in revenue was ticket sales, which are expected to decrease from $26,642,651 in 2003 to an estimated $23,000,531 in 2004. The decrease in revenue of $3,642,131 is primarily because there is one less home football game on the 2004 schedule (a difference of approximately $2.5 million) and the decrease in football season ticket prices ($500,000). The most significant increase in the 2004 budget was the capital construction and capital replacement category, which was increased $1.3 million. These funds are earmarked to do the mandatory concrete repair and waterproofing to East Stadium.