August 2004 NCAA Executive Committee minutes

MINUTES OF THE

NATIONAL COLLEGIATE ATHLETIC ASSOCIATION

EXECUTIVE COMMITTEE

NCAA National Office August 5, 2004

Indianapolis, Indiana

Participants:

Donald Beggs, Wichita State University

Clinton Bristow Jr., Alcorn State University

Carol A. Cartwright, Kent State University

Mary Sue Coleman, University of Michigan

Scott Cowan, Tulane University

George Hagerty, Franklin Pierce College

Walter Harrison, University of Hartford

Robert Hemenway, University of Kansas

John P. Keating, University of Wisconsin, Parkside

Peter Likins, University of Arizona

Sydney McPhee, Middle Tennessee State University

Chris Monasch, America East Conference

Ivory Nelson, Lincoln University (Pennsylvania)

Phillip Stone, Bridgewater College (Virginia)

Randall Webb, Northwestern State University

John A. White, University of Arkansas

Suzanne Willey, University of Indianapolis

Bridget Belgiovine, NCAA, recording secretary

Myles Brand, NCAA

Bernard Franklin, NCAA

G. Wayne Clough, Georgia Institute of Technology, and Suzanne Coffey, Bates College, were not able to attend.

Also in attendance were: Gary Brown, associate director of The NCAA News; Elsa Cole, NCAA general counsel; Dennis Cryder, senior vice-president for branding and communications; Jeff Howard, managing director of public relations; Jim Isch, senior vice-president for administration/chief financial officer (CFO); John Johnson, director of promotions and special events; Kevin Lennon, vice-president for membership services; Gene Marsh, University of Alabama, Tuscaloosa; Keith Martin, managing director of finance and operations; David Price, vice-president for enforcement; Wallace Renfro, senior advisor to the NCAA president; Greg Shaheen, vice-president for Division I men’s basketball and championships strategies; Judith

Sweet, senior vice-president for championships and education services/senior woman administrator; Tom Yeager, Colonial Athletic Conference; David Berst, Daniel Dutcher and Mike Racy, NCAA governance vice-presidents; and Beth DeBauche, NCAA governance director.

[Note: These minutes contain only actions taken (formal votes or stated "sense of the meeting") in accordance with NCAA policy regarding minutes of all Association entities. While certain items on the Committee’s agenda were acted on at various times throughout the meeting, all final actions within a given topic are combined in these minutes for convenience of reference.]

The meeting was called to order at 4:13 p.m. by the chair, President Cartwright. All members were present as noted above.

1. Welcome and Announcements. President Cartwright welcomed new members to the Committee: Ivory Nelson, the new vice-chair of the Division III Presidents Council; and Clinton Bristow Jr., Walter Harrison and Sidney McPhee, members of the Division I Board of Directors.

2. Approval of April 29, 2004, Meeting Minutes.

It was VOTED

“To approve the Executive Committee minutes of the April 29, 2004, meeting as distributed.”

3. NCAA President’s Report. President Brand provided updates, discussed a series of initiatives and sought Executive Committee input.

a. National Association of Basketball Coaches (NABC) Proposal/Process. The Committee received an update on the continued communication between NCAA staff and the NABC regarding a series of possible legislative recommendations introduced into the normal Division I legislative process. President Brand noted that this was an example of efforts to engage membership organizations to find creative ways to meet the objectives of the strategic plan.

b. Legislative Changes Relating to Penalty Structure. The Committee received an update that all three divisions adopted legislation to create a new reporting process to address the secondary violations penalty structure, consistent with its directive.

c. Committee Structure Review. The Committee received an update on the status of NCAA senior staff review of the NCAA committee structure, as recommended by the Committee. The goal for the review is to ensure efficient and effective management of the Association. Currently, the Association has 182 committees. Committee composition ranges from three to 49 members; 296 staff liaison positions support the structure with a minimum of one liaison and a maximum of five for each committee; 1,654 total committee positions are involved in committee service with more than 1,600 individuals serving. The next steps will include an assessment of meeting frequency and cost implications through a survey of all committee members, followed by selected telephone interviews. Senior staff will collect and review data during the fall and provide recommendations to the Committee at its January 2005 meeting.

d. Fiscal Responsibility. President Brand discussed the challenges associated with addressing fiscal responsibility in intercollegiate athletics, the next stage of reform for the NCAA. President Brand noted the intent to focus on this issue over the next year and requested involvement and support of Committee members. The Committee noted the significance of President Brand’s chief executive officer (CEO) newsletter and NCAA Web site posting of key speeches as measures to inform and engage CEOs in support of Association-wide initiatives.

e. Role of Presidents. The committee structure review subcommittee on the role of campus chief executive officers is continuing its review process.

4. NCAA Executive Committee Administrative Subcommittee. The Committee discussed a recommendation regarding the Association’s enforcement process related to NCAA Constitution, Article 2.2 – the principle of student-athlete welfare.

It was VOTED

“That the Executive Committee endorse the establishment of a subcommittee working with NCAA enforcement staff and legal counsel to study whether the Association should amend the infractions process and authority related to violations of Constitution, Article 2, principles for conduct of intercollegiate athletics.”

5. NCAA Executive Committee Finance Committee Report.

a. Third Quarter Budget-to-Actual. The Committee received a report of the Association’s financial activity for the third quarter of FY 2003-04, noting that results are within budget parameters. The Association received 100 percent of the television and marketing fees and has met 99 percent of its revenue projections for the year as of the third quarter. It also was noted that legal services were lower due to reimbursement from insurance carriers. The impact could result in higher premiums and increased legal retentions in future years.

b. FY 2004-05 and FY 2005-06 Budget.

(1) Projected FY 2004-05 and FY 2005-06 Revenue and Expenditures. The Committee reviewed the approved 2003-04 budget with the projections for revenue and expenditures for 2004-05 and 2005-06.

Estimated revenues will be approximately $485.7 million and $521.1 million for the next two years, representing nearly a 7.3 percent increase in both years of the biennium. Approximately 90 percent of revenues are derived from the television and marketing rights contracts. Another five percent is derived from the men’s basketball tournament ticket sales.

The projected expenditures adhere to the agreement reached by the membership and the Committee after finalizing the CBS agreement. Distribution increases to the various divisions range from 7.3 to 7.8 percent each year of the biennium. An allocation of $4.25 is used to offset any inflationary impact. An additional two million dollars are provided for presidential and Executive Committee priorities.

It was VOTED

“To accept the 2004-05 and 2005-06 biennial budget revenue and expenses projections.”

(2) FY 2004-05 and FY 2005-06 Executive Committee Finance Committee Summary of Recommendations. The Committee reviewed and accepted the specific summary of revenue and expense recommendations, including internal reallocations for the biennial budget. It was noted that President Brand and NCAA staff reviewed national office operations for reallocation resources to support the strategic plan. Through reallocations, the

NCAA eliminated 23 positions. Staffing changes will be made in five priority areas – membership services, research, enforcement, basketball and information technology.

New initiatives for FY 2004-05 focused on information technology; grants to affiliates; summits; coaches academy; sportsmanship and fan behavior; diversity programming; student-athlete programming; best practices; NCAA football promotional support; Title IX; CEO orientation; research; and clear language initiatives.

Major inflationary expense items are increased costs of travel; insurance; and salaries and benefits. The Finance Committee recommended a 3.5 percent increase for staff salaries, distributed on merit. Other major inflationary items included increases for Division I championships; $500,000 of student scholarship programming to support programming formerly funded from the old NCAA Foundation, disbanded two years ago; and $1 million for an increase in legal costs due to adjustments in insurance policies retentions.

New initiatives in the second year of the biennium are focused on similar programming. Major allocations include grants to affiliates, coaches’ academies, diversity, student-athlete programming, summits, former NCAA Foundation student-athlete programming, the second year of the clear language initiative and one full-time employee for information technology.

(a) FY 2004-05 Association-Wide Requests and Executive Committee Finance Committee Recommended Funding. The Committee reviewed the recommendations.

(b) FY 2004-05 Strategic Plan Requests and Executive Committee Finance Committee Recommended Funding. The Committee reviewed the recommendations.

(c) FY 2005-06 Association-Wide Requests and Executive Committee Finance Committee Recommended Funding. The Committee reviewed the recommendations.

(d) FY 2005-06 Strategic Plan Requests and Executive Committee Finance Committee Recommended Funding. The Committee reviewed the recommendations.

(e) FY 2004-05 Recommended Budget. The Committee reviewed the recommended FY 2004-05 budget.

It was VOTED

“To approve the FY 2004-05 NCAA operating budget.”

c. Audit Charter. It was noted that, although the NCAA, as a nonprofit organization, does not have to adhere to the Sarbanes-Oxley Act requirements, many of the provisions of Sarbanes-Oxley have been incorporated into the audit charter as best practices.

The audit charter outlines the responsibilities and duties of the Finance Committee in regard to directing and monitoring the activities of the independent auditors. The Finance Committee will be required to meet at least twice per year, one of the meetings being with the external auditors. Auditors will present an annual audit plan to the Committee for its review and approval at the beginning of each audit cycle. External auditors will share their findings to the Finance Committee. A report of Finance Committee actions will be reported to the Executive Committee on a regular basis.

It was VOTED

“That the Executive Committee approve the NCAA audit charter.”

d. Whistleblower Policy. The Committee discussed the recommendations from the Executive Committee Finance Committee to develop a whistleblower policy for NCAA employees and membership. The policy is intended to ensure the business of the NCAA is conducted with the highest professional and ethical standards; investigate allegations; provide multiple reporting access points; and promote open, honest and accountable management of Association resources. The policy provides protection from retaliation for individuals who, as whistleblowers, bring allegations of fraud, coercion, theft, bribery or violations of the law to the attention of Association officials.

The policy provides multiple entry points for whistleblowers to access the system. In the case of an allegation against the president, the whistleblower would contact the chair of the Executive Committee. In the case of allegations against the senior vice-president for administration/CFO, the whistleblower would contact the president. For all other individuals, the whistleblower would either contact their supervisor or the whistleblower coordinator, who will be the senior vice-president for administration/CFO.

It was VOTED

“That the Executive Committee approve the NCAA whistleblower policy, as amended, to state that the whistleblower coordinator will make a report to the Executive Committee Finance Committee meeting when issues arise.”

e. Quasi-Endowment Policy. The Committee reviewed an updated quasi-endowment policy, noting specific changes made to provide additional flexibility in the implementation of the policy. The Committee deferred action to its October meeting to ensure further membership communication, particularly in Division I.

f. FY 2003-04 Audit Plan Report. The Committee received an update of the Finance Committee meeting with external auditors; reviewed the audit plan for the remainder of the calendar year; and discussed the timeline of audit work, services rendered and a process for assessing the auditor’s services. It also was noted that the Finance Committee began the new audit cycle for FY 2003-04.

g. Investment Subcommittee report. The Committee noted that the Investment Subcommittee selected three new money managers for the Association and retained two current managers.

h. Catastrophic Injury Insurance Recommendation. The Committee reviewed the catastrophic injury insurance program that covers participants in intercollegiate sports, including cheerleaders when participating in a covered event. The insurance covers the student-athletes during conditioning, practices and games and supplements institutional or individual coverage. The policy is not intended to be the primary insurance coverage for the student-athlete, rather a catastrophic coverage. Currently, member institutions or individuals cover the first $65,000 of medical costs, with the catastrophic coverage paying any additional costs. It was noted that the current $65,000 deductible, in place for the past two years, has not kept pace with increased medical costs (52 percent). A recommended $10,000 increase represents 15 percent inflation and recognizes the impact of medical costs, although not keeping pace with inflation.

It was VOTED

“To increase the catastrophic injury insurance deductible to $75,000, effective with the policy period August 1, 2005, through July 31, 2006. The Committee recommended membership notification in advance of the increase.”

6. Litigation update. The Committee received a report from the NCAA general counsel regarding litigation and settlement actions. It was noted that the NCAA president authorized a legal settlement pursuant to authority delegated to him by the Committee of its powers under to NCAA Constitution 4.1.2-(f).

7. NCAA Division I Board of Directors and Divisions II and III Presidents Councils Reports.

a. Division I Board of Directors. The Committee received an update on the Division I Board of Directors meeting, which included the following:

(1) Sports Wagering. Received an update on the NCAA sports wagering study, noting that it will focus on the issue in the upcoming year.

(2) Recruiting Task Force. Adopted a series of recommendations forwarded from the task force.

(3) Division I-A Membership Requirements. Adopted legislation that will impact Division I-A institutions that fail to meet I-A membership requirements.

b. Division II Presidents Council. The Committee received an update on the actions of the Division II Presidents Council:

(1) 2004-06 Division II Biennial Budget. Approved the preliminary biennial budget that includes a $2.4 million enhancement of Division II national championships.

(2) Strategic Plan. Endorsed the updated Division II strategic plan, which aligns with the Association-wide strategic plan approved by the Executive Committee in April.

(3) Division II Coaches Intern Program. Noted that implementation of the new Division II Coaches Intern Program will begin September 2004. The $300,000 annual program is designed to increase the number of female and minority coaches in the pipeline for Division II coaching vacancies.

(4) Presidents Council Vice-Chair. Arthur Kirk Jr., Saint Leo University, will assume duties as vice-chair of the Division II Presidents Council and also serve on the Executive Committee, effective September 2004.

(5) Division II Student-Athlete Advisory Committee (SAAC) – Fundraising Effort. Commended the Division II SAAC on its success in recently completing year one of its fundraising efforts for the Make-A-Wish Foundation, raising approximately $50,000. It was noted that SAAC agreed to continue its affiliation with the Make-A-Wish Foundation for 2004-05.

(6) Division II Conference Commissioners Association. Received a report from the Division II Conference Commissioners Association regarding the group's initiative to develop a national corporate partner program for Division II conferences and a national television magazine show to enhance the identity of Division II.

c. Division III Presidents Council.

(1) Association-Wide Issues.

(a) NABC Proposals and Process. Expressed a desire that the recent Division I proposals, particularly the fifth year of eligibility, be distinguished from the recent reform agenda in Division III (e.g., elimination of redshirting).

(b) Legislative Changes – Secondary Infractions. Agreed with the goals of the initiative to reduce NCAA bureaucracy and enhance student-athlete welfare and expressed concern with the process to adopt and implement changes noting that changes would have benefited from greater governance structure involvement.

(2) Division III Issues.

(a) Future of Division III – Phase II. Approved a draft survey to be sent mid-August to CEOs to test philosophical principles and practical applications in six areas: membership growth; postseason access; sport and program equity; sports sponsorship and broad-based programs, academic success of student-athletes; the integration of athletics into the campus culture; and conference affiliation. The survey will be reviewed in October and discussed with the membership at the 2005 NCAA Convention. Questions related to membership growth cross divisional lines, and relevant findings will be presented to the Executive Committee in October.