April 2005 NCAA Executive Committee agenda Supplement No. 1

`MINUTES OF THE

NATIONAL COLLEGIATE ATHLETIC ASSOCIATION

EXECUTIVE COMMITTEE

Gaylord Texan Resort January 10, 2005

Grapevine, Texas

Participants:

Donald Beggs, Wichita State University

Carol A. Cartwright, Kent State University, chair

Mary Sue Coleman, University of Michigan

Paul Engelmann, Central Missouri State University

George Hagerty, Franklin Pierce College

Walter Harrison, University of Hartford

Robert Hemenway, University of Kansas

Arthur Kirk, St. Leo University

Peter Likins, University of Arizona

Sydney McPhee, Middle Tennessee State University

Michael Miranda, Plattsburgh State University of New York

Chris Monasch, America East Conference

Ivory Nelson, Lincoln University (Pennsylvania)

Phillip Stone, Bridgewater College (Virginia)

John A. White, University of Arkansas

Beth DeBauche, NCAA, recording secretary

Myles Brand, NCAA

Bernard Franklin, NCAA

Clinton Bristow Jr., Alcorn State University; G. Wayne Clough, Georgia Institute of Technology; Scott Cowan, Tulane University; and Randall Webb, Northwestern State University were unable to attend.

Also in attendance were: Gary Brown, associate director of The NCAA News; Erik Christianson, director of public and media relations; Elsa Cole, NCAA general counsel; Dennis Cryder, senior vice-president for branding and communications; Gail Dent, associate director of public relations; Jim Isch, senior vice-president for administration/chief financial officer (CFO); Tom Jernstedt, executive vice-president; John Johnson, director of promotions and special events; Kevin Lennon, vice-president for membership services; Keith Martin, managing director of finance and operations; 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; David Berst, Daniel Dutcher and Mike Racy, NCAA governance vice-presidents; and Bridget Belgiovine and Terri Steeb, NCAA governance directors.

[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 6:55 p.m. by the chair, President Cartwright. All members were present as noted above.

1. Welcome and announcements. President Cartwright thanked George Hagerty, the departing Division II Presidents Council chair. She also thanked the departing Divisions II and III Management Council chairs, Sue Willey and Suzanne Coffey. Paul Engelmann, the new chair of the Division II Management Council, and Michael Miranda, the new chair of the Division III Management Council, were in attendance and welcomed.

2. Approval of October 28, 2004, meeting minutes.

It was VOTED

“To approve the Executive Committee minutes of the October 28, 2004, meeting as distributed.”

3. NCAA President’s Report.

a. College basketball partnership. President Brand informed the Committee that the NCAA has brought together a group of men’s basketball stakeholders to help define and distinguish the game of men’s collegiate basketball as a separate game from that of the professional one in an effort to more positively position our game to allow for future health and growth. This partnership is an informal group outside the normal NCAA committee structure, including a number of persons who do not have NCAA standing, such as members of the broadcast media and sports executives. Additional participants may be added as the group’s conversation evolves.

b. Implementation of the student-athletes first philosophy. President Brand provided a brief update on the initial stages of the implementation of the student-athletes first philosophy, which places student-athletes at the heart of decision-making. He noted that good progress has been and will continue to be made.

c. Mandatory binding arbitration. Phillip Stone informed the Committee that Division III had been scheduled to consider a legislative proposal requiring members to participate in binding arbitration, finding arbitration to be a less costly, more civil approach to resolving matters, but it withdrew the proposal based on a desire to move forward in tandum with the other two divisions.

It was VOTED

“To establish a subcommittee of the Executive Committee to work with NCAA general counsel to explore whether, as a condition of membership, active members, member conferences, provisional members and affiliate members, should be subject to mandatory binding arbitration of claims arising under either federal or state law against the NCAA, its officers, employees and agents.”

4. NCAA Executive Committee Finance Committee report.

a. First quarter budget-to-actual. The Committee reviewed the financial schedules for the first quarter 2004-05 budget-to-actual.

b. Fiscal year 2003-04 audited statements. The Executive Committee reviewed the audited financial statements prepared by the audit firm of Deloitte and Touche. Deloitte and Touche issued an unqualified opinion for the fiscal year September 1, 2003, through August 31, 2004, financial statements.

It was VOTED

“To approve the audited financial statements prepared by the audit firm of Deloitte and Touche.”

c. Reserve policies. The Committee also reviewed the Association’s reserve policies for fiscal year 2003-04, noting these policies will be modified in 2004-05 to assist in funding the quasi-endowment as noted in subparagraph (2) below. The policies for Association-wide unrestricted reserves primarily consist of three funds:

(1) Association-wide reserve ($54 million). This reserve is established at one-third of the operating budget less revenue distributions. In 2004-05, this allocation will be re-titled the NCAA operating reserve.

(2) Working capital reserve ($49 million). This reserve is established to provide cash flow needs until the majority of revenues are received following the Division I Men's Basketball Championship. In 2004-05, this allocation will be reallocated as the NCAA Quasi-Endowment.

(3) Office building improvement reserve ($3.2 million). This reserve is established to meet the facility repair and renewal needs of the national office, warehouse and Hall of Champions. It is allocated $300,000 per year.

d. Recommended uses of unallocated assets. The Executive Committee reviewed the recommended uses of net unallocated assets.

It was VOTED

“To approve the following uses as recommended:

“(1) $13.7 million allocated to Division I institutions in accordance with the fiscal year 2003-04 basketball and broad-based revenue distribution formulas.

“(2) $13.7 million allocated to the NCAA Quasi-Endowment in accordance with the recently approved quasi-endowment policy.

“(3) $1.3 million allocated to student-athlete programs as part of an ongoing effort to gradually transfer the budget obligations from the former NCAA Foundation to the NCAA.

“(4) $700,000 allocated to information technology to address some of the backlog that exists in moving more NCAA business applications to the Web.”

e. Future interest income allocations. The Executive Committee reviewed recommended allocations for future interest income.

It was VOTED

“To approve allocation of all future interest earnings to the quasi-endowment and that the backfill of the base operating budget will occur over the next several years as funds are available.”

f. Financial recovery plan. The Executive Committee reviewed a plan that provides direction should, for any reason, the Division I Men’s Basketball Championship be canceled. Several sources for recovery would be considered, including reserves, operating budget reductions, revenue distribution reductions, CBS payments and insurance. Any or all of these sources might be used to fully recover from a loss.

It was VOTED

“To approve the financial recovery plan as described.”

g. Risk assessment. The Committee heard a report from Deloitte and Touche regarding key risks that could impact the Association:

(1) Adverse reputation and brand impacts due to external and Association actions.

(2) Lack of revenue diversification.

(3) Limitations on the NCAA's ability to effectively govern due to federal or state legislative intervention or adverse legal interpretation of NCAA regulations and standards.

The finance committee recommended that the Executive Committee encourage management to implement the mitigating strategies developed jointly by Deloitte and Touche and NCAA staff.

h. Fiscal year 2004-05 audit emphasis. The finance committee approved the following Deloitte and Touche audit services for upcoming years:

(1) Audit of the fiscal year 2004-05 financial statements.

(2) Audit of the fiscal year 2004-05 qualified savings and retirement plans.

(3) Preparation of federal, state, benefits and property tax returns.

(4) Exempted contest agreed-upon procedures.

The finance committee also approved the following additional audit services with the understanding that management would prioritize the work over the next two years depending on the project scope and available resources. Staff are authorized to use appropriate consultants or audit firms (other than Deloitte and Touche) to complete the work.

(1) Television and marketing assets valuation.

(2) Championships site selection and ticketing procedures.

(3) Initial-Eligibility Clearinghouse process review.

(4) Sales tax recovery project related to hotel occupancy costs.

(5) Training related to corporate sponsorships.

i. Fiscal year 2005-06 preparation budget timeline. The Committee reviewed the 2005-06 budget process and timeline. The upcoming year is the second year of the biennium, so only inflationary requests for existing programs will be considered.

5. Centennial celebration. The Executive Committee heard an update regarding the NCAA centennial celebration. The mission of the centennial celebration is to commemorate 100 years of intercollegiate athletics, by focusing on the student-athlete, in a manner that honors the past, highlights the advocacy and reform initiatives of the present and provides a look into the future. This year-long celebration, which will begin at the 2006 NCAA Convention, presents an opportunity for the Association to illustrate its breadth and depth and share its role within higher education and intercollegiate athletics with the general public, media, external stakeholders and the NCAA members.

6. NCAA U.S. Olympic Committee Task Force. The Committee received a report from the NCAA/U.S. Olympic Committee Task Force, regarding the task force’s efforts to help ensure that American student-athletes and coaches have an opportunity to participate in collegiate athletics programs in sports traditionally included in the Olympic Games. In seeking to address its mission, the task force developed a methodology to identify “at risk” sports; defined a number of “at risk” sports; and is seeking to identify and implement practical ideas and solutions for protecting and strengthening “at risk” sports.

7. Task Force on Presidential Authority. The Committee received a report from the chair of the Task Force on Presidential Authority, which is examining ways for the NCAA president to reduce expenditures and enhance efficiencies in the NCAA committee structure. Based on that examination, the task force recommended adoption of a resolution.

It was VOTED

“That the following Resolution shall be adopted, which provides:

“Whereas, the current NCAA committee structure consists of 182 committees, which involves over 1,600 membership representatives at a cost of more than five million dollars annually;

“Whereas, the NCAA Executive Committee has a fiduciary duty to ensure the efficient management of the Association and intercollegiate athletics in keeping with good business practices and the NCAA Strategic Plan;

“Whereas, the NCAA Executive Committee has empowered the NCAA staff to assume a more active leadership role in the administration and direction of the NCAA, which has, and will continue to, result in changing the function of a number of committees;

“Whereas, recent technological advances have resulted in more efficient modes of communication such as telephone, video and Web-based conferencing, which have demonstrated cost savings;

“Now, Therefore Be It Resolved, that expenditures associated with the NCAA committee structure shall be reduced by:

· “Increasing the use of new and different technologies to disseminate information and conduct committee meetings;

· “Modifying current committee travel policies and practices so that more in-person meetings are conducted at the NCAA national office in Indianapolis, Indiana; and

· “Reducing the size of NCAA committees by an average of 25 percent through term expirations and appropriate actions in each division to reconsider the size and responsibilities of ad hoc and standing committees and, therefore, in some instances, requiring legislative action.

“Be It Further Resolved, that the NCAA staff shall continue to study and examine the NCAA committee structure to identify means of alleviating bureaucratic inefficiencies and that an annual report shall be provided to the NCAA Executive Committee each January on the efforts to further streamline the NCAA committee structure.”

8. Litigation update. The Executive Committee received a report from the NCAA general counsel regarding litigation and settlement actions.

Ÿ NCAA Constitution, Article 2. The Committee received a report from the chair of the Executive Committee Subcommittee on NCAA Constitution, Article 2, which indicated the subcommittee has preliminary interest in recommending the adoption of a

new institutional control bylaw to address violations of the principle of student-athlete welfare through the application of a show-cause provision. The subcommittee also is interested in recommending the adoption of a specific bylaw intended to address situations where there has been knowing institutional involvement in offering or providing prescription or banned drugs to a student-athlete to change athletics performance. The subcommittee agreed that, at this stage in its examination, both options should be subject to further consideration. The subcommittee plans to present its recommendations to the Executive Committee at its April meeting.

9. 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 actions of the Division I Board of Directors:

(1) Basketball recruiting and access legislative packages. The Board received separate presentations from the executive director of the National Association of Basketball Coaches and the chief executive officer of the Women's Basketball Coaches Association regarding the development of their associations’ recruiting and access legislative packages. These legislative packages are scheduled to receive consideration by the Board of Directors in April 2005.

(2) Report from the Division I Baseball Issues Committee. The Board received a report from the Baseball Issues Committee regarding that group’s recommendations for changes to the baseball playing season. The Board indicated general support for the establishment of a uniform start date but expressed concern with the current number of games and moving the championship later. The Board suggested that the committee consider modifying the length of the playing season by reducing the maximum number of contests rather than moving the start date for the NCAA Division I Baseball Championship one week later.

(3) Update from the Committee on Academic Performance. The Board received a report on the work and recommendations of the Division I Committee on Academic Performance and approved the following:

(a) Academic progress rate (APR) scores should be used to define the contemporaneous penalty “cut” score and should be published as stand-alone rates of academic measure.

(b) Teams with APR scores below 925 should be subject to contemporaneous penalties (within a consistent margin of error set at a confidence level of 84 percent).

(c) The maximum contemporaneous penalty applicable to any team in any given year would be up to, but not more than, 10 percent of the maximum financial aid team limit in that sport.

(d) Institutional mission should be a factor considered by the committee’s subcommittee on appeals when considering waiver requests of the contemporaneous penalties.

(4) Discussion regarding Division I-A membership standards. Board members continued to express concern about the Division I-A attendance requirement and requested that the NCAA staff, in conjunction with appropriate Management Council and Conference Commissioners Association members, draft legislation for the Board’s final consideration in April 2005 that would modify or eliminate the 15,000 average attendance requirement for the Division I-A membership. In addition, appropriate legislative proposals and recommendations should be developed for consideration in April that support and enhance the Division I-AA membership.

(5) Appointments. The Board of Directors appointed the following individuals to serve within the governance structure:

(a) Board of Directors chair. Philip Austin, University of Connecticut, Big East Conference (Division I-A), following the April meeting.

(b) NCAA Executive Committee.

Ÿ Philip Austin, University of Connecticut, Big East Conference, effective immediately.

Ÿ Daniel Curran, University of Dayton, Atlantic 10 Conference (Division I-AA), effective April 29, 2005.

Ÿ Philip Dubois, University of Wyoming, Mountain West Conference (Division I-A), effective April 29, 2005.

Ÿ Stephen Flatt, Lipscomb University, Atlantic Sun University (Division I-AAA), effective April 29, 2005.

Ÿ John Welty, Fresno State University, Western Athletic Conference (Division I-A), effective April 29, 2005.

(c) Division I Budget Committee. Benjamin Ladner, American University, Patriot League (Division I-AA), effective immediately.

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

(1) 2005 NCAA Convention update. The chair of the Presidents Council reported that all 32 Presidents Council-sponsored proposals were adopted by the division’s membership, including the proposal that would require as a condition of active Division II membership that all Division II institutions submit the academic success rate data on an annual basis in a form prescribed by the Management Council.

(2) Initiative to examine the structure of football. The Presidents Council indicated its willingness for the Management Council to begin an initiative with the Divisions I and III governance structures and the American Football Coaches Association to review the football structure in the NCAA to determine if a better system could be implemented. A concept may be before the Executive Committee at a future date for its consideration.

(3) Chief Executive Officer Leadership Summit. The chair of the Presidents Council provided an update on the Division II Chief Executive Officer Leadership Summit, scheduled for June 24-26 in Orlando, Florida. Formal notification regarding this event will be sent to the Division II membership within the next few weeks.

(4) Ratification of appointments. The Presidents Council ratified the appointment of the following Division II Management Council representatives:

(a) Glenn Stokes, faculty athletics representative, Columbus State University, Peach Belt Conference.

(b) Laure Smith, senior woman administrator, University of Nebraska at Kearney, Rocky Mountain Athletic Conference.

c. Division III Presidents Council. The Committee received an update on the actions of the Division III Presidents Council:

(1) 2005 NCAA Convention update. The chair of the Division III Presidents Council reported that all proposals included in the Presidents Council package were adopted by the division’s membership.

(2) Future of Division III. As part of the NCAA Convention series of meetings, Division III had healthy and fruitful discussions about the division’s future. The Presidents Council noted it was premature to assume that the Council would sponsor any specific legislation regarding the future direction of the division.

(3) Financial aid audit. Division III agreed to mandate a financial aid audit for member institutions, whereby any identified discrepancy of more than four percent in the amount of aid awards to student-athletes as compared to the general student-body will result in further inquiry.

(4) Financial crisis plan. Division III is developing a contingency plan in the event the division experiences a financial crisis.