MEMORANDUM

August 18, 2005

TO: NCAA Division II Budget and Finance Committee.

FROM: Tamara Gingerich

Accountant.

SUBJECT: Heartland Conference Financial and Operational Audit.

The Division II Budget and Finance Committee decided during the April 18, 2005 meeting to exercise the Committee’s right to perform a financial and operational audit of the Heartland Conference. The committee’s decision was based on concerns noted during the review of the 2003-04 and 2004-05 conference grant annual report and the review of the 2005-06 conference grant application. Tamara Gingerich of the national office staff was appointed to perform the audit and report any findings to the committee to help determine future funding of the conference grant requests.

Concerns noted by the committee.

Spanning the past two years, the committee has noted several items of concern regarding the Heartland Conference. The concerns noted include: part-time employment status of the commissioner; return of $26,000 in conference grant funds in 2004-05 from a conference with going concern issues; voting status of the conference SWA’s; number of employees, their location and the percentage of time they devote to the Heartland Conference; direct donation to the Make-A-Wish foundation; lack of commissioner attendance at the Conference Commissioners Association meetings and the ongoing status of the conference as a whole.

Meeting with the Commissioner.

I traveled to the Heartland Conference office in Waco, Texas to meet with the commissioner, Tony Stigliano. Mr. Stigliano began by giving me the history of the conference. He has worked as the commissioner of the Heartland Conference for 15 years. He notes that his biggest challenge since becoming a member of the NCAA has been the going concern of the conference from one year to the next. The conference has had several institutions that have joined only to announce they were leaving again in the following year. The volatility has hindered his ability to allocate and spend the funding from the NCAA as according to model conference guidelines.

I reviewed all documentation supporting the expenses reported on the 2003-04 and 2004-05 annual reports. All expenses are supported by third party documentation, are reasonable and within applicable Budget and Finance Committee guidelines. Mr. Stigliano has all expenditures reviewed and tracked by a third party bookkeeper on an annual basis. He is currently disbursing the sub-grant amounts and having the respective individuals at each institution report back on how the money was spent. For SAAC, SWA, and FAR each group is required to send him an email or copy of receipts to be reimbursed and then a check is cut for payment. Mr. Stigliano and I reviewed several examples of other annual reports and applications. He thought all institutions had to receive equal allocation for each category of funding. I conveyed that some conferences are able to allocate unevenly based on the needs of each institution. I suggested that he use an application system in which each institution would request funds in each of the categories and how they intend to spend them. Mr. Stigliano was very accepting of this suggestion and plans to apply it to the upcoming year. He has plans to increase the participation by each of the conference presidents when allocating funds. He hopes to make each institution become more involved in the conference grant program.

Mr. Stigliano and I discussed the composition of the Heartland Conference staff: Tony Stigliano, full-time commissioner, Waco, Texas; Ann Stigliano, full-time assistant, Waco, TX; Peyton Low, full-time SID, Tyler, TX; Gérard Le Canu, part-time SID that handles stats, San Antonio, TX; part-time compliance individual at St. Edward’s University. I inquired about Mr. Stigliano’s prior response of part-time employment as conference commissioner. He responded that he is full-time because the majority of his time is spent operating the conference office. He indicated that he does some consulting work on the side, but does not feel that it interferes with his performance as commissioner for the Heartland Conference.

We discussed the breakdown by category and reasons for surplus causing $26,000 to be returned by the conference in 2004-05. I expressed the committee’s concern to see money being returned from a conference that is rumored to be struggling. Returned amounts include: SWA - $8,000 and FAR - $4,000 – Mr. Stigliano believed all institutions should be allowed equal amounts. These funds were not requested and not used by the institutions that it was allocated for. He will be changing the allocation procedure so this should not occur going forward; Promotions - $8,000 – Mr. Stigliano did not spend money based on the unknown future status of the conference. He did not believe that spending money to promote a conference that may cease to exist in the following year would be justifiable. He admitted this was a very conservative response to the use of the promotional money and that it would be used in the future; Compliance - $3,000 and Technology - $2,000 – The institution decided to delay updating the computer and software being used by the compliance coordinator. The technology money was not utilized as anticipated.

Mr. Stigliano noted the dates of some Conference Commissioners meetings conflicted with other meetings on his schedule. He didn’t feel the information was as beneficial and applicable for small conferences as it was for larger conferences. I encouraged him to think of the appearance reflected if he does not show an interest in the commissioners’ meetings. I also expressed concern of him missing valuable information that is exchanged at these meetings. He agreed that he might benefit from attending and would make an effort to do so in the future. Since meeting with Mr. Stigliano, he has made arrangements to attend the October Conference Commissioners meeting in Indianapolis.

During discussions of the Make-A-Wish contributions, Mr. Stigliano admitted he did not approve of the direct contribution to the foundation, but at that time his SAAC groups were not supporting the Make-A-Wish Foundation with planned events. He was scrutinized for not making a contribution to Make-A-Wish Foundation in 2003-04, so he felt he needed to make a contribution from the Heartland Conference. I explained the recent motion passed by the committee to prohibit direct contributions to charitable organizations.

Mr. Stigliano noted that the impact forms were not as beneficial to him as he had anticipated. He suggested they be replaced with an open-ended question that each conference would ask for and then report to the committee with the annual report. Example: “How were you benefited from the conference grant funding?” He felt this would be helpful to the conference as well as the committee.

Meeting with President.

I also traveled to Austin, Texas to meet with President George Martin at St. Edward’s University. I conveyed to President Martin that the expenditures for 2003-04 and 2004-05 were well documented and all the expenses appeared reasonable. I believe the expenses fall within all current guidelines of the Budget and Finance Committee.

President Martin and I discussed the status of the conference going forward. It was rumored that the four Texas schools were considering moving to the Pacific West Conference. This caused unease between the other institutions and hindered planning for the 2005-06 fiscal year. President Martin assured me that the four Texas schools would not be joining the Pacific West Conference and would continue their membership with the Heartland Conference. I recommended that the conference work to add the other two institutions that have expressed interest in the conference and then take advantage of the funding in the future year. It appears the Heartland Conference is expanding and becoming a more stable conference not only in numbers but also geographically.

We discussed Mr. Stigliano’s commitment to make the changes and suggestions that he and I had discussed regarding descriptions on the annual report and application, as well as getting all institutions more involved in the application process.

President Martin, as well as Mr. Stigliano, suggested that more consultations (audits) with conferences be held on an annual basis. They felt it was a great learning experience for both of them. They appreciated the opportunity to ask specific questions and go over specific examples. They also felt it was a great statement of how the NCAA supports their initiatives and programs.

TMG:bar