East Carolina University’s Board of Trustees met Aug. 1 in the Spillman building to discuss the budget which has had four areas of concern in athletics, the Dowdy-Ficklen Stadium project, ECU physicians and enrollment.
Interim Chancellor Dan Gerlach provided a response to the operational assessment during the meeting. Gerlach provided the ECU Response to Operational Assessment which he also gave a presentation on and ECU Auxiliary Financial Operations Assessment Report documents to The East Carolinian.
“Based on procedures performed, we believe the decrease in practice profitability is less a matter of timing (between when new physicians are on-boarded and when physicians are clinically productive) and more a reflection of the required cost of providing care to the patient population of eastern North Carolina as aligned with the BSOM mission,” the report said.
The Southside Stadium projects original budget was 55 million in April 2017 with a completion date of April 2018. ECU submitted a request to the UNC Systems Office and the NC Board of Governors which has increased the budget to 60 million with a completion date of May 2019, the report said.
The report said that athletics expects an upward trend from 35.4 million to 41.8 million from fiscal years 2020-2022 from student fees, sports marketing, and NCAA and American Athletic Conference distribution fees.
BOT member Phil Lewis raised concerns about the Athletics Estimated Revenues and Expenditures in the ECU Financial Operations Assessment, which has record revenues in estimated year three. The revenues are expected to be $35.4 million for 2020 and up by 20 percent in 2022 to $41.8 million.
“We’re showing a 12 million dollar loss in a 35 million dollar budget this year. We’re not worried about that?” Lewis asked.
Gerlach responded by saying the new NCAA contract revenues will AAC will be responsible for this and higher fee revenue. He said it is expected that ticket sales will “come back” and they’re working to improve Pirate Club performance.
“We’re not at an all-time high right now and expect to go higher. We’ve kind of had higher revenues if you look back a few years and then we dent and hope to come back,” Gerlach said.
Gerlach said part of the $12 million loss was not completely operating loss. Operating loss included paying off contracts and ECU’s football team being sent to Florida last fall missing the game against Virginia Tech who ECU has to pay for missing the game.
“We don’t have some people we had before we have to pay their contracts off. That's 2.5 million dollars of that,” Gerlach said.
ECU Student Body President Colin Johnson raised concerns about the Southside project of Dowdy-Ficklen Stadium taking money from the athletics budget.
“One of the recommendations from the Cherry Bekaert (LLP) report is to lower the cost of debt service into the athletics budget, is that something that we’re taking into consideration?” Johnson asked the board.
Gerlach said that this was a recommendation and not a mandate but is something that may be done. He said this may be an issue in the future because they don’t know attendance and sales will be for athletics. The Pirate Club was responsible for the Southside Stadium project, according to Gerlach.
Gerlach said on future athletics projects the university is going to want to have the money for the project available.
“We’ve done some projects thinking that the university or Pirate Club could front the money for it while we wait for the pledges to roll in and that's kind of clogged sometimes,” Gerlach said.
After the meeting, Gerlach said there are higher expenses due to the recruitment of football coach Mike Houston and new Athletics Director Jon Gilbert who “has a history of getting excellent coaches and running a program of excellence.”
“So one of the things is we have higher expenses because we recruited a coach (Mike Houston) that we think can win,” Gerlach said.
Facilities are paid out of general university expenses but the costs are shown in the athletics budget, Gerlach said.
Gerlach said athletics had an impact on enrollment. He said some things included in the athletics budget weren’t included before.
“Compliance is something we include at a higher level than ever before, trainers we are not able to use grad students because the requirements are going up so we have to have the employees as trainers,” Gerlach said.
The ECU Auxiliary Financial Operations Assessment Report procedures were limited to ECU physicians, ECU Athletics Department, and the Southside Stadium Renovation project.
ECU Physicians had a net surplus of 6.7 million in 2017, 0.5 million in 2018 and 0.0 million in 2019, the report said.
Gerlach said last year ECU had an incoming class of 4,175 students and it is expected to have a record incoming class of 4,400 this year.