| Public Release Date: August 26, 1997 | No. 97-44 |
“State special appropriations” are General Fund appropriations made to the University of Minnesota and designated for a specific purpose. Historically, the Legislature earmarked portions of the state special appropriations for women’s athletics at the various university campuses. The purpose of these appropriations was to improve the University of Minnesota women’s athletic programs and to ensure compliance with Title IX of the Educational Amendment Act of 1972 and Minn. Stat. Section 126.21. The state Department of Finance disbursed the state special appropriations, as well as other appropriations, to the University of Minnesota pursuant to statutory requirements.
The Legislature began earmarking appropriations for intercollegiate athletics in 1975. Through fiscal year 1997, the University of Minnesota Duluth had received $8,100,657 in state special appropriations for women’s intercollegiate athletics. The campus’ allocation for fiscal years 1996 and 1997 was $647,754 each year.
Our review addressed the following issues:
Our review relied significantly on the August 1996 internal audit and investigative study of the Department of Intercollegiate Athletics. We reviewed the reports and the internal auditor’s supporting working papers and had extensive discussions with the audit staff about their work.
In response to an internal audit and an investigative study, UMD improved its cost allocation processes for the women’s athletic program. The University of Minnesota Department of Audits provided sound advice for many of these improvements. We concur with, and in some cases, expand on the internal auditor’s recommendations. The report of the UMD Vice Chancellor’s investigative group identified another important cost allocation issue, accounting for activities that were conducted primarily to generate income, such as youth athletic camps and fundraising. UMD had charged the costs of certain income generating activities to the women’s athletic budget, but had not credited the related revenues to it.
We found one issue that had not been cited by either the internal auditors or the investigative group — potential problems with UMD’s method for calculating participation ratio. The ratio provides the basis for allocating the indirect costs associated with many services shared by the men’s and women’s athletic programs. Our analysis indicates that UMD used a participation ratio that resulted in some excess charges to the women's athletic budget for fiscal years 1994 through 1996. UMD has changed its method of calculating participation ratio, however, and it used an appropriate definition of participation in fiscal years 1997 and 1998.
UMD has also addressed several budgetary matters related to the women’s athletic department. In fiscal year 1997, UMD replenished the women’s athletic budget for $68,663 of costs that the internal auditors had questioned. The fiscal year 1998 UMD Athletics’ budget was developed following recommendations of the internal audit and investigative study; it also included additional funding for the women’s athletic program. It has not been resolved if additional budget adjustments will be necessary as a result of the problems that existed prior to fiscal year 1997.
The state of Minnesota did not establish accountability for the use of restricted appropriations made to the University of Minnesota. The Legislature cited certain program restrictions in the appropriation laws, but did not establish a process to measure compliance. Also, we found no evidence that the University central administration ensured that UMD complied with the specific legal restrictions on the funding. UMD did not demonstrate a clear understanding of the requirements associated with certain appropriation riders. To improve accountability, both the state Department of Finance and the University central administration should play more active roles in monitoring compliance with appropriation restrictions. Specifically, the department should reach a resolution with the University about the sufficiency of UMD’s actions to resolve any questioned spending from the state special appropriation for women's athletics.
