A report released by the state Legislative Finance Committee is forcing Northern New Mexico College officials to re-examine how the school pays for its athletic program.
Northern officials, from 2011 to 2017, have transferred several hundred-thousand dollars from the school’s Instruction and General Purpose Fund, to subsidize the athletic program, and state lawmakers believe that practice has to stop.
A Legislative Finance Committee report titled, “Higher Education Cost Drivers and Cost Savings.” released on Oct. 24, shows Northern pulled $550,000 from the school’s General Purpose Fund to subsidize the Northern Athletic Department, between 2011 and 2017. The report also cited the University of New Mexico and New Mexico State University for transferring Institutional and General Purpose funding to cover athletics.
However, Northern’s interim vice president of Finance and Administration Ricky Bejerano said the Committee report contained several errors and the total transferred between 2011 and 2017 was about $2,099,864.
Northern finance officials, so far this year, have transferred approximately $87,000 to subsidize the athletic program. Athletic Director Ryan Cordova said while the transfers outlined in the report may seem like a big deal, he believes it is somewhat a common practice.
“Now every school in the state of New Mexico transfers some kind of money from the school to cover athletics,” he said. “They don’t just rely on RSP (Requests for Special Projects) from the state.”
Cordova said the only difference between the state’s other higher education institutions and Northern is that the latter “front loads” its budget under the athletic line item and transfers money from Institutional and General Purpose funding, as needed, whereas other institutions include costs such as referee expenses and conference dues during the budget-building process.
Northern Board of Regents Secretary Damian Martinez said although he is not singling out athletics, it concerns him that General Purpose money is being errantly used throughout the institution.
“I have some real big concerns with how things (money) have been spent at the school,” he said. “My concerns are with the use of I and G (Instruction and General Purpose) monies to support programs across the school.”
Finance officials also, during the same timeframe, transferred about $680,589 from the General Purpose account to subsidize the El Rito campus; $110,743 to support the Food Services Department; and $98,586 to cover cost overruns at the bookstore, just to name a few.
Martinez said the realization is especially troublesome, considering the school’s instructors haven’t had pay raises in several years.
“We haven’t given our professors raises since dinosaurs walked the Earth and I and G money can be used for that,” he said. “It concerns me greatly that we are running an athletic program that can’t be run without using money that shouldn’t be used for athletics.”
The big take-away from the report is that Northern department heads and administrators need to live within their respective budgets going forward, Martinez said.
Northern President Richard Bailey said now that the Finance Committee has made it crystal clear that transferring funds from the Instruction account to subsidize non-academic programs is not OK, school personnel will have to come up with some creative solutions to cut costs.
“On the athletic side, the report was very clear,” he said. “The line in the sand is, we won’t be able to use that (Instruction and General Purpose money) for our Fiscal Year ’19 budget. I think we all need to come together to look at other options and have some serious discussions about a way forward.”
Bailey said the school is working on a couple of initiatives that could help reduce the El Rito campus’s energy costs, which are driving the fund transfers.
He said the agreement Northern has with Kit Carson Electric Cooperative and its builder, Delaware-based Syncarpha El Rito, LLC, to build a one megawatt solar array, should reduce those costs somewhat, in addition to an energy audit Northern officials are pursuing.
Bloated administrative costs
The report also flagged Northern administrators for spending too much on administration and not enough on instruction.
According to the report, in 2016, Northern officials spent a total of 36 percent of the instruction funding they receive from the state, and collect in tuition and fees, on providing academic instruction.
While 36 percent, or $5,494,667, of $15,262,963, doesn’t seem like a small sum, the total spent should have been more.
If Northern officials had been more in line with the other state schools, they would have dedicated an average of 54 percent of their General Purpose funding to academic instruction.
A 54-percent allocation would have bumped the academic instruction costs up to about $8,242,000.
The report also concluded that Northern probably spends too much on executive management. Bejerano said Bailey’s administration is already on track to reduce the school’s administration costs.
“The two most significant are the renegotiation of contracts, which netted approximately $70,000 in realized savings,” Bejerano said.
Northern officials will also save upward of about $145,000 by not filling a couple of positions, such as the finance director and vice president of Institutional Advancement.
Altogether, reductions and renegotiations have netted the school about $215,000 in savings.
Bejerano said overall, school officials are getting into the habit of paying close attention to how they use school resources.
“The president is making sure that each and every expenditure is thought through before we make any type of commitment,” Bejerano said.