Shaping Policy and Practice in Intercollegiate Athletics: A Study of Student Perceptions of Resource Allocation for Athletics and its Effect on Affordability of Higher Education

Intercollegiate athletics is an increasingly expensive venture in American higher education. Noted athletic powers have budgets exceeding $100 million, and schools with lesser reputations increase athletic budgets despite lacking the ability to generate large sums of revenue through ticket sales and other sources. Higher education is faced with declining amounts of non-student support for academic and non-academic programs (Vedder & Denhart, 2010). Public institutions increasingly rely on funds provided by institutional subsidies and student activity fees (Vedder & Denhart, 2010; Chapman, Ridpath, & Denhart, 2014). This mixed-methods study addresses, using Asymmetrical Information Theory (Akerlof, 1970), student perceptions of student activity fees. The population is represented by students (n=3,282) enrolled during the 2012-13 academic year at institutions in the Mid-American Conference (MAC). Findings suggest students are aware of the fees, but not aware of the amount or purpose. Many expressed concern about transparency and affordability of education because of the amount of subsidies to fund athletic programs. 1 Ridpath et al.: Student Perceptions of Resource Allocation Published by Digital Commons @ Kent State University Libraries, 2015 Ridpath, Smith, Garrett, Robe & Note 20 Higher education access and affordability has become the focus of policymakers as costs have climbed in recent years. The attainment of a college degree is often considered paramount to achieving gainful employment, and earning much more over a lifetime than one otherwise would (NCPSI, 1998). In recent years, the funding of institutions of higher learning has been discussed on a more frequent basis (McClendon, Hearn, & Mokher, 2009; Tandberg, 2010a, 2010b). Budget cuts are occurring on campuses throughout the United States despite the rising costs associated with attending college (U.S. Department of Education, 2010). That has sparked many discussions as to how universities can maintain academic standing and primacy without placing a large financial burden on students. The long-standing debate over college costs and access to higher education by the American population without regard to race, sex, or socioeconomic background has reached a crescendo in American political rhetoric. President Barack Obama spoke about rising tuition costs during his 2012 State of the Union address and put colleges and universities “on notice” by stating in 2012 that federal funding for higher education would decrease if tuition continued to rise (Thomas, 2012). For the past 25 years, tuition and fees have increased greatly, growing in 2012 to 5.6% beyond the rate of inflation (Page, 2011). General student fees at public institutions are rising even quicker at a rate of 13% or higher over a similar time frame (Vedder & Denhart, 2010). While state governments have discussed limiting tuition increases, little focus has been placed on the additional fees that students must pay in addition or as part of their tuition. Although there have been some notable studies on this subject including Chapman, Ridpath and Denhart (2014), Ott (2009), Kent State University (2011), Smith and Caldwell (2013), and Vedder & Denhart (2010). This topic should be examined further, given the increased focus on higher education costs and the inability of many to pursue a college degree in the current unstable world economic climate (Vedder & Denhart, 2010). One such discussion revolves around athletic department fee subsidies students must pay as part of tuition and general fees to attend. Literature Review Institutional Subsidies for Intercollegiate Athletics The often prevailing notion that athletic departments operate self-sufficiently like other campus auxiliaries such as housing and dining services remains widespread (Weaver, 2011). However, according to a 2010 USA Today study of the then-119 NCAA Division I-A schools, on average, 60% of athletic department income came from student fees and institutional subsidies. That represented an increase of over 20% on average over four years. In 2011-12, subsidies for all of Division I athletics rose another 10% by nearly $200 million compared to 2010-11, reaching a total of $2.3 billion. (Berkowitz, 2013; Berkowitz, Upton, & Brady, 2013; Berkowitz, Upton, McCarthy, & Gillum, 2010; Weaver, 2011). University athletics subsidization takes three forms: (1) Direct subsidy 2 The Journal of SPORT, Vol. 4 [2015], Iss. 1, Art. 3 http://digitalcommons.kent.edu/sport/vol4/iss1/3 Student Perceptions of Resource Allocation 21 from a general fund; (2) Indirect facility and administrative support, and; (3) mandatory fees students pay as a part of their tuition and fee bill (Chapman et al., 2014). Student general fees, separate from course related and laboratory fees, are generally considered a revenue source to fund extracurricular activities that students desire (Denhart & Ridpath, 2011). In choosing a university to attend, high-school students consider many factors and place emphasis on university perception (“The Image of Ohio University,” 2007). Such factors include the price differential of two specific universities (Bergerson, 2009), the academic programs/majors offered, social activities, and extra-curricular activities, among others. As athletic fees continue to rise, more research is needed into whether the importance universities place on athletics coincides with the importance students place on athletics, specifically with regard to college choice, affordability, willingness to pay and knowledge of these fees. How Public Institutions of Higher Learning Expend Budget Dollars Funding sources for public four-year institutions vary; according to the National Center for Education Statistics, the main sources include tuition and fees, federal and state grants and contracts, sales and services of auxiliary enterprises, independent operations, and state and local appropriations (Chapman et al., 2014; U.S. Department of Education, 2010). The general fee generates revenue for various activities that provide a better college experience for the student population, but receive little-to-no money through tuition. Universities struggled throughout the 1800s to raise money for providing higher education to students with academic potential (Rudolph, 1962). Initially, due to benevolence and Christian beliefs foundational to the creation of American colleges, administrations felt it necessary to put student needs above tuition collection. DePauw University tried to skirt problems imposed by free tuition; in 1873, they gave all students free tuition, and charged mandatory fees (Rudolph, 1962). However, it wasn’t until the early 1900s when the idea of student fees took a firm hold. Students began collecting voluntary student fees to provide a well-rounded experience in activities beyond the classroom for all students (Chapman, et al., 2014; Lorence, 2003). Those fees met a certain level of scorn as students felt they funded activities tangential to the aims of institutions of higher learning. After World War I, institutions of higher learning were thought to now have the responsibility of building character and well-roundedness as well as providing a comprehensive social and educational experience (Chapman et al., 2014; Rudolph, 1962). It wasn’t until the 1960s that student fees again faced controversy. Students began to use student fees to fight for rights and freedoms as campus activism took root (Meabon, Alexander, & Hunter, 1979). Public Interest Research Groups (PIRGs) were formed on college campuses across the nation by Ralph Nader during the 1970s. On the basis of advocacy for the benefit of college students, PIRGs staked a claim to a portion of the student fee money (Jaschik, 2007). Other groups followed suit, some considered more controversial than 3 Ridpath et al.: Student Perceptions of Resource Allocation Published by Digital Commons @ Kent State University Libraries, 2015 Ridpath, Smith, Garrett, Robe & Note 22 PIRGs, such as religious and other political advocacy groups. Students questioned the legality of being forced to pay student fees to support groups with viewpoints that differed from their own, and filed lawsuits for the right to opt out of certain fees (Lorence, 2003). The rising operating costs of a NCAA Division I intercollegiate athletic department, and how it is primarily funded, have also come under scrutiny, but for largely different reasons. Students attending universities often face financial challenges post-college when student loans need to be repaid. Student loan default, huge debt amounts, and repayment challenges for college graduates are just some of the reasons Obama spoke out about rising tuition at American colleges and universities (Thomas, 2012). The total cost of college, including the payment of fees, has increased the level of interest in the growth of this higher education expense (Chapman et al., 2014; Vedder & Denhart, 2010). A contributing factor to the closer examination is the growing phenomenon of the intercollegiate athletics “arms race,” driven by a consistent justification for the increasing costs of intercollegiate athletics commonly called the “Front Porch Theory.” The belief in this theory drives many monetary decisions in college sports as university presidents and trustees view athletics as the window that shapes university perception (Suggs, 2003). If that window is broken or dirty like the front porch of a house, it damages the reputation of other institutional aspects (Chapman, et al., 2014; Denhart & Ridpath, 2011; Frank, 2004; Litan, Orszag & Orszag, 2003; Vedder & Denhart, 2010). Many university presidents and athletic directors often claim, specifically in mid-major conferences like the Mid-American Conference, that students greatly value a strong intercollegiate athletics program as part of their collegiate experience. In addition it is suggested that a successful athletic program significantly influences college choice, fundraising, increases the numbers and quality of applicants, and provide a window to the institution that by extension can enhance research and academic activities (Rate & Karr, 2011; Suggs, 2003). Supporters also cite connections with alumni, donors, and government officials (“2011-12 Comprehensive Fee Report-Athletic Fee,” 2012; Berkowitz, et al., 2013; Weaver, 2011). However, little empirical research exists to support those assertions. In most situations where there are measurable returns, such as higher application rates and fundraising, it is typically a short-term, unsustainable spike that doesn’t create long-term benefits (Chapman, et al., 2014; Denhart & Ridpath, 2011; Frank, 2004; Litan, et al., 2003; Vedder & Denhart, 2010). To keep the front porch in order, institutions often feel compelled to participate in a “winner-take-all market” (Frank & Cook, 1995). The “winner-take-all market” is an economic theory that suggests institutions face powerful incentives, fueled by the success of direct competitors, to increase expenditures for a competitive edge, even though revenues generated directly by college athletic programs fall far short of covering their costs in the overwhelming majority of cases (Chapman et al., 2014; Frank & Cook, 1995; Berkowitz, 2010). Since generated revenue fails to cover athletic operating expenses at nearly all institutions, the athletic budget gaps are almost always filled by subsidies from 4 The Journal of SPORT, Vol. 4 [2015], Iss. 1, Art. 3 http://digitalcommons.kent.edu/sport/vol4/iss1/3 Student Perceptions of Resource Allocation 23 other institutional resources and, most substantially, student fees to cover the increased costs and deficit (Vedder & Denhart, 2010). Discussion often revolves around the morality of university subsidies for athletic departments while state government support for higher education is dwindling (Chapman, et al., 2014; Denhart & Ridpath, 2011; Smith & Caldwell, 2013; Vedder & Denhart, 2010). Each university and state allocates its student fees differently, but several areas listed below are consistent among public institutions in the United States and allocation to these primary areas has remained virtually unchanged for 60 years (Vedder & Denhart, 2010). State legislatures provide public colleges and universities guidelines for eight general areas that are permitted to receive funds from student fees, although they vary by state: • Student health services • Student social centers • Debt service on student personnel facility • Student government or student publications • Student recreational programs • Student cultural programs • Debt service on general social facilities • Intercollegiate athletics (Chapman et al., 2014; Millet, 1969). Other areas noted in the survey for this study that student fees fund include club sports, university outreach/community service, and other student groups and organizations. Student Fees Allocated to Intercollegiate Athletics Notably, in the Mid-American Conference (MAC), intercollegiate athletics receive some of the highest funding from student fees (Berkowitz, Upton, McCarthy, & Gillum, 2010) and is an ideal population to address the theorized research questions and support research-based conclusions due to being one of the highest student fee subsidized athletic conferences. The subsidy has become more much expensive over time as athletic costs have soared at rates beyond growth in generated revenues (Vedder & Denhart, 2010). Most relevant to this study is the specific “student athletic fees” subsidy. Student athletic fees often provide benefits or at least a perceived quid pro quo for the students. The most common example of a benefit is what is advertised as reduced or free admission to institutional athletic events, even though the cost of admission is paid up front via the fee allocation whether the student attends the games or not (Berkowitz et al., 2010; Chapman, Ridpath, & Denhart; Denhart & Ridpath, 2011). Several major Bowl Championship Series (BCS) institutions such as the University of Texas, The Ohio State University, and the University of Alabama do not charge fees to support their athletic departments and students pay for tickets to attend many athletic events, but others such as the University of Virginia do charge the subsidy, 5 Ridpath et al.: Student Perceptions of Resource Allocation Published by Digital Commons @ Kent State University Libraries, 2015 Ridpath, Smith, Garrett, Robe & Note 24 while schools like Clemson University are considering it (McGranahan, 2014). Many institutions charge more than $1,000 as an athletic subsidy per academic year, including Longwood, Norfolk State, VMI, and William and Mary (Table 1). However, a small sample has been built in other studies to question whether students, parents, and faculty feel athletics are as important as the administration feels they are and worth the amount of subsidy assessed (Berkowitz et al., 2010; Chapman et al., 2014; Vedder & Denhart, 2010). It can be debated that inconsistencies exist in the accuracy and transparency of the presentation of student athletic fees within National Collegiate Athletic Association (NCAA) Division I public institutions since the presentation of costs to the consumer is not standardized. Utilizing data from annual athletic department revenue/expense report submissions to the NCAA, specifically the Equity in Athletics Disclosure (EADA) Report, and publically available online information concerning enrollment at those public institutions, athletic subsidies per full-time equivalent (FTE) student can be derived, but it can be challenging to find the exact amounts charged. The subsidy per FTE measure in the EADA report is a total allocation of university resources and is more reflective of the cost of athletics per full-time student. Some institutions, such as the Michigan based institutions in the MAC have their student fees for athletics included in a total tuition amount rather than a separate fee (Vedder & Denhart, 2010). Coastal Carolina University (CCU) in Conway, South Carolina, states on the university website that student athletic fees (in-state) are $175 per semester, $350 annually. In CCU’s 2010-11 filing with the NCAA, they indicated that athletic fee revenues were $3,720,622, while “other school funds” utilized to subsidize athletics were $12,898,882, for a total subsidy of $15,619,504. When contacted about the source of the “other school funds,” a university official stated the funds come from tuition, but as stated prior some tuition amounts already include the fee for athletics. At Coastal Carolina, the subsidy from tuition is likely at least $1,935 annually per FTE, and not the published $350 (Smith & Caldwell, 2013). Data compiled for the 227 public Division I institutions revealed that total subsides in the academic year 2010-11 were $2,178,569,185, while educating 4,186,050 FTEs, or $520 per student. In many cases this amount was higher than the published student fee costs. The data in Table 2 exhibits the 10 states with the highest total subsidies to athletics within Division I public institutions in 2010-11. 6 The Journal of SPORT, Vol. 4 [2015], Iss. 1, Art. 3 http://digitalcommons.kent.edu/sport/vol4/iss1/3 Student Perceptions of Resource Allocation