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Trustees Hear Financial Update on Intercollegiate Athletics

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Sept. 14, 2017

UNIVERSITY PARK, Pa. -- A review of Penn State Intercollegiate Athletics organization, strategic plan, various measures of institutional control, peer institution benchmarking and five-year historical and five-year prospective financials were presented today (Sept. 14) by Sandy Barbour, director of Athletics, and Rick Kaluza, senior associate athletic director for finance and business operations.

According to a report to the Board of Trustees Committee on Finance, Business and Capital Planning, Barbour indicated that ICA currently supports approximately 800 student-athletes across 31 varsity sports (16 men's and 15 women's), with more than 72 percent of these student-athletes receiving some type of grant-in-aid/ scholarship support (366 full grant-in-aid equivalencies).

Penn State's 31 programs rank in the five highest totals among all 130 Football Bowl Subdivision institutions. Intercollegiate Athletics has engaged in peer institution benchmarking with its Big Ten Conference colleagues and several other schools nationally, all of whom annually compete for multiple NCAA championships, similar to Penn State.

Data from the institutions' Equity in Athletics Disclosures Act for fiscal year 2015-16 showed that Penn State ranks near the middle in spending per student-athlete in comparison among Big Ten schools and eight national public institutions -- Alabama, California, Florida, Florida State, North Carolina, Pittsburgh, Texas and Virginia.

Kaluza reported a gross operating surplus of approximately $4.6 million for the year ended June 30, 2017, and an ending cash reserve of $7.5 million.

At the conclusion of fiscal year 2011, ICA had a reserve balance of approximately $20 million. Following the impact of the sanctions and loss of Big Ten bowl revenues, the reserve balance was approximately $150,000 at the end of FY 2013. Through a combination of expense reduction initiatives and the return of conference and bowl revenues and the external loans, Penn State Athletics has built a reserve balance to $7.5 million as fiscal year 2017 concluded.

Barbour concluded the presentation by acknowledging that although the five-year budget projections are vastly improved over those presented in 2014, resources will remain tight for the 31-sport, 800 student-athlete program. The ability of ICA's programs to remain competitive, or in some cases, achieve greater competitive levels, will be dependent on the department's ability to identify and execute new revenue streams while growing current revenues. In addition, although investment in many areas will be required for competitive improvement and revenue growth, it also will be important for the department to be critically cost conscious and efficient with spending.

Barbour also noted that anticipated revenue enhancements (i.e. event revenue, conference media rights, strengthened partnership agreements, increased philanthropy) will continue to improve ICA's operating budget picture. However, given ICA's significant capital/facilities needs, the financial challenge will be to sufficiently fund the priorities in the facilities master plan announced last March.

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