MEMO
To: Senate, Michigan Technological University
From: Senate Finance Committee, B. A. Barna and L. R. Davis, Co-chairs
Date: 13 November 2001
Copies: C. J. Tompkins, W. K. Wray
Re: Financial Implications of the Termination of Men's and Women's
Varsity Tennis
At the request of the Senate, we have reviewed the financial implications
of the proposed termination of the tennis teams.
Financial Considerations (Annual)
Tuition Foregone
|
Item
|
Description
|
|
|
1.
|
Cash flow from tennis team tuition, FY 2002
|
$57,232
|
|
2.
|
Percentage of team members to be
lost from program termination
|
.70
|
|
|
|
|
|
Net cash flow lost
|
|
$40,062
|
Cost Reductions
|
Item
|
Description
|
|
|
1.
|
Travel, etc
|
$34,000 |
|
2.
|
Eliminate Coach
|
$46,276
|
|
|
|
|
|
Total savings
|
|
$80,276
|
|
Net Savings from Elimination
|
|
$40,214
|
The net cash flow from fiscal year 2002 tuition was calculated from
student records. The major difference between our calculations and
the numbers obtained from the Director of Budgeting is that we do not
treat the outside (e.g., federal) financial aid students receive as a
reduction of the net tuition revenue received by the university.
While these moneys are financial aid, the cost is born by the
sponsoring bodies (e.g., the federal government) and do not
reduce the funds received for tuition by the university.
The assumed student attrition rate is an estimate based on the team
members' self-reported assessments of the likelihood that they would
not have come to MTU had there been no tennis team. Our estimated
attrition rate has been judgmentally reduced below the one indicated
by the students' self-reports (over 80%) to allow for self-reporting
bias.
However, our conclusions are unlikely to be affected by any reasonable
assumption about the attrition rate. For example, assuming a 50%
attrition rate increases the cost savings to $51,660, an approximate
$10,000 increase in savings.
The team costs and coach's salary are from the Athletic Director's
fiscal year 2002 budget and past experience. They do not differ
significantly from the administration's numbers in our judgment.
These savings should be realizable beginning in fiscal year 2003.
Hidden Costs
We have not included in our quantitative analysis any allowance for
educational costs or state appropriations attributable to the tennis
team members. It is our judgment that neither of these factors will be
affected in total in the short run by elimination of the tennis team.
We do believe that both total education costs and state appropriations
will be affected in the long run by the elimination of the tennis
teams, but estimation of the effects would be speculative with respect
to both time and amount.
Conclusion
It is our judgment that the projected savings from elimination of the
tennis team do not in and of themselves provide significant motivation
for elimination of the team. It is our belief that non-financial factors
such as (1) the quality of the students that are attracted by having
tennis teams (2) the contribution of the tennis teams to the quality of
student life, and (3) the effect of having the teams on external awareness
of the university are more important to this decision.