Question

Harvey Hogan was in his 31^st year as Director of Athletics at Wilson College, a coeducational, private liberal arts college that offered 16 sports and was a member of the Champions Intercollegiate Athletics Conference (CIAC). Mr. Hogan was proud of the fact that, although his budget was the smallest in the conference (which consisted of 10 schools), he had always operated in the black.

    However, the college faced some serious financial issues in the current school year due to a drop in enrollment during the spring semester. As a result, the Chief Financial Officer (CFO) told all department heads that their individual budgets could NOT go over what had been appropriated at the start of the year.

     Mr. Hogan met with the coaching staff and apprised them of the financial crisis that faced the college. He asked for their help but really did not foresee a problem since the Athletics Department had never gone over budget in his previous 30 years.

     On June 30^th, the fiscal year ended and the CFO (Ms. Newman) put an emergency call into Mr. Hogan. She scheduled a meeting with him so he could explain why he was over budget by $12,000.00. She told him that 4 sports had exceeded their budgets—men’s lacrosse, women’s volleyball, men’s tennis, and football.

     When Mr. Hogan returned to his office he immediately called each coach and scheduled meetings with them. According to the women’s volleyball coach, she had failed to check her monthly computer printouts because she was “too busy coaching and recruiting” to spend time on the printout. She said she was sure she stayed within her budget and did not overspend. After some investigating by Mr. Hogan, the coach admitted that she had been asked to serve as a chaperone for the intramural flag football team which travelled to New Orleans for the national tournament. She had transferred some volleyball funds to their account to help them cover their costs. She also paid for their uniforms, but indicated that it was the first time she had ever gone over budget.

     The football coach was also shocked to learn he was over budget by $5000.00. He discovered that the company that washed the team practice and game uniforms failed to send a monthly statement as he had requested. Instead, the owner of the cleaning company waited until the end of the school year to send a bill for $5000.00. Moreover, in previous years several football student athletes who were offered grants-in-aid did not report for practice choosing to enroll at other institutions. The coach assumed this would happen again. However, every scholarship athlete reported for practice which put him over by two grants ($40,000.00). While he was still in compliance with the conference, he was above the institutions limit.

     The men’s tennis coach has always ignored Ms. Newman’s directive to turn in all receipts by June 1^st. Instead, he regularly procrastinated until as late as mid-July when he would turn in receipts for the national tournament held in May. He was $2000.00 over budget.

     Men’s lacrosse exceeded its budget because the coach, who had built a nationally ranked team, had decided to take a trip north to play several games over spring break. He had no other excuse except that he felt the tough competition would help his national ranking and bring good publicity to the college and help his recruiting.

     In addition to these problems, another serious one surfaced. The track and field coach wanted a new computer. When he was told that the request would not be approved until the next year, he worked out a deal with a local computer store. The salesperson agreed to let him get a computer and hold the bill until the next year when he was told he could purchase the computer. Unfortunately, the salesperson was fired and the store owner demanded payment immediately.

     The final frustration came when 12 dozen pairs of athletic socks arrived. The bill had no identifiers on it so Mr. Hogan could not tell who ordered them. No one would admit it and it was a mystery as to how the purchase order got through the business office without the approval of the Athletics Director, Mr. Hogan.

     In the next meeting that Ms. Newman had with Mr. Hogan, she was furious. She asked Mr. Hogan “who is in control of the Athletics Department budget—you or your coaches!” What should Mr. Hogan do?

Questions for Discussion

1. It’s now the middle of July. What can Mr. Hogan do, if anything, about what happened in the last fiscal year? (5 pts.)

2. Make a list of all of the problems you see in the situation above. (10 pts.)

3. Describe how Mr. Hogan can remedy those problems to prevent them from happening in the future. (20 pts.)

Answer 1

Sol:

a) as it is middle of July and there has many financial problems Mr. Hogan only can instruct department to keep their budget tight and keep everything short and simple as possible.

b)List of problems:

1)In the current year college faced serious financial issues due to drop in enrollment during the spring semester. As a result, the Chief Financial Officer instructed all department heads that their individual budgets will not be helped for over budgeting.

2)Mr. Hogan asked the coaching staff for their help but they had not seen this kind of  a problem. It creates prior experience problem to deal with this kind scenario.

3)The football coach saw that the company that washed the uniforms failed to send a monthly statement and then the cleaning company owner waited until the end of the year to send a bill of $5000.

4)Last years several football student athletes were offered grants-in-aid they did not report for choosing practice to enroll at other colleges.

5)The men’s tennis coach has always procrastinated and after this he created over budget for his game.

6)Men’s lacrosse exceeded its budget because the coach thought about developing team skill before their tough matchups which would help team to grow and this created budget problem.

7)The track and field coach wanted a new computer. But he was refused by the college for this year even he tried to make a way for computer later he was stopped by the store owner demanding payment immediately for it.

8)how the purchase order of 12 dozen pair of socks got through the business office without the approval of authority.

c) Remedy:

1) College have to increase their enrollment in the next year

2) Current situation will help departments to gain experience which will help department to manage this kind of problems in future.

3) Company that wash uniforms they should be always in touch with department so that this kind of a problem not happen again about monthly statement.

4) Student who was given grant in aid they should be given a limited time to give their report otherwise they will be cancelled.

5) Procrastination have to reduce for tennis coach by giving him schedule or priority list. Otherwise it will not help.

6)Man's lacrosse team have to practice in there home ground for the time being.

7) Track and field coach computer should be stalled for next year as immediate payment not possible.

8) Purchase order should be monitored by the authority carefully every week and it should not be available to everybody whereas authority should be given to one person and without sign of authority order is not valid should be written in the order invoice.