In an unprecedented move Tuesday, the Board of Directors of the San Diego State University Foundation approved a $200,000 loan to the school's ailing intercollegiate athletics program.
The SDSU administration asked for the loan after receiving a budget update that showed a cumulative five-year athletics deficit of $450,000. The university negotiated with the foundation because, by state law, a California State University may not directly seek a loan from a financial institution.
Under the agreement, which the board approved 7-2, the foundation, set up to provide academic aid to the university by procuring grants and endowments, will secure a 17-month loan from the Bank of San Diego, using foundation assets as collateral.
The university will make loan payments directly to the bank, and it plans to back the loan with returns from athletic department income--ticket sales, radio and television revenue, and student fees.
Should the university be unable to make a payment, it must notify the foundation 90 days in advance, and, at that point, funnel all athletics program income into a bank account established by the foundation.
The foundation historically has helped SDSU in academic, not athletic, matters, said Mike Sigler, Associated Students president and a foundation board member. Sigler, who joined Skaidrite Krisans in voting against the loan, said he opposed the loan because he was concerned that "instructionally related activities" fees could be used as collateral should the university default.
Of the more than $300 each student pays per semester in registration fees, $15 goes to the activities fund. Last year's athletic program budget received $800,000 from that fund, approximately 88% of the money in the fund. Over the last several years, student leaders have argued that the athletic program has been receiving too large a share of activities fund money.
According to William Erickson, vice president of SDSU business and financial affairs, the loan is necessary to solve some cash-flow problems.
"One of the biggest problems that we have is that we do not receive reimbursements from the league until June," Erickson said. Those reimbursements are in the form of television and radio revenue that the Western Athletic Conference and the National Collegiate Athletic Assn. hold until June 30 of each year.
"When you're running a deficit, (the delayed payment) presents some problems," Erickson said.
He predicted that the budget will balance by the time the fiscal year ends June 30. Erickson said that the athletic program, which lost $20,000 in fiscal 1983-84, took several cost-cutting measures last year. The amount of money allotted to each of the university's sports was cut, and men's and women's swimming and men's volleyball were eliminated, reducing the number of athletic teams from 19 to 16.
The volleyball program was able to raise sufficient funds on its own to remain in the program, however. To remain an NCAA Division I school, the university must participate in at least 16 intercollegiate sports.
The $450,000 deficit could be reduced substantially, depending on the outcome of the current SDSU men's basketball season, Erickson said. He estimated that post-season tournament play could net the program as much as $271,000.