Titan Campaign Funds Diverted for Expenses : Finances: Deficit forces athletic department to shuffle its priorities, and some stadium improvements could be jeopardized.
Cal State Fullerton’s $5.3-million campaign to benefit the Titan Sports Complex and the Titan athletic department has netted some $1.5 million in pledges--more than enough to fund construction of an $875,000 baseball pavilion/press box, the first item on the school’s priority list of stadium improvements.
But don’t expect university administrators to begin seeking contractors’ bids for the baseball pavilion project any time soon.
Why? Because the school is using about $800,000 in campaign funds to pay athletic department operating expenses from 1991-92, a move that has rankled one city official, raised the eyebrows of some faculty members and could jeopardize some stadium improvements if the campaign doesn’t reach its goal.
The campaign, which began in the spring of 1991, is split into a $4-million capital effort for the stadium and a $1.3-million effort to cover projected shortfalls in the athletic department budget.
When the City of Fullerton’s Redevelopment Agency agreed in February, 1991, to lend the school $540,000 for a private fund-raising company to run the campaign, it did so under a stipulation that the first funds raised would go toward the sports complex’s “add alternates,” which include items such as the baseball pavilion, furnishing the football/soccer support building and adding bench seats to the east side of the football/soccer stadium.
But an $800,000 athletic department deficit for 1991-92 forced the school to shuffle its priorities, and a loophole of sorts in the arrangement with the city--the parties are still negotiating how campaign funds should be spent, and nothing has been put in writing--allowed the school to allocate funds as it wished.
School President Milton Gordon, on the recommendation of Vice President for Administration Sal Rinella and with the blessings of the campaign cabinet and, apparently, most major donors, approved a plan in which the school is converting $800,000 in pledges to cash by securing bank loans for that amount.
Those funds will be used to balance the 1991-92 budget, and the school will use money from five-year campaign pledges to repay that debt. Some $150,000 in interest payments on the loans will also come from the campaign.
“The agreement with the city is for how we use capital campaign funds,” Rinella said. “We took funds that came in on the front end and let them flow toward operating expenses. We haven’t spent money on the complex itself. We didn’t violate the agreement--we’re just consuming the dollars as we need them.”
Rinella said most of the money pledged has not been designated for specific components of the complex and that only one donor insisted his pledge go toward stadium improvements.
“We double-checked with the donors to make sure they were comfortable with this,” Rinella said.
But at least one Fullerton city council member, Molly McClanahan, has a problem with the allocation. The city has invested $10.76 million in the sports complex, which will also be used for youth sports, but much of the money raised for the complex so far has gone to Cal State Fullerton.
“Our interest is in the sports complex and the community’s use of it, not the school’s operating budget,” McClanahan said. “My concern is that money given for the capital drive be used for that. The Redevelopment Agency is interested in completing the facility. That’s why we loaned them money for the fund drive.”
While there is nothing illegal about the school’s action, and the city council has been apprised of the situation, McClanahan believes it’s something of a gamble:
What if the drive stalls at $1.5 million, and there’s not enough money for even the first add alternate? What if the campaign nets $3 million--will $1.3 million still go toward athletic department operating expenses, leaving only $1.7 million for stadium improvements?
Rinella, however, said optimism that the campaign will soon secure several six-figure pledges and possibly a seven-figure pledge offsets the risk.
“The president wouldn’t be moving forward with this if he wasn’t feeling we’ve turned the corner in the campaign,” Rinella said. “And we feel we have.
“After a long, tough year of recession, I see good things coming. We’re confident we’ll reach the $4-million mark. Ultimately, the dollars will all flow to the appropriate spots. We just went in a little different direction.”
Others remain skeptical.
“It’s been 1 1/2 years since we’ve hit the bricks for money, but where is it?” said Stewart Long, an economics professor who chaired the academic senate the last two years and was a member of the athletics council last year.
Added McClanahan: “While I respect the fact that they have to keep major donors under raps while discussions are going on, we also need to keep their feet to the fire.”
City Councilman Dick Ackerman, who has been a driving force behind the sports complex project for more than a decade, said the campaign cabinet didn’t really have a choice. The only other way to balance the budget would have been to make sweeping cuts in the athletic program.
“It didn’t make much sense running the risk of eliminating the program you built the complex for (football) to build a baseball pavilion,” Ackerman said. “That’s not a good trade-off. We’re not raising funds as fast as we had anticipated, and our priorities changed.”
Gary Chalupsky, director of redevelopment and economic development for the City of Fullerton, agreed.
“I don’t think anyone is jumping for joy that this is occurring . . . but if you can’t keep the football program running, you can’t keep the campaign going,” he said. “That’s a pretty reasonable argument.
“The city’s priorities effectively remain the same, but what the university said is if people don’t designate where they want their gifts to go, then they’re free to use them in the order they want. You could judge that to be bad faith, but it’s my understanding that the council is fully aware of what’s going on.”
At least two questions still remain:
--What if the actual cash intake on the campaign comes up short of the amount pledged?
This is one reason the athletic department found itself in such a budget mess last spring. Athletic officials were expecting a $650,000 shortfall, but the deficit proved to be much larger, about $800,000. The main culprit: The 1991 Titan Athletic Foundation drive.
Remember that one? It came a few months after Fullerton had nearly dropped football and on the heels of a surge in community support for the sport. Then-TAF director Walt Bowman announced that the TAF’s annual spring drive netted $503,000 in pledges, the most ever in one campaign.
The actual amount received was $283,000.
The campaign cabinet has taken measures to protect itself, though. Ackerman said they are now using binding contracts for pledges, and if they are not honored, the school could take legal action against the donor to recover the pledge.
“The bank isn’t going to advance us money on pledges they don’t think are good,” Ackerman said.
--What will the athletic department do in the future if it has a large deficit but no capital campaign fund to tap?
Barbara Stone, a political science professor who has been involved in athletics for years, would like to know.
“Do you realize where they’d be now if they hadn’t ‘stolen’ $800,000 from the capital campaign?” Stone said. “Those are one-time funds, and they haven’t really cut costs.”
If the capital campaign, which continues at least through the end of this year, goes well, the athletic department will gain another $500,000 from it--the balance of the $1.3-million operating costs figure--for the 1992-93 school year.
After that, Rinella believes an increase in revenues from gate receipts and advertising and marketing opportunities in the new stadium, larger annual TAF drives, and a decrease in costs should end the dependency on special campaigns.
“It’ll be a challenge, but no worse than the ones the rest of the university faces,” Rinella said.
Athletic Director Bill Shumard said he is in the process of planning for 1993-94 and beyond but declined to reveal figures of projected revenue increases or cost decreases, the most controversial of which has been the possible downgrading of the school’s Division I-A football program.
“We’re definitely going to feel the burden,” Shumard said. “We need to build a bigger support base, but what can we realistically do? I’m not quite ready to be specific about it.”
Still Waiting
What the $4-million capital fund-raising campaign is supposed to buy for Cal State Fullerton:
$875,000--Construction of baseball pavilion.
$750,000--Equipment.
$600,000--Finish stadium support building, football locker room, training rooms.
$550,000--Construction of east side stadium building.
$350,000--5,400 additional football stadium bench seats.
$150,000--Additional turf and irrigation.
$150,000--Construction of concession building.
$135,000--Landscaping.
* TITANS BLOWN AWAY: Cal State Fullerton lost five of its 13 fumbles, helping Georgia roll to 56-0 victory. C7
