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Task force starts JQH financial exams

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In the wake of a state audit report that found Missouri State University’s JQH Arena has lost money its first two years of operation and the school is planning to subsidize the arena to the tune of nearly $300,000 in 2011, a task force is now charged with finding ways to make the arena profitable.

President James Cofer assembled the nine-member task force, and the group is expected to announce its findings by April 1, according to task force Chairman Brent Dunn, vice president of university advancement. Its first meeting was held Nov. 16.

“It was the first time that the committee got together to organize and hear the charge from the president and go from there,” Dunn said. “We looked at a lot of documents; it’s a complex issue.”

The arena is starting the year in the red to the tune of $328,890, according to the university’s fiscal 2011 budget.

Dunn said the group began examining the arena’s budget and found that there were many considerations it would have to make. For example, he said there are personnel who work inside the arena, Hammons Student Center and Plaster Sports Complex, and the task force will have to determine how those salaries would be budgeted.

Dunn said the task force is charged with:
• determining whether the university’s original expectations for the arena are being met;
• establishing the current financial status of the arena’s revenues and expenditures;
• reviewing the arena’s operational policies to see if they need to be amended; and
• creating a plan to specifically address any issues regarding financing, ongoing operations, policies or scheduling.

Task force members Kyle Moats, Jacob Swett, Nila Hayes and Cofer each declined to be interviewed for this story and referred all questions to Dunn.

Dollars and cents
According to the October audit report presented by State Auditor Susan Montee, the university used money from other school funds to offset losses at JQH Arena.

“Costs to operate JQH Arena continue to increase, and the arena has not generated adequate event revenues to cover these costs. As a result, transfers from the Intercollegiate Athletics Fund totaling $275,340 and $26,350 from the University Relations Fund for the years ended June 30, 2010 and 2009, respectively, were necessary to partially offset operating losses,” Montee said in the 58-page audit report. “Further, according to the current budget, the university expects to transfer an additional $275,340 from the Intercollegiate Athletics Fund during the year ending June 30, 2011.”

Dunn said the economic downturn might be partially to blame for the arena’s revenue shortcomings, but that has yet to be determined.

“We still have to get comfortable with what makes up (JQH Arena’s) operational budget,” Dunn said.

Operations are projected to lose $328,377 during fiscal 2011, which began July 1. MSU budget officials project JQH Arena operating revenues of $280,000 this year, while expenses are forecasted at $608,377. Factoring in nonoperating revenues, net assets are expected to grow by $4,639. However, included in the nonoperating revenue line is the transfer of $275,340 from the Intercollegiate Athletic Fund that Montee referenced in her report.

Skeptic turned hopeful
MSU Professor of Economics Reed Olsen has been critical in the past of the university’s accounting practices with regard to JQH Arena.

Before the audit report, Olsen told administrators that he believed the arena was losing money, despite former president Michael Nietzel’s assurances that JQH supported itself financially. Now, Olsen says he has both reasons to be hopeful and skeptical that the school’s administrators will be transparent about the arena’s finances.

Olsen said that during a recent Faculty Senate address, Cofer told attendees the issues the audit raised were big problems that would be addressed. Olsen said, however, that the makeup of the JQH task force included personnel who were heavily involved with the athletic department and had a vested interest in hiding the truth.

“The building is already built, and I don’t think it’s ever going to pay for itself,” said Olsen, a 20-year MSU staff member. “I only wish the university would forthrightly deal with that fact.”

Olsen said the university has an ethical responsibility as a publicly funded institution to be transparent about how it spends its money, and he hopes that President Cofer will ensure the university is open and honest about all of its accounting practices.[[In-content Ad]]

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