Question About Scholarships

[Kung Wu]

I don't know if this matters for your purposes, but what it costs the athletic department doesn't change based on "hard" or "soft" money.

The Athletic Department is a separate entity from the University.

It's not like the Buick division of General Motors was buying parts from the Chevrolet division. Then it's just a bookkeeping entry and the net cost to GM is the money that went outside of GM.

It's like Buick buying parts from Ford. All of the money goes outside the entity.

The University is not like a holding company (GM) with the athletic department as a subsidiary (Buick). The Athletic Department writes a check to the University for tuition. Whether or not it's "free" money to the University (the profs pay stays the same with one more student) doesn't matter one bit to the athletic department.

As far as the University is concerned, it doesn't matter if the money came from an athlete on scholarship or from an out-of-town student living on campus. Both are equally unrelated to the entity that is the University.

Right, I was aware of the two entities. I don't know anything more than that the ICAA is a private company.

My complete guess is it is required by the IRS because the ICAA must operate as a for-profit company, where the University would operate as a 501(c) of some sort (maybe a 3?). And my second guess would be that the University wholly owns the private company, but each files taxes separately. I guess I could look that up and see if it's true.

If that hunch is correct, the ICAA would want to maximize all the expenses they can to offset income from ticket sales by writing a check for full tuition, etc. If that's true then it would also explain hoopsnuts' dilemma:

If you came from out of state, the University wanted out of state money from the athletic department. Never made sense to me, but hey who said it had to make sense.

That could substantially help to maximize the ICAA expenses. The University upon receiving the check would pay relatively little taxes (any?) on that income from the ICAA.

Am I all wet here?

[im4wsu]

I don't know if this matters for your purposes, but what it costs the athletic department doesn't change based on "hard" or "soft" money.

The Athletic Department is a separate entity from the University.

It's not like the Buick division of General Motors was buying parts from the Chevrolet division. Then it's just a bookkeeping entry and the net cost to GM is the money that went outside of GM.

It's like Buick buying parts from Ford. All of the money goes outside the entity.

The University is not like a holding company (GM) with the athletic department as a subsidiary (Buick). The Athletic Department writes a check to the University for tuition. Whether or not it's "free" money to the University (the profs pay stays the same with one more student) doesn't matter one bit to the athletic department.

As far as the University is concerned, it doesn't matter if the money came from an athlete on scholarship or from an out-of-town student living on campus. Both are equally unrelated to the entity that is the University.

Right, I was aware of the two entities. I don't know anything more than that the ICAA is a private company.

My complete guess is it is required by the IRS because the ICAA must operate as a for-profit company, where the University would operate as a 501(c) of some sort (maybe a 3?). And my second guess would be that the University wholly owns the private company, but each files taxes separately. I guess I could look that up and see if it's true.

If that hunch is correct, the ICAA would want to maximize all the expenses they can to offset income from ticket sales by writing a check for full tuition, etc. If that's true then it would also explain hoopsnuts' dilemma:

If you came from out of state, the University wanted out of state money from the athletic department. Never made sense to me, but hey who said it had to make sense.

That could substantially help to maximize the ICAA expenses. The University upon receiving the check would pay relatively little taxes (any?) on that income from the ICAA.
Am I all wet here?

The ICAA is the not-for-profit or we couold not deduct 80% of the contribution we make to it. The University itself could, in theory, be either not-for-profit or not.

[Kung Wu]

The ICAA is the not-for-profit or we couold not deduct 80% of the contribution we make to it. The University itself could, in theory, be either not-for-profit or not.

Ah, very good point.

[Kung Wu]

Well just to confirm .. is SASO part of ICAA, WSU or yet another independent entity?

Edit: Kansas filing shows that WSU-IAA is a not-for-profit, as you said, so SASO is probably just a department/division/something under them?

[eeshocker]

Re: In continuation . . .

Tuition and fees would seem to be nearly 100% soft money -- costs the university nothing if a 31st student sits in a class, versus the 30 students that paid are sitting in it. The teacher's salary didn't go up or down based on the additional seat, and the operating expenses aren't increased.

I am not sure how many scholarship athletes are attending classes at WSU, but I would guess that if you took away all the tuition and fees paid for these students, it would have some impact. Let's just say there are 100 of them, that would equal nearly 250K per semester. If you take this money away, what kind of impact would this have on salaries or even the number of professors needed to teach. Also, wouldn't the impact be greater for certain programs. I would think that the impact on the engineering school would be much less than the liberal arts.

[ShockerInKC]

I think some of your logic is faulty.

The university does not run "at a profit." As if it did, it would not need to receive any funding from the state to keep running. So the idea that any of the services the university provides (like housing) actually turns a profit is suspect. To extrapolate, if every service the university provided (teachers, food service, books, housing, library, research facilities) was break-even or better, they wouldn't require any state funding or donations.

The books are probably marked up pretty good, but that bookstore is open and staffed all semester. Basically think of it as 2 christmases per year, followed by 3 months of selling mostly chewing gum.

Also your arguement about books not costing any money is wrong. Let's say the books are new at the beginning of the semester, and they are returned used at the end. If the net change in value is zero, then I'd like to borrow your car for 6 months for free. The book depreciates.

As for the additional student sitting in class not costing any additional money, well that seems true but less so as you consider more and more students. If you add 100 atheletes sitting in various classes it does obviously increase the costs. Also those atheletes use other facilities (gym, training rooms, ....) that have to be larger and have more staff to cover the increased utilization.

[hoopsnut]

The information I posted earlier about the loan of books is accurate, but incomplete. It used to be that the athletes would go to the books store and pick up books which were paid for by the athletic department. At the end of the semester they would be turned in and the athletic department would receive the buy-back credit. The athletic department decided that they could save money and has chnaged the system. They now have their own supply of books that are distributed to scholarship athletes out of the learning center at Koch Arena. At the end of the semester, the books are turned back in for redistribution without the added bookstore costs each semester. Of course, they periodically find thenselves with a shelf full of outdated books, but ultimately, they save a bunch of money.

[RoyalShock]

The dorm room rates have to make tons of money for the university. I'm guessing the net proceeds go into a general university fund to help offset costs.

As for the bookstore, I'm sure they do just fine during the semester. Every time I've been there someone is buying something.

I don't know what the book business is like with the various online options available, but if it works like it did 20 years ago they make a killing off of books. Sell it new for $70, buy it back for $20, sell it used for $40-$50. Rinse. Repeat.

Besides, aren't college bookstores typically owned and operated independently? I thought that was the case. Maybe not.

[SFL]

I don't know what the book business is like with the various online options available, but if it works like it did 20 years ago they make a killing off of books. Sell it new for $70, buy it back for $20, sell it used for $40-$50. Rinse. Repeat.

College text books = Scam :(

[WstateU]

Sorry, maybe a little off topic... didn't want to start a new thread. A nice little thank you from the student athletes... and a nice marketing piece. I believe it was played during half time of Monday's game. Notice the 'twin towers' in the video.

http://www.goshockers.com/ViewArticle.dbml?DB_LANG=C&DB_OEM_ID=7500&ATCLID=205043598

[Kung Wu]

The university does not run "at a profit." As if it did, it would not need to receive any funding from the state to keep running. So the idea that any of the services the university provides (like housing) actually turns a profit is suspect. To extrapolate, if every service the university provided (teachers, food service, books, housing, library, research facilities) was break-even or better, they wouldn't require any state funding or donations.

I am trying derive the hard cost of a scholarship. Whether WSU runs at a profit or not is irrelevant, but I do think those responsible for budgeting the four relevant things: tuition, rent, room, board would certainly try to make a profit. Again whether they do or not, doesn't really matter to me in this discussion.

The books are probably marked up pretty good, but that bookstore is open and staffed all semester. Basically think of it as 2 christmases per year, followed by 3 months of selling mostly chewing gum.

Also your arguement about books not costing any money is wrong. Let's say the books are new at the beginning of the semester, and they are returned used at the end. If the net change in value is zero, then I'd like to borrow your car for 6 months for free. The book depreciates.

You are correct. There is an opportunity cost on the books. New books will drop in value to the resale price of the used book. Opportunity cost is a soft cost -- no real expense to the university, just a lost opportunity to sell the book for more than it otherwise would so I need to bump the soft money expense on books by, say, 20% of the book portion of a scholly. The 20% would more than include bookstore overhead as well.

As for the additional student sitting in class not costing any additional money, well that seems true but less so as you consider more and more students. If you add 100 atheletes sitting in various classes it does obviously increase the costs. Also those atheletes use other facilities (gym, training rooms, ....) that have to be larger and have more staff to cover the increased utilization.

Yes, also true, but that expense is spread over 10,000+ students. 1/10000 = 0.01% (this is per scholly). I considered that to be close enough to zero. You are correct, if I was considering lots of scholly's I'd need to bump it to, say 2%? Heck I will just do that.

Revised:

Hard money
----------
Room: $3600 (high plus low divided by 2) x .60 = $2200 [rounded up a bit]
Board: $2800
Tuition and fees: $100
Books: $0

Total annual award w/ real expenses: $5,100


Soft money
----------
Room: $3600 - 2200 = $1400
Board: $0
Tuition and fees: $4700
Books: $100

Total annual award, expense-free: $6,200

Better?