NCAA Division I Breakout Session
Proposal 62 and Implementation of
(Monday, June 15, 11:00 - 11:45 a.m.)
May I have your attention, please? Good morning. I'm Judy Rose, director of athletics at the University of North Carolina-Charlotte and a member of the NACDA Executive Committee. I'd like to welcome you to the NCAA Division I Breakout Session, again, on Proposal 62. We did this last year, but this year, it's only implementation of Proposal 62. I think you've all received some handouts and I'm sure you're going to be very grateful for those.
We have a wonderful group of panelists this year and I'm very pleased with their acceptance and agreeing to do this. I'd like to first introduce Ted Leland, the director of athletics at Stanford University. Ted, prior to being at Stanford University, was the director of athletics at the University of the Pacific and Dartmouth College. I think success follows Ted. His university has had 31 national championships since his arrival in the fall of 1991, including an NCAA record six national titles in 1996-97 and they have won the prestigious Sears Directors' Cup for the past four seasons.
Without further ado, Ted, a member of the Management Council, we welcome you this morning.
I want to welcome everybody today. We have a 45-minute panel today and I'll try to go as quickly as we can. Each of us panelists will have about 25 or 30 minutes and then we'll try to have time for some questions and answers.
To give you a little bit of history, Proposition 62 was passed at the 1997 convention and it gave student-athletes on scholarships the right to work during the academic year. We all know that that original legislation was fraught with problems. In the summer of 1997, the presidents group, the board of governors, in effect, delayed implementation of Prop 62 until the summer of 1998, this summer. The Management Council was asked to respond to the complaints and concerns about Prop 62 and come up with some alternate legislation under the new legislative processes.
The Management Council, in its wisdom, appointed me to the committee and made me the chair of the committee on Prop 62. It was described to me by one of my friends as being the last rat to get off the sinking ship. As the chair of this ad hoc committee, I was described as the first time a rat swam to a sinking ship and climbed on board. We worked really hard for about a month and a half. In December of 1997, we came up with some alternate legislation that has been passed and will be implemented this summer. It's been good.
The general aspects of the re-done Prop 62 are the following. There is a $2,000 cap on the amount a student-athlete can earn. The athletics department can intercede on behalf of helping the athlete to find a job. The $2,000 is exempted from institutional limits on financial aid. The prohibition on participating in this program in the first year of residence is still intact. Then, the nature of the permissible work is consistent with current amateurism rules already within the NCAA. We do not have a perfect solution, but it's a solution. The anticipation is that we will continue, as always, to refine this piece of legislation. There are still people out there that are opposed to any kind of work program like we're talking about and are unhappy with this piece of legislation. There are people on the other side of the spectrum that say it's still too confining and that we should give our student-athletes more rights and privileges to work.
My feeling is to give it a try. That's what we're doing. As imperfect as it is, it's something we need to implement. We're going to spend the rest of today discussing how we are recommending people implement this. This comes from us as individual professionals and there's not any NCAA position on this.
The last thing I would ask is that we avoid those peculiar interpretation questions we get sometimes. The interpretations of this rule are going to be ongoing and they're going to be difficult. We can all think of strange circumstances that would defy logic in some way. Let's not try to think of those today, because most of the student-athletes are looking forward to this as a privilege they will enjoy. We're hoping it won't be that much of an implementation problem.
Our next panelist is David Thompson, assistant commissioner of compliance for the ACC. He began there in 1988. He joined that staff five years ago as an enforcement and compliance representative previously on the NCAA staff. He served as one of the initial co-chairs of the Collegiate Commissioners Association Compliance Administrators and has been a member of the NCAA Legislative Review Committee and the NCAA Task Force to study the special assistance fund. David.
Thank you Judy. What we'd like to do today is focus on, as much as possible, the implementation of this. I know in the past years, there's been a lot of discussion about the interpretations related to the legislation and how it's going to be abused. We'd like to focus on the systems aspect of this, how schools are going to implement it and put their programs in place so they can monitor it effectively.
I do want to go over a brief summary of some of the key points between the old legislation and the new legislation before I get into that. The real differences between the student-athlete employment legislation we have now, and that we voted in last year, is that we've gone from a cost of attendance limit down to a $2,000 limit over and above the value of the full grant-in-aid for the term time employment earnings exception. In addition to that, the first $2,000 that a student-athletes earns, using the exception, is now not going to be institutional financial aid and, therefore, won't count either toward the individual limit or the team limits.
In the April Management Council Meeting, there was also one other significant change that came about. Right now, the first $2,000 that you earn, using the exception, is from employment in which the institution intercedes on behalf of you. If you go out and work with a booster in town and the institution is interested on behalf of you, the first $2,000 is not accountable toward institutional team limits. That's not true of employment within the athletics department or within an athletics facility that's owned by the athletics department. That is still going to be considered institutional aid and it's going to be accountable toward the team in individual limits.
That change that was made in April off of that change was that the first $2,000 of employment earnings in the recreational unit on campus, even if it's owned or operated by the athletics department, is also not going to be considered institutional aid and would not be countable toward the team individual scholarship limitations. So, that's a pretty big change in itself.
I hope everybody has a copy of the document we handed out. If you'll go to the third page, there's a series of questions and answers. It starts with Proposal 98.9, Effective Student-Athlete's Employment Earnings During Official Vacation Periods. The answer to that is no.
A year ago, when Prop 62 was set to go into affect August 1, 1997, the Board of Directors had a meeting in June. The conferences had requested that this legislation be delayed a year and the Board, at that point said that since they're not officially on board right now, we don't think we can do that. They actually delayed the consideration of that issue until August. As you know, the legislation was scheduled to go into affect August 1, 1997, so, at least in theory, the legislation did go into effect for about 11 or 12 days.
At any rate, when the presidents delayed, or between this time last year and August, Stan, Britton and I got together and said if they don't delay it, what are we going to do? What's going to happen to our schools because there was not a document out there to help our schools try to figure out how to apply the legislation and how to monitor compliance with it. So, the three of us got together and, with the help of a number of institutional administrators, not only the financial aid area, but in the compliance area, and at the end of the project, the NCAA staff got more involved in reviewing some of the interpretative issues that we tried to flush out. It got a good going over the first time around last year. Thankfully, as we know, the legislation was delayed and then when we finally got to this point in April when we knew what the new legislation was going to look like, we got back together with the NCAA staff and tried to update the document so that it made sense with the new proposal.
The first question is, does this new proposal affect employment during vacation periods and the answer is no. The legislation that we've had for years and years said that student-athletes can go out during the academic year during official vacation periods and work is still in effect. As a practical matter, you may end up having some problems where student-athletes are working where part of the week they're not on an official vacation period, therefore, their earnings may count toward the $2,000 limit. Part of that same week may go into vacation period and, literally, you're on-campus compliance people may have to get out the paycheck and decide what percentage of that paycheck is countable toward the $2,000 limit and which is not.
The next question is, may a student-athlete use the employment earns exception during his first academic year of attendance. That's a no. There is nothing different now from last year. Both the incoming freshmen and the transfer student first year can't use the exception.
When must a written statement pursuant to 152611 be signed by the student-athletes? The answer you have on that page is the correct theoretical answer, but at least as far as the ACC is concerned, the practical answer I have given is, it's far wiser to simply get the statements signed up front before any employment starts. At least in theory, you can have a student-athlete who's taking advantage of the exception or intends to take advantage of the exception, who doesn't get the statement signed with the employer and the student-athlete prior to commencement of employment. You wouldn't have a violation until the student-athlete's financial aid exceeded the value of the grant-in-aid. In all likelihood, that wouldn't take place until the middle of the spring semester.
At that point, you would have a violation and you couldn't undo the violation, you couldn't recover from it by getting the signature at that point. As a practical matter, the best answer is that any student-athlete who believes they're going to use the employment exception needs to get that form signed by the employer and by the student-athlete prior to their first day of employment during team time.
The fourth question, the shorthand question is, may a full-grant recipient work in the athletics department? Again, the short answer to that is no. If you're a full-grant athlete, you're already at 1.0 and employment in the athletics department or at a facility owned by the athletics department is going to be countable aid toward the team individual limit, so the answer is simply, no. Now, could that same person go out and work in the recreation unit and earn $2,000? The answer is yes.
What constitutes intercession? This has probably generated more debate and discussion among compliance folks throughout the country as to how you define this. We have a very conceptual definition and we intentionally chose not to get into the exercise at this point, not to get into the exercise of trying to list every type of situation that might come up that you're going to have to decide whether that constitutes intercession or not. One of the reasons for that is that the whole issue of whether the athletics department has interceded or not has become at least a little less important because that first $2,000 has now become exempted. So, the point at which you really have to be concerned about that is when a student-athlete is getting close to $2,000 and their employment earnings may start counting toward the individual team limit. At that point, you really need to know whether or not the job they got did, in fact, come about as a result of intercession from the athletics department.
Again, the definition there is very general. It basically says that any special arrangement by the athletics departments or athletics department employee to help secure the employment would count as intercession.
As far as I'm concerned, another theoretical answer here is, that if you take that definition, you can also say that it's permissible or would not be considered intercession if the student-athletes goes out and works for the biggest booster in town provided that they go through the normal application process. For example, they answer an ad in the classified section of the newspaper and go through the normal evaluation process that the employer goes through with any other employee. If that happens, even though the student-athlete was working for the biggest booster in town, intercession would not have occurred and you could go on. As a practical matter, that's a difficult one for the compliance people to figure out. It's not impossible, but it's a difficult practical problem.
Question F, for purposes of NCAA legislation, do funds received by student-athletes from special assistance funds count toward the $2,000 limit. The answer is no. Question G, is gross pay or net pay used when determining whether you're approaching the $2,000 limit and the answer is gross pay. Again, when your compliance folks are checking those pay stubs, they need to look at the gross pay and not the after tax amount the student-athlete is getting.
Likewise, we've had a lot of questions about what forms are countable here. The short answer there is any income as defined by the Internal Revenue Service is going to be income. A lot of questions we have received relate to what happens if the student-athlete gets a job at a car dealer or some other commission job, how do you account that? There are already existing NCAA financial aid rules that deal with commission jobs. There are certain conditions under which they must be met in order for a student-athlete to work in those commission-related jobs. That should handle that situation.
Other income issues that come up include tips which, again, the IRS is going to consider income. In practice, that's going to be something you need to keep track of. Another issue is business-related expenses. What about meals related to the job? If I'm on the job eight hours, maybe my employer provides me with two free meals. Again, the IRS will make you count that as income, so you have to count that towards the $2,000 limit for purposes of this legislation.
May student-athletes be compensated for speaking, lecturing at institutional athletics boosters organizations? This is relatively a recent interpretation made by the Legislation and Review Interpretations Committee and the answer is no. That's not to say that they cannot speak at any function. In fact, there are some functions, perhaps civic functions, and get compensated as long as the other Amateur and Bylaws are adhered to, specifically, 12.5. The LRIC specifically decided to carve out and say, let's not let student-athletes get paid for speaking to booster organizations. Prior to this year, there was already the prohibition against student-athletes receiving compensation for speaking solely at camps and that continues as far as this legislation is concerned, as well.
Will this proposal allow employment earnings to allow institutions to satisfy the minimum financial aid requirements? The answer is, basically, if it's considered institutional financial aid. That is, if it's employment in the athletics department, for example, or if it's employment for a booster in whom the athletics department has interceded, then exceeds $2,000, the answer is yes. If it's considered institutional financial aid, you're going to be able to count it toward meeting the institutional financial aid minimums.
The last question that we really wrestled with and it's on the last page of the questions and answers was, what happens, because one of the criteria for the rule is that you must be academically eligible in order to use the exceptions, when I start the year academically eligible and then, due to some institutional GPA requirement in mid-term, I become academically ineligible in December for the entire spring semester? The original answer that was given was, in that case, if I've earned money in the fall and I was a full-grant athlete, the institution is going to have to grant my full grant by $1,000 in the spring.
After much discussion, the LRIC has changed that answer. Now, as I understand it and if Elaine Dreidame is in the room, she can sure elaborate on this, essentially, the answer is that at the time you are academically eligible, you are eligible to use the exception. On the moment you become academically ineligible, you can no longer use the exception. If I earned $1,000 in the fall, became academically ineligible at mid-term, that $1,000 is simply water under the bridge and the institution would not have to grade eight my aid during the spring semester because I earned that money during a time when I was academically eligible.
I'm going to stop with that. The only other thing I'm going to mention is during the course of this conversation, one of the things we tried to emphasize and the Student-Athlete Advisory Committee bought into, in fact, emphasized, was the idea that there are going to be some violations in this legislation. Hopefully, they won't be the types of violations where student-athletes are working or getting paid without working or getting paid high hourly rates or not showing up, but even in the perfect world, there are going to be some violations where student-athletes exceed $2,000. Student-athletes will work two days before the written statement is signed may happen. To that extent, we hope that the membership and the enforcement staff can draw distinction between those types of violations that are just going to happen as administrative issues and violations where student-athletes actually aren't working or receiving pay beyond what they should.
In those cases, and, again, we talked about this with the Student-Athlete Advisory Committee, we need to look at the student-athlete's responsibility in those situations. Institutions can do a lot to monitor to this and they can do a lot in terms of getting information to the student-athlete about how much they can work, how long they work, when they need to stop working. The student-athletes should be held to a high degree of responsibility if those types of things are not complied with.
Our next panelist is Britton Banowsky, the associate commissioner for administration and compliance for the Big 12 Conference. Britton has also had experience as a practicing attorney, which never hurts when you're dealing with the NCAA on issues. He is responsible in the conference office for legal affairs and business transactions and has oversight for compliance. Prior to joining the Big 12, he was the fourth commissioner of the Southland Conference. Welcome Britton
Thank you Judy. I'm pleased to be here. When Judy called and asked if I would come to Marco Island and present on the issue of student-athlete employment, I said on one condition that we get someone else, such as Dave Thompson, to speak on all of the interpretation issues. I understand that the interp booth is being set up as we speak. I'm sure he'll be happy to handle all of your questions regarding this legislation.
My challenge was to design a system that would help our institutions at the Big Twelve and, ultimately, the institutions at the ACC and the Big East manage compliance with this rule. When I was sitting there, as many of you were, in Nashville, and the vote was announced, someone behind me said that we just set the NCAA back 20 years. There were, over the next weeks that followed, widespread concerns over the abuses that would be associated with this legislation. To a certain extent, some of those concerns still exist. When we sat down last summer, we tried to come from the standpoint of creating a system that was manageable, that would work for most Division I institutions and the process was a good one. We gathered forms from all of the Big 12 members and members of the ACC and Big East. We compiled all of it and tried to come up with the best system or types of attributes that a system should possess in order to be effective to document compliance.
A couple of challenges came out. The first challenge we recognized was that Division I has 300 institutions and some have staffs of two or three people committed to compliance. Others have compliance responsibilities spread over several people. We needed a system that would work for all.
The second challenge was to manage the employee booster relationship. That's really where the rubber hits the road. We have come out that it's okay to intercede on behalf of student-athletes and get them jobs with boosters under certain conditions. That creates alarms and bells and whistles go off in some folk's minds. Effectively trying to manage that relationship was a challenge.
We also, as you know, have the opportunity for our student-athletes to work now during vacation time. Vacation time can be the summertime or in between terms. That goes on right now, so most of our Division I institutions have some system for managing that and for understanding where those lines are drawn. Incorporating that system into a new system was also a challenge. Finally, when we got down to, okay, how many forms do we need for this, the challenge was to do it in as few forms as possible and also give each of you a sense for what the minimum standards are for those who don't have the resources to gear up in a big way to manage this problem, but also, for
those of you that do have the resources or have had a history of problems in this area, give you enough to be able to put a system in place.
Unfortunately, in the interest of time, we must forego the enjoyment associated with a detailed walk through of all of these forms. I'll give you some keys to success and then speak to some of the forms in a brief way. I put down five points in terms of keys to a successful system for Proposal 62. They are not in your materials because I wrote them on the plane yesterday.
The first one is identifying one individual responsible for managing this system or for coordinating the university's role relative to this system. Certainly, there will be a lot of other people involved, your financial aid people will be involved, your coaches, to a certain extent, will be involved, but you need a place where the buck will stop. If not, you'll get the unfortunate circumstance of an enforcement staff asking who is responsible and we'd say we're not really sure. You'll be pointing at each other when you really need to focus in and rest responsibility with one individual.
The second is one program. We have a vacation time program, a term time program, but it should be one program with one individual so that you know whether the off-campus employment is with a booster or on-campus employment is within the athletics department or work study, it all goes through one place. If it doesn't, you'll have concerns about situations outside your program that can come back to haunt you.
The third point is education. This is a key. You've got to educate the boosters, the prospective employers, the student-athletes and the administrators in your program with respect to the do's and don'ts. Dave has put together a nice question and answer. That's what you need to get into the hands of all of your student-athletes in your orientation program at the beginning of the year. Tell them how the system works and if they want to take advantage of the term time employment opportunities, they have to follow your rules.
The same thing applies to your prospective employers. If you don't do a good job of educating them on the front end, you're going to have to answer to someone on why the student got paid more, then, you're going to have eligibility problems you're going to have to deal with in order to get the student-athlete reinstated, etc. I labor in this area because it's worth emphasizing. Education is the ounce of prevention.
Document all three phases. It's wonderful to have compliance programs and systems, but if you can't document your compliance with the NCAA rules, you really don't have anything. I approach this from the standpoint that you have an enforcement person on your campus going through these issues. How do you want to protect your university from the integrity challenge? You've got to be able to document it.
There are three phases. The front-end phase is pre-employment. You have student-athletes that want to know what kind of jobs they can take. There will be employers that will want to get in touch with student-athletes. You have in the packets we've given you with four forms that really are the front-end forms. You've got a form called the employer application form. This gives you the information about who the employer is, what kind of job is available.
Form two is the written statement required by the legislation. What is the minimum? This is legislatively mandated so it is the minimum. These forms have been looked at by the NCAA on both the enforcement staff and the compliance services staff. They've made comments so, I think these are good documents if you're going to implement a program.
The third form is simply a student-athlete employment agreement. This is important. It's certainly not necessary, but it's important. You sit your student-athlete down to see if he knows the rules and they know that it's unacceptable to get $1,000 tip from a booster, you're going to be able to avoid that situation. That's why I like the idea of a student-athlete's signature on a hard form. It's absolutely not required.
Form number four is simply a checklist. That's all it is. It's important to have a checklist so that you have everything in order. There are 12 questions here and if you ask yourself these 12 questions and have answered them, I think you've worked on just about all of the issues.
Now, we move to the second phase. What, if any, obligation does a university have to check to see that during the period of employment if the student-athlete is, in fact, doing the work. We had a university in the Big 12 that had student-athletes employed, but we had a booster who basically said not to worry about showing up except when it's time to pick up your check. Well, obviously, it became an issue. In fact, the student-athlete was employed in two or three jobs all with the same understanding not to show up until it was time to pick up their check. You do have some obligation, whether it's spot checking of a few of your high profile student-athletes, or what. You do have some obligation to actually check to make sure they are at the job. Form five gives you a way to do that.
The final form is the back end. You have to have this. Whether you take it off check stubs, or what, you're going to have to document what amount that student-athlete earned during what periods of employment. For vacation period, there is no limit, but if he works the first day of the term, you have to know that. Being able to document it on the back end is important. If I was setting up a program and I didn't have a whole lot of resources, I'd use form two, form four and form six. Minimum, I'd use form two because it's required.
You should audit your system. Maybe every other year, get your faculty rep or someone on campus to take a look at what you're doing. Make sure it looks okay and that you haven't had a whole lot of problems.
The abuse scenarios, I won't get into. They generally flow from the eight typical payment methods, commissions. You have car salesmen, insurance salesmen and it sets up those kinds of opportunities for abuse. The cash tips are an area you should look at closely. This system is set up to design those types of compensation patterns and get some sort of special analysis.
Before I turn it over to Stan, and Stan has talked to the NCAA enforcement staff, and again, that's where we need the most guidance as to how diligently and how actively they are going to be enforcing this area. He can speak to that. I've seen the way we legislate. We do it for a lot of reasons, competitive balance being the most prevalent. When in doubt, we regulate. In this case, I'm concerned that if we restrict employment earnings too much, we may create a new class of plaintiffs. With that, I'll stop and turn it over to Stan.
Stan Wilcox is the associate commissioner for compliance for the Big East Conference. He's a graduate of Notre Dame where he participated in two regional finals and a Final Four in basketball as a member of that team. He is also an attorney. He was employed by the National Collegiate Athletic Association as a legislative assistant after completing law school from 1989 to l994. Stan Wilcox.
Thank you Judy. My comments should be brief. It's tough to follow Britton and Dave. After going through the materials, there's really not much more to be added. First of all, when we embarked on this endeavor, the thing we were looking to do was, mainly, come up with a document that will help you out, particularly to assure that your institution has something that you can say that we have institutional control on our campus.
Obviously, institutional control has become a new area for major violations that the Committee on Infractions has been using in processing cases. Particularly, we wanted to assure that we had enough materials that would be conducive to Division I-A, as well as Division I-AA and I-AAA institutions. For the Big East, that was a concern for us because we have that membership within our conference.
In conversations with the enforcement staff as well as the membership services staff, as we were putting these materials together, we wanted to make sure we weren't going out on our own and putting together a document that really wouldn't be of any use to anybody because either the membership services or the enforcement staff hadn't put their stamp of approval on it. So, the first thing we wanted to do was bring them into the loop. We didn't want to be out there as renegades. They both agreed to be participants in our process in pulling this information together. Once we completed it, they both had the opportunity to review it. Membership services has been using most of the materials at the regional seminars. The enforcement staff has assured us that if an institution has the information we have handed out, if you are using that on your campus, the majority of any kind of violations that may still occur, are only going to be secondary in nature. That's really what our goal was when we set out to put together this document.
I also had conversations with the eligibility staff as far as the student-athletes have to take more responsibility on their shoulders as we give them more freedoms. Perhaps they should be dealt with harsher whenever they go afoul of any of the new regulations. At this point in time, the eligibility staff has not come up with any policies as far as how they review eligibility cases in this area, although they will be meeting very shortly and perhaps that will be an agenda item. As far as eligibility is concerned right now, they wouldn't treat them any differently than they've been treating other eligibility issues dealing with the current employment legislation. Obviously, they're looking at the student-athletes' knowledge of the rules, the amount of overage they may have earned, etc.
I would like to point out that this endeavor was a part of our ongoing CCA group, which is the Collegiate Commissioners Compliance Administrators. We meet monthly, by telephone conference calls, to discuss various interpretative issues and other matters that may come up in our conferences and try to come up with a consensus as to how those things should be applied across the board. This is an on-going and continuing relationship we have amongst the Division I conferences. In the past, we had limited it to I-A institutions. Then, we had representatives from I-AA and I-AAA. We have now opened it up to everyone. Our goal is to work together so that we're all on the same page on legislative, as well as interpretative, issues. We're hoping in this area where there's going to be a number of interpretative issues that will come out, we're all be able to continue discussing them on our conference calls, as well as to try to come up with a way in which we can work with, not only the staff, but the academic eligibility compliance cabinet sub-committee on legislative review and interpretive issues. When we have an issue of national significance, we are coming together as conferences and agreeing upon how issues should come out as well as forwarding the recommendations on to that committee so we can have an interpretation that everyone feels comfortable with. That's ongoing.
We're going to continue to work together and resolve issues such as this so that we can assist each other and help understand how we can work our way through the maze of various issues that come up. As other major issues come up, we'll come together and try to assist our compliance coordinators on our campus and make life a little easier for them.
I'd like to thank our panel for giving us the tools to help us with the implementation of Proposal 62. Thank you for being here. See you at the luncheon.