Topeka University of Kansas Chancellor Doug Girod said Wednesday that he is concerned about the impact that the recently passed federal tax bill will have on KU's athletics program.
"There were about 10 issues in that tax bill that I would argue will have significant harm to higher education," Girod told the Kansas Board of Regents during its regular monthly meeting Wednesday. "About four of those did get pulled out going through conference. A number of the others did not. Certainly one of the significant ones for Division I programs is the elimination of a deduction, or partial deduction, for donations associated with the purchasing of season tickets."
Under current law, people can deduct from their taxable income 80 percent of any donations they make to a university athletics fund as a condition of purchasing season tickets. Most Division I schools have such policies, including KU, which requires a donation of at least $100 to the Williams Education Fund in order to be eligible for season tickets to any Jayhawk sport.
Girod said that typically generates between $17 million and $20 million a year, or about $95 million over a five-year period. Roughly half of that, he said, is used for student athletic scholarships.
Under the new tax law that Congress just passed, that tax deduction would go away starting in tax year 2018.
In an interview during a break in the Regents meeting, Girod said KU officials don't yet know how current donors will react to that change.
"That’s the question, because right now they have a pretty reasonable incentive for donations they give, for example, to the Williams Fund for seats," he said.
He added that the university hopes Jayhawk basketball is popular enough with the public that people will continue giving, just so they can be eligible for season tickets. But he said he has already spoken to some donors who have said the that the tax law change would affect their decisions.
Girod said concern had also arisen about a provision of the bill that imposes a 21 percent excise tax on universities and other nonprofit organizations for salaries they pay that are over $1 million.
Both KU head basketball coach Bill Self and head football coach David Beaty earn salaries well over that amount.
Girod said that at KU, as well as most public universities, athletics departments will be the most affected by that change, and he does not believe it will affect anyone at the medical school where he formerly served as executive vice chancellor.
"I think for most public institutions, the athletics departments will be the ones where we carry that liability," he said.
Girod said there is yet another provision of the bill that currently affects only private colleges and universities, but it's one that he fears could be extended to public institutions. That provision imposes a tax on the investment income of endowment funds, if the size of those funds is greater than $250,000 per student.