Tag: buyouts

  • Coach Buyouts Boom to Record Highs

    Coach Buyouts Boom to Record Highs

    Earlier this year, Pennsylvania State University announced it would close seven campuses due to financial constraints, while Louisiana State University implemented a hiring freeze and other cost-cutting measures.

    Months later both institutions fired their head football coaches—for a price. Despite Penn State’s financial challenges, administrators were willing to pay more than $45 million to make head coach James Franklin go away after the Nittany Lions posted a 6-3 record. LSU fired Brian Kelly after a 5-3 start and gave him a buyout of $54 million.

    Franklin’s total buyout was ultimately reduced to $9 million when he landed the head coaching job at Virginia Tech, and Kelly’s exit package will also shrink should he find another position. But the eye-popping compensation numbers are adding up—and setting new records at a time when many colleges and universities are cutting costs.

    Record Buyouts

    Recent data compiled by the Knight Commission on Intercollegiate Athletics shows that failing is a lucrative business for college football coaches. Fifteen fired football coaches have already racked up collective buyouts of nearly $228 million from public universities, compared to $120 million in fiscal year 2024. (Those totals are for Football Bowl Subdivision coaches only, formerly known as Division I-A, and only include public universities, since private institutions don’t release such contract details.)

    Former LSU coach Brian Kelly landed one of the largest buyouts in the history of college sports.

    Gus Stark/LSU/University Images/Getty Images

    The Knight Commission noted that individual coaching buyouts this year “are the second, third, fourth, and fifth highest severance pay obligations in history.” The top slot still belongs to Texas A&M University, which fired Jimbo Fisher in 2023 with an exit package of more than $75 million.

    Looking across a longer timeline, the commission estimates that universities shelled out a total of $852 million in severance pay for football coaches, including assistants, between 2012 and 2024.

    University Responses

    Universities often stress that coaching buyouts are paid with donor funds, not public money. Even so, some experts argue that paying vast sums of money to fire coaches is problematic and damages faculty and staff morale, especially at universities that are slashing jobs and budgets.

    Penn State defended its recent buyout to Inside Higher Ed by emphasizing that its athletic program is among the few in the nation “that is self-sustaining and therefore does not use any tuition or taxpayer dollars.” In addition, the university said, it has a major economic impact on the surrounding area.

    “Decisions regarding budgets and operations of the academic enterprise are separate and distinct,” a spokesperson wrote in an emailed response to a question about closing rural campuses across Pennsylvania. “As noted, no tuition or tax dollars are used for athletics. The difficult but necessary decisions Penn State has made impacting campuses and unit budgets, have been made with a core focus on setting our students up with the best opportunities for success.”

    LSU did not provide a statement to emailed questions prior to publication.

    Congressional Scrutiny

    While Congress has deliberated capping pay for college athletes—whom institutions can now pay directly, as of earlier this year—Knight Commission on Intercollegiate Athletics CEO Amy Privette Perko has encouraged lawmakers to rein in coaching salaries.

    “As Congress debates the merits of federal legislation to place limits and guardrails on college athlete compensation, it should also examine the conditions that allow for the continued growth of excessive compensation and severance for football coaches at non-profit universities,” she said in a statement accompanying the organization’s report on buyouts.

    Some members of Congress appear interested in taking on runaway salaries and buyouts.

    In October, Representative Michael Baumgartner, a Washington Republican, introduced the Correcting Opportunity and Accountability in Collegiate Hiring Act, a proposal that would cap annual pay for all athletics department employees. Baumgartner’s proposed bill would limit annual pay to no more than 10 times the cost of in-state tuition for undergraduate students.

    While new LSU coach Lane Kiffin is set to make $13 million a year, his annual salary would be dramatically lower—about $280,000—under the pay scheme proposed by Baumgartner.

    Multiple state attorneys general have already voiced opposition to the proposal.

    Lane Kiffin speaks at a press conference as he is introduced as the new head football coach of the LSU Tigers. He is a white man with short brown hair, wearing a blue suit with a purple tie and patterned shirt.

    New LSU coach Lane Kiffin is poised to make $13 million a year.

    Tyler Kaufman/Getty Images

    Some lawmakers have also questioned whether college sports should remain tax-exempt. Senator Maria Cantwell, a Democrat representing Washington, wrote a letter to the Joint Committee on Taxation earlier this year, seeking an analysis of the implications of stripping the NCAA, member institutions and athletic conferences of their ability to continue as tax-exempt organizations.

    “Given the evolving market dynamics of college sports coupled with changes in the legal framework affecting college athletes, legitimate questions have been raised about whether it is time to rethink the tax-exempt regime under which college sports currently operates,” she wrote.

    But so far, legislation to alter the college sports landscape has proven difficult to pass. The latest effort to overhaul athletics—which would have limited student transfer eligibility and how much universities can spend on name, image and likeness deals—collapsed short of the end zone last week when House members balked on the GOP-backed bill and sponsors pulled it from a vote.

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  • University of Nebraska System offers buyouts to tenured faculty amid budget woes

    University of Nebraska System offers buyouts to tenured faculty amid budget woes

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    Dive Brief: 

    • The University of Nebraska System is offering buyouts this fall to tenured faculty members eligible for retirement across its four campuses as the institution’s leaders look to shave $20 million from its budget.
    • Buyouts will be available to tenured faculty who will be at least age 62 at their date of separation and have worked at least 10 years in the system. More than 500 faculty members will qualify, according to reporting from Channel 8 News. 
    • In a Friday message to faculty and staff, system Chancellor Jeffrey Gold said the buyouts would position the institution “for long-term strength and financial sustainability.” The system has made several rounds of cuts in the past few years in the face of rising costs and limited state funding increases. 

    Dive Insight: 

    Like many other higher education institutions, the University of Nebraska System has sought to lower its expenses amid myriad financial headwinds, including rising labor costs and state and federal funding challenges. In June, system leaders approved plans to cut $20 million from its budget for the 2025-26 fiscal year and raise tuition by an average of 5%. 

    Those moves come after system leaders slashed $11.8 million from the most recent budget and $30 million from two years prior. The system has also offered several waves of buyouts over the past 15 years, though the payouts have decreased, according to the Lincoln Journal Star. 

    In this case, those taking the buyouts will receive 70% of their annual base salary in a lump sum payment. In 2019, eligible faculty who took buyouts got 80% of their annual salary and in 2014 they received 90%, the Journal Star reported. In 2010, eligible faculty received 100% of their salary. 

    Faculty members who take the latest buyouts will separate from the university next summer. 

    However, not all faculty members who apply will automatically be approved. While the system plans to allow as many interested employees to participate as possible, an FAQ said “each campus reserves the right to limit the total number of participants in order to preserve the viability of programs and services, as well as to remain fiscally responsible.”

    The news comes as the University of Nebraska-Lincoln, the system’s flagship campus, plans to slash $27.5 million from its own budget by the end of the year to remedy a structural deficit. The cuts could include eliminating or merging academic programs. 

    Earlier this month, UNL President Rodney Bennett said will review a planning committee’s recommendations for cuts and present final budget recommendations to Gold in October. 

    UNL officials also plan to grow extramural grants and contracts and boost revenue through higher enrollment and retention. They also hope to see increased revenue from the system’s tuition hike, which raised in-state undergraduate tuition from $277 to $291 per credit hour. 

    The other institutions in the Nebraska system are the University of Nebraska at Kearney, the University of Nebraska at Omaha and the University of Nebraska Medical Center.

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  • Duke University offers buyouts and signals future layoffs as federal cuts hit

    Duke University offers buyouts and signals future layoffs as federal cuts hit

    Dive Brief:

    • Duke University is offering voluntary buyouts for employees and has frozen hiring as it braces for federal funding cuts, the institution said Wednesday. 
    • The North Carolina institution signaled that layoffs were likely in the coming months, but said it is “pursuing several employment actions now in hopes of reducing the scale of involuntary separations later this summer.”
    • The moves are in response to federal cuts and policy shifts, which could translate into funding losses for Duke between $500 million and $750 million, university officials said during an internal webinar Wednesday, according to media reports.

    Dive Insight:

    Historically, much of Duke’s research enterprise has been devoted to work on behalf of the government. Federal grant support made up nearly three-quarters of the $1.5 billion in sponsored research funds that Duke received in fiscal 2024, much of it going toward health science.

    The university, in its latest financial statement, described its medical school as “one of the largest biomedical research enterprises in the country.” And funding just from the U.S. Department of Health and Human Services — which houses the National Institutes of Health — accounted for 58% of all of Duke’s sponsored research funding. 

    The National Science Foundation and U.S. Department of Energy also accounted for tens of millions of dollars in the university’s funding. 

    Since President Donald Trump retook office, those agencies and others have been cutting and delaying grant awards at a frantic pace, including moves to cap reimbursement for indirect research costs at NIH and the Energy Department. Both funding caps have been blocked in courts — at least for now — but the Trump administration is continuing to fight the legal cases against the policies. 

    Uncertainty over the funding will likely loom for some time to come. 

    For Duke, the NIH indirect cost cap would mean $194 million in lost funding each year, President Vincent Price and other leaders said in February. 

    “Much is at stake,” the officials said then. “Our nation’s world-leading research enterprise has been enabled by — and will only be sustained by — partnership and co-investment from both the government and higher education.” 

    They also signaled at the time that “careful planning and difficult decisions” could lie ahead. 

    Today, Duke is trying to cut $350 million from its budget, according to reports of the university’s presentation, as it grapples with funding gaps under the Trump administration. 

    As it trims down, Duke has paused capital spending on buildings, renovations and other projects that are “not fully funded or deemed essential,” the university said Wednesday. 

    It’s also reviewing universitywide programs — such as technology adoption, off-campus real estate and on-campus space consolidation — for potential cost-savings.  

    Employee benefits could also be on the chopping block. 

    “A study is also under way to assess how certain changes to the university’s benefits may generate savings while protecting the program’s strong competitive position,” Duke said.

    However, Executive Vice President Daniel Ennis told employees Wednesday that the university still plans to give out merit raises and will not change its tuition grant program for children of employees. 

    Universities around the country have been scrambling in recent months to open breathing room in their budgets to cope with the uncertainty and disruption created by cuts and delays at federal agencies. Many have frozen hiring and budgets to maintain financial flexibility while others have laid off employees to cope with cuts.

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