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Paying to Make the Grade

(Cross Posted at Market Power)

NCAA officials and officials of member schools have been fretting for some time over the low graduation rates of student-athletes, especially in football and men's basketball. Recently, NCAA officials changed the way they measure academic progress and story the data told wasn't pretty. Now members of the NCAA board of directors decided to provide financial incentives to schools to improve their graduation rates. From the Chronicle of Higher Education daily alert ($$$ req'd):

A plan approved on Thursday by the National Collegiate Athletic Association's Division I Board of Directors would pay colleges up to $100,000 each if their athletes do particularly well in the classroom and a high percentage of them graduate every year.

The biggest payouts would go to colleges whose athletics programs make significant improvements in graduating players, while some money would also go to programs that are struggling academically and need assistance.

According to the plan, the NCAA will provide a total of $10 million to all member schools. The breakdown of how it is intended to be used:

Half the money, or $5-million annually, would go to institutions whose athletics programs make big improvements in their academic performance over the previous year. An additional $3-million a year would be given to institutions that can demonstrate that they have little money for tutors or programs that help athletes do well in the classroom. The rest of the money would reward athletics programs that show extraordinary academic performance.

The first step is a step in the right direction because it provides an incentive at the margin to schools to improve their athletes' academic performance. But the main problem is that those who will have to shoulder the burden of work (the student athletes) still won't see any direct financial compensation for their efforts.

As an analogy, suppose a university wanted to offer Friday night classes and Saturday day classes. As an incentive, the university offers each department some amount of funds for each Friday Night/Saturday class taught but with a stipulation that none of that money can go directly to the professor. My guess is that there will be less (very little/no?) enthusiasm to teach these classes relative to a program where the professor gets a bonus for teaching such classes.

I'm not so crazy about the second step (providing $3 million to schools that don't have the resources). Athletic departments have some leeway over how they spend their budgets. Since money is fungible, money spent on, say, training facilities is money not spent on tutoring. If some department's officials claim that they do not have much money available for tutoring, how do we know that this isn't because they have chosen to spend their funds somewhere else? This second step gives departments the perverse incentive to decrease their spending on tutoring etc. to obtain more cash from the NCAA. I imagine NCAA officials realize this so we'll probably see a further burgeoning of the bureaucracy to combat it.

The third step, rewarding each school with good academic performance, will work like an extra credit assignment where everyone who gets an A gets a candy bar. Students who are most likely to get a candy bar from this assignment are those who would have gotten an A anyways.