Colleges tackle budget pruning
The headlines say it all.
“Texas universities forced to trim their budgets, even with big state cuts averted.” —Texas Tribune
“University of Alaska budget cut by $8 million in legislative compromise” —Alaska Dispatch News
“University of Missouri to cut 400 positions amid budget woes” —US News & World Report
“Illinois is starving state colleges and universities” —CNN Money
Being asked to do more with less is not new in higher education, at either public or private institutions. And nobody knows that better than Hank Bounds, president of the University of Nebraska system.
With nearly 53,000 students on four campuses, the university is faced with a recurring $49 million budget shortfall created by state funding cuts and rising costs.
At Nebraska and elsewhere, tackling the problem involves looking for ways to save in every corner of the institution. Thinking beyond painfully slashing big line items, higher ed leaders can realize significant savings in finding smaller cuts that, all together, add up to make a huge impact.
A team approach
Nebraska system officials addressed the shortfall in early 2017 by forming budget response teams for each of eight operational areas: finance, HR, IT, facilities and energy, printing, communication, procurement, and travel.
“Parts of our university operate like a business and should run like one, so that’s where we started,” says Bounds.
Each team got staffed by employees from that operational area.
The nearly 100 volunteers placed on the project had this challenge: Identify cost-savings strategies to help meet specific financial targets for each unit—without impacting the school’s affordability and academic excellence.
“I gave them one rule: There are no rules,” says Bounds. “It didn’t matter if they consolidated or privatized. I just wanted them to come back with recommendations that would meet their target.”
And they did. All eight teams exceeded their dollar value goals.
“A real key to this was staffing the teams with people who are on the ground doing the work every day. They are in the best position to make recommendations and decisions,” says Bounds.
As a result, seven months after announcing plans to identify ways to meet the budget shortfall, officials had this update: $30 million in cuts had been found and efforts to find more ways to save would continue.
Some of the savings will require departmental or functional reorganizations, such as assigning cybersecurity to one central team. Others can be implemented more easily.
For example, changing the travel mileage reimbursement rate for personal vehicle use from the federal 53.5 cents per mile to 25 cents—the actual cost to operate a university-owned vehicle—will save the university about $500,000 annually.
Bounds attributes the system’s budget success to clearly communicating the situation and goals, being transparent about the impact on the institution, acknowledging that mistakes will be made and forming the right teams.
“This is a pretty tough ask of people,” he says. “But when they understand the true circumstances and you communicate with them carefully along the way and request their input, they rise to the occasion.”
William & Mary, the second oldest higher ed institution in America, started making campuswide cuts to improve efficiency in 2013, with the William & Mary Promise. The operating model is designed to maintain instructional quality while improving predictability in the form of a set tuition rate for the four years an in-state student attends the college.
Fueling the guaranteed rates is the Business Innovation Initiative, a campuswide effort to improve business processes and reallocate funds to the university’s highest priorities, such as providing financial aid to out-of-state students and retaining top faculty.
The goal: Lock in $5 million in annual recurring savings by the end of fiscal year 2020, says Henry Broaddus, vice president for strategic initiatives.
The initiative has already cut $4.5 million in recurring spending, and approximately $9 million total when adding in one-time savings.
The first step from a consulting firm brought in to guide the process involved asking every employee who spends at least 5 percent of time on administrative work to complete a task survey. The process identified waste and barriers to efficiency, all while also underscoring the initiative’s importance and encouraging active participation.
Next, administrators targeted operations with the greatest potential for reducing costs, improving efficiency and generating new revenue. That evaluation started with the departments of finance, procurement, IT, facility operations and human resources.
Like at the University of Nebraska, William & Mary formed staff teams so that those doing the work collaborated with consultants to uncover opportunities to spend less or improve efficiency.
Most of the savings came from reorganizing IT, changing procurement processes and making organizational restructures so that “we deliver some services in a slightly different manner,” Broaddus says. “But we saved money by also making smaller changes.”
One that had almost no impact on the community—what Broaddus refers to as “a low tumult factor”—involved switching from liquid to foamy soap dispensers in restrooms. Replacing just over 1,300 dispensers saved the college $10,000 the first year, which includes the cost of new dispensers, and $17,000 each subsequent year.
That $17,000 is more than the average unmet financial need for out-of-state undergraduate students.
“If we could find 500 similar savings opportunities, we could meet financial need for all students,” he says, adding that the institution already meets all necessary financial aid for in-state students. Not surprisingly, the soap dispenser idea came from inside the facilities department.
“This is significant because it represents a culture change that was an important objective,” Broaddus says. “We’ve encouraged campus units to identify these opportunities to save money that can be reallocated to the university’s highest priorities, not necessarily to the department generating the savings.”
The broad mandate from the top of the organization gave these efforts the weight needed for success—that, and the fact that there wasn’t a financial crisis, Broaddus says.
“We don’t want to have to make a lot of big cuts quickly. If you can integrate a culture of continuous improvement and an ongoing search for smaller ways to save, you’ll make important progress.”
Read the accompanying case studies to see how small ideas bloomed into noticeable savings at institutions nationwide.
Sandra Beckwith is a writer based in western New York.
Register now for UBTech 2018
Register now for UBTech 2018, June 4-6 at the Mirage, Las Vegas. At UBTech 2018, you’ll network with a dynamic community of higher ed leaders who are shaping the future of campus technology and explore topics like cyber security, distance learning, campus learning space design, communications, personalized learning and more. Your UBTech registration also includes a free pass to the InfoComm exhibit hall.