University plan to trim admin costs appears to be ahead of schedule

Administrators estimate the school will trim $70 million in administrative expenses by 2017.

Kevin Beckman

The University is expected to reallocate about $70 million into its academic mission, as a result of the school’s long-term goal of trimming administrative expenses.

Starting in fiscal year 2014, University President Eric Kaler — who pledged to reduce administrative costs during his inaugural speech in 2011 — is set to implement a six-year plan called Operational Excellence, or OpEx, which would cut $90 million from the University’s operating budget across all campuses.

“People think there’s waste involved in running this large organization, and we’re going to do what we can to assure people that efficient and effective operations is a priority,” said Associate Vice President of University Budget and Finance Julie Tonneson. “We’re going to cut where we can.With three years of the plan complete and three to go, administrators estimate the school will succeed in reallocating over $70 million in administrative expenses by the end of fiscal year 2017. School officials said the ensuing funds will be put toward academically-oriented University expenses.

Just under $19 million was cut from administrative expenses in 2014 and nearly $20 million was cut in 2015, according to University reports submitted to the Board of Regents.

While cuts for 2016 have been filed, Tommeson said a report isn't expected to be submitted to the board until November or December.

Many of the cuts made to date have been through elimination of positions — like accountants, communications specialists or other kinds of administrative support. Tonneson said.

“A majority of our budget is people,” she said. “That’s where the units have to look to make any kind of significant cuts in their budget.”

The Budget and Finance office estimates 275 administrative positions were eliminated between 2014 and 2015 and that just over 100 will be eliminated between 2016 and 2017, though not all of the positions are full-time.

Interim Vice President and CFO Mike Volna said other strategies include reducing the responsibilities of certain administrators, decreasing the amount of time those people work, or hiring a replacement employee with less experience at a lower salary if an employee leaves.

“It’s not the case where they would take an existing person and actually reduce their rate of pay,” Volna said.

Tonneson said that in addition to eliminating positions and reducing salaries, departments are also reducing certain expenses like travel, professional development or equipment.

But, she said, administrators have stressed the importance of not cutting from the provision of student services.

“There are certain things that we ask units to protect, and most of that has to do with students,” Tommeson said, “That could be student financial aid or student services or anything that impacts the student experience.”

She said the biggest hit to students would come from the loss of student employment, such as eliminating student workers in some departments and cutting student employee hours in others.

Regent Richard Beeson, who chairs the Board’s Finance Committee said the cuts have helped tuition increases stay low.

“If we didn’t have savings taken out of the administration, it would have shifted over to student costs,” Beeson said.

Board of Regents Chair Dean Johnson said the plan to roll out OpEx reflected a desire for the University to be more effective with school resources.

“It’s become a Board priority that more of our resources be directed to educational programs and less administratively,” Johnson said. “One of the things you have in large organizations is a tendency to overbalance on administrative expenditures and not enough on the rank-and-file aspects of operations [like] academics, classrooms, and student supports.”

Johnson said the first rounds of cuts and reallocations were the easiest for the administration to make because there were more areas of operations that could be identified as adjustable.

The last $20 million in cuts will deem more difficult due to limited remaining resources, but Johnson said school officials are in constant communication with department heads to make sure nothing vital is eliminated.

“There gets to be pushback … because $90 million is no small sum of money,” Johnson said. “[But] the best way to do it is to go to the people it most directly effects. People are quite creative about that, and it’s a better way of doing it than a top-down authoritative way.”

Beeson said tension could mean the cuts are being effective.

“That’s healthy,” he said. “It tells me the reforms are having an impact.”

While no specific plans for further cuts outside the realm of Op Ex have been discussed, administrators said the University will continue to look for ways to trim expenses.
“Both the board and [Kaler] have … started to think about what, if anything, we would want to memorialize going forward once this plan is done,” Volna said. “But they have just begun conversations. No decisions have been made.”