U tests new services model to cut costs

The model would involve streamlining University services.

Alexi Gusso

The first step of University of Minnesota President Eric Kaler’s plan to cut $90 million in administrative spending over six years may be streamlining University services.

The University will standardize services across different parts of its administration in an effort to slash costs, according to a preliminary plan announced at a Board of Regents meeting Friday.

University Chief Financial Officer Richard Pfutzenreuter said the shared services model will organize administrative services so different University units can share them.

Scott Studham, University vice president and chief information officer, said the shared services model will allow people to work together and share ideas, saving costs and time.

For example, he said two-thirds of the University’s information technology professionals work outside of the central IT organization — something that would be consolidated under the new model.

The two-part process is part of Kaler’s plan to reduce administrative costs by $15 million every year, which accounts for 1.2 percent of the University’s administrative budget, Minnesota Public Radio News reported. 

Studham said the implementation will be a “pretty large shift” from the University’s current model, in which different parts of the administration don’t often share resources.

“This isn’t something that happens overnight,” he said. “It’s a multi-year, deliberate, methodical approach.”

The timeline for implementing the plan and its total cost are undetermined, University spokesman Matt Hodson said.

The shared services model will be tested at the University’s Duluth campus and on non-collegiate units such as IT and human resources before applying the method system-wide.

Sen. Terri Bonoff, DFL-Minnetonka, the Senate Higher Education and Workforce Development Committee chairwoman, said she’s happy with Kaler’s plan but would like to see further integration in shared services right away.

“I would’ve preferred they tackle all of it,” she said. “But I don’t know how complicated [the process] is, and I accept the rationale that they wanted to have that success under their belt.”

Bonoff and other state leaders requested more transparency between the Legislature and University during the last legislative session.

In response, the University hired two consulting firms earlier this year to analyze administrative spending after being accused of excessive administrative spending in a December Wall Street Journal article.

A full report by Huron Consulting Group was presented at Friday’s meeting. Shared services was the most significant recommendation of several to cut costs and consolidate the administrative units at the University.

The report outlined ways the University could cut costs in four departments — finance, procurement, human resources and information technology.