Cutting Administrative Costs
Efficiency Advances Excellence
Cut administrative costs by $90 million and reinvest those savings directly into core mission activity.President Eric Kaler, 2014, setting the U of M's six-year budget goal
Defining Administrative Costs
To make our six-year goal measurable, we became the first among our peer research universities to track job categories to establish a measurable definition of annual “administrative costs.”
Administrative costs consist of the annual combined costs for:
- Leadership and oversight
- Mission support (staff and operating costs) and facilities
Cutting Administrative Costs
In the first four years, we've focused on these major areas for savings:
Restructuring programs. We’ve eliminated multiple centers and offices, outsourced entire activities, and used new technology solutions to lower costs. Examples:
- Eliminated the Plant Pathology Library
- Eliminated the Building Systems Automation Center
- Eliminated the Office for System Academic Administration
- Closed the University bindery
- Restructured maintenance and custodial services and outsourced elevator services
- Converted multiple print publications to electronic
Eliminating positions. The U of M has over 26,000 employees systemwide. And over 6,000 of these are students, whose contributions enhance their experience while reducing our full-time payroll costs. In the last four years we’ve eliminated almost 500 positions.
Purchasing smarter. We’ve made significant changes in our procurement process, including establishing new contracts, eliminating service fees, reducing shipping costs.
Managing energy consumption. We’ve replaced thousands of light fixtures with long-lasting LED bulbs, implemented new HVAC systems and monitoring units to control heating and air conditioning costs, and built a new steam-combined-heat power facility to service the Twin Cities campus. We’re lowering our utility bills while increasing the reliability of our energy infrastructure. In FY 2016 alone we avoided $8,932,000 in costs through our energy efficiency initiatives.
Pushing Ahead of Schedule
Our projected administrative cost savings through FY 2018 are $79.1 million.
We’re reinvesting these savings directly into core mission delivery:
- Research and teaching facilities
- Faculty and staff salaries and health benefits
- Public safety
- Technology security
Avoiding Costs to Students and Taxpayers
When we cut administrative costs and reinvest those dollars internally, we avoid or reduce costs to students and taxpayers. Over the last six years, thanks to our focus on cost reduction, tuition at the Twin Cities campus for Minnesota residents went up just 1.4%. For our four campuses in greater Minnesota, tuition rose just .5%.
Reaching Our Six-Year Goal
We remain focused on driving cost savings. Future areas of concentration may include:
- Integrating communications
- Streamlining enterprise asset management
- Upgrading information technology
- Centralizing travel buying