Cost Containment

Report of the Faculty Members of the University Cost Containment Committee

August 16, 1996

The University Cost Containment Committee met eleven times over the academic year 1995-1996. The members of the Committee were two representatives of the central administration, four Deans, and five faculty members, all appointed by the President. The representatives of the Administration were the Provost and the Executive Vice President. The Deans were from Dental, Engineering, Nursing, and Wharton. The five faculty members are listed below. In appointing the faculty members, the President consulted with the Chairs of the Faculty Senate. In addition, six administrators reporting directly to the Executive Vice President regularly attended the meetings.

The Executive Vice President, John Fry, chaired the committee and prepared its agenda. The meetings themselves provided a forum in which managers reporting directly to the Executive Vice President described their goals and strategies in restructuring their functions, and their progress in achieving these goals. In this type of forum, the faculty were able to form judgments about the restructuring process itself, but had little input into the shaping of specific proposals.

The faculty were impressed with the progress made in some areas reporting to the Executive Vice President. As an example, the faculty concur in the new goals of Human Resources to make personnel processes fully supportive of the operations of other units within the University. The faculty and other members of the Cost Containment Committee felt that the central and school administrations should devote more attention to the development of managerial skills of existing personnel. It would be most appropriate for Human Resources to take a more active role in nurturing and developing managerial skills throughout the University.

The faculty regard the decision to engage Barnes and Noble to manage and enhance the book store facility as a creative and new approach to administration. Barnes and Noble has wide experience and knowledge in running book stores, and it makes sense for the University to tap this type of resource. In view of its newness, this use of outside expertise to operate the book store should be monitored closely. If successful, it could serve as a cost-effective model to provide other administrative services to the University community at the same or higher quality than are currently delivered.

The faculty were disappointed with the progress made in Physical Plant. In particular, the level of maintenance of existing facilities is sometimes not satisfactory and appears to vary widely in quality from one building to another. The faculty were not convinced that the plans to improve maintenance levels will succeed. The Committee also discussed the high cost of construction of new University buildings, but for reasons of time did not explore this issue in any depth. The reasons for these high costs clearly need to be analyzed.

The Vice Provost for Computing has a broad and far reaching vision as to the computer facilities that the University requires, but at this time this vision has not been tied to financial and performance goals. Implementing and managing changes in computing at the University is difficult, as the Vice Provost for Computing reports to both the Executive Vice President and the Provost. Moreover, changes in computing at the central level interact with computing services provided at the school level. The faculty did not feel that there has been a detailed enough agreement among the central administration, the schools, and the ultimate users to implement at this time major new initiatives in the computing environment. The faculty, however, do support the major initiative now underway for upgrading the University accounting system.

The Cost Containment Committee reviewed only those administrative functions reporting directly to the Executive Vice President, namely Business Services, Facilities Management, Finance, Human Resources, Information Systems and Computing, Internal Audit, and Public Safety. The Cost Containment Committee did not review other major administrative functions of the central administration which do not report to the Executive Vice President but rather report to the President or Provost. These other major administrative functions include support for student services, development, admissions, legal services, libraries, radiation safety, and animal and human research protocols.

In view of the often significant resources devoted to the central administrative functions reporting to the President and Provost, these functions should receive in the future the same level of scrutiny as those reporting directly to the Executive Vice President.

The faculty were generally impressed with the motivation, intellect, and goals of the Executive Vice President. Despite his obvious desire to improve administrative services at the University, the faculty are deeply concerned about the level of success that he can achieve within the current University administrative structure. Although the Executive Vice President has the authority and the willingness to improve those services reporting directly to him, he has no direct control over the quality and nature of the administrative services that the schools provide or those administrative services provided through the offices of the President and Provost.

The Cost Containment Committee did not examine directly the quality of management at the school level, but continual references by those making presentations to the Committee and the personal experiences of the faculty members themselves suggest that there is great unevenness in the management skills among schools and within schools. The faculty have the perception that some administrators at the school levels are reluctant to accept and encourage change, preferring instead the comfort and certainty of the status quo. This attitude of course deters the effective restructuring of administrative services.

To gain the maximum benefit from the restructuring of administrative services, it is absolutely essential that management skills within schools and across schools be of the highest quality. The achievement of this objective will require the active involvement of the President and Provost to encourage the Deans to devote a substantial portion of their energies to the improvement of managerial skills at both the school and department levels. In turn, the Deans must vocalize this imperative and provide continuing oversight of this objective.

A basic issue in restructuring administrative services is the relative roles of departments, schools, and central administration in providing services. The decentralized decision-making structure of this University makes this issue one of fundamental importance. A decentralized structure helps to bring the decision-making closer to the end user, but it can discourage communication and cooperation across budgetary units. Despite its obvious importance, there was little discussion of where services should be provided and how to encourage communication among all administrative units. This lack of discussion represented a major deficiency in the activities of the Cost Containment Committee.

The University must find ways to encourage better communication and cooperation across administrative centers and to involve the end users in the decision-making process. The recent survey of members of the Faculty Club is an example of reaching out to the end users.

Cost containment and the preservation of quality administrative services involve difficult choices and will require even more involvement of all members of the University community. The President and other senior members of the upper administration must provide the leadership role in this involvement. The faculty members suggest as the next step that the President establish institutional mechanisms to move the cost containment effort from just the functions reporting directly to the Executive Vice President to other administrative units, including the schools. In view of their size and importance to the University as a whole, it makes sense to begin this process with the two largest schools in terms of faculty, the School of Medicine and the School of Arts and Sciences.

Faculty Members of the University Cost Containment Committee

Marshall E. Blume, Howard Butcher Professor of Finance
Sherman Frankel, Professor Emeritus of Physics
Patrick T. Harker, UPS Professor of Transportation
David K. Hildebrand, Professor of Statistics
Lee D. Peachey, Professor of Biology


Volume 43 Number 2
September 3, 1996

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