Consultants Find Millions of Potential
Savings at UC Berkeley. The
University of California's Berkeley campus could save $93 million to $135 million
with operational efficiencies, according to a new report by Bain and Company, a
consulting firm hired to find waste. The report urges university officials to
make an effort "to capture at least $75 million in annual operational cost
savings."
There are five big
areas of what the San Francisco Chronicle
refers to as "bloat." They are:
·
Management Overstaffing. The consultant sees savings of $40 million to
$55 million by reducing management overstaffing. "The university has many
layers (11) and relatively narrow spans of supervisory controls (average of
4.4)," the report states. In fact, 55 percent of supervisors have three or
fewer direct reports.
·
Inefficient Purchasing. Fragmented purchasing is undermining campus
buying power. There is a lack of standards for commonly purchased goods, and
spending is fragmented across thousands of vendors – 75 percent more vendors
per dollar than at benchmark institutions. The consultants estimate potential
savings of $25 million to $40 million in this category.
·
Student Services: Productivity Varies
Significantly and Programs Overlap. The consultant believes $15 million to $25 million in potential savings
are possible by reforming the $220 million spent on student services.
Productivity varies significantly, and more than 50 different services are
offered with instances of overlapping programs and functions across differing
units.
·
Information Technology Standards Lacking. The campus spends $130 million on
information technology and there are savings of $10 million to $16 million
possible in this area. There are few standards, and procurement leads to
increased costs. IT staff and decisions are decentralized, causing higher
institutional cost and risk.
·
Energy Consumption Above
Average. A big surprise is
that at a campus where environmental issues are stressed, energy consumption is
not systematically measured and managed. Consumption is slightly above average
compared to other California universities. A potential savings of $3 million to
$4 million can be achieved in this area.
Berkeley Vice
Chancellor Frank Yeary said: "We will get
push-back in certain quarters. But the fact that the state has so consistently
disinvested in our organization … most people really appreciate the need to
change."
Professor Chris Kutz, chair of the Faculty Senate, said, "We've been a
very decentralized, sluggish bureaucracy for a long
time."
Liza Kemish, statewide vice president of the University
Professional and Technical Employees Union, said, "I imagine we'll want to
talk with each other and develop a coordinated plan to fight back."
(Sources: Report by Bain and Company, "Achieving Operational Excellence at
University of California, Berkeley," and San Francisco Chronicle, April 13.)
Cal-Tax
recommendation: The public should be
outraged that it has taken a budget crisis to force the university to operate
efficiently. The university should be doing this as a steward of taxpayer
dollars. It also is upsetting that public employee unions fight efforts to
eliminate waste. We recommend that the state push for follow-through on the
problems identified in this report, and that other campuses be examined, as
well. It is more likely than not that similar studies
at other UC campuses would turn up waste of a similar magnitude.
Cal-TaxReports, April 19, 2010
© 2010 California Taxpayers'
Association.
All Rights Reserved.