Cost Cutting and Efficiency Initiatives at Private Colleges and Universities
Carefully planned, well-considered strategic cost savings initiatives are underway at private colleges and universities across the country.
Institutions are redoubling efforts to:
- Cut their operating costs
- Adopt better business practices
- Increase productivity
- And operate more efficiently ... while staying true to institutional mission, responsive to the marketplace, and committed to giving students a high-quality education at the lowest price possible.
- Streamlining operations while safeguarding academic quality and student service
- Forming and expanding academic and administrative consortial efforts to reduce costs and improve quality
- Expanding environmentally-friendly systems that reduce energy consumption and result in significant cost savings
- And more
The following examples demonstrate the measures private colleges are taking.
Last update: April 9, 2012
Agnes Scott College has cut $3 million from its operating budget through a combination of payroll, operations, and debt cost reductions, as well as strategically restructuring several offices. To meet its strategic goals in new economic times, the college is reducing its operating budget to align with revenue; increasing enrollment and improving retention; pursuing necessary capital projects through fundraising; and reducing debt. The college has pursued a variety of initiatives to generate additional revenue and reduce costs, including ramping up events such as weddings, film shoots, and conferences on campus; a new competitive innovation grant offered to faculty, staff and students with ideas on how the college can improve; and sustainability-related efforts. These include a collaborative project that will produce 30 percent energy savings in homes owned by the college and rented by college faculty and staff, revenue from recycling and Terracycling, and a revolving fund to pay for sustainability projects on campus, and then redirect any saving back into the fund for further green projects.
To reduce costs, the Baldwin-Wallace business office is reviewing purchasing procedures for printing services and paper, audit services, and custodial services; and has completed a request for proposal for investment consultant services. A $2.4 million investment in energy-savings projects has already reduced the college's carbon footprint by 18 percent within six months of implementation.
Baylor University's efforts to control costs include holding operating and capital expenses flat for four years, emphasizing shared administrative services, limiting salary increases, and instituting a wellness program to hold down medical costs. It is also implementing a revolving review of every department to examine expenditure growth, and challenging departments to seek sources of revenue other than tuition. The university is re-negotiating long-term contacts in areas such as electricity to reduce costs and enhance the move to renewable energy; implementing campus-wide energy savings and recycling programs; and implementing a Good Stewardship system to encourage departments to recommend ideas for cost savings.
Brenau University is using networking technology, Skype, and other digitized communications to reduce costs by facilitating administrative meetings between staff at different locations, and allowing hybrid courses or special lectures/presentations to be delivered by a single professor to students at more than one location. The university has renegotiated maintenance and service contracts. Brenau partners with local companies to develop or build-out facilities that the university rents, rather than purchase, making the improved facilities immediately available for student use and spreading the cost out over a longer period of time. It has consolidated multiple Brenau locations in the Augusta area to one new and more serviceable space for administrative, classroom, and support functions.
By enhancing energy efficiency, California Lutheran University has held its energy use constant from 2009 to 2011, despite adding three new buildings in that time. The university has added insulation, replaced windows, replaced air conditioning units with ones that switch off when windows are opened, reduced lighting, reduced the number of printers, added motion sensors to lights, and taken other steps.
Campbellsville University cut its budget 5 percent across the board, and the president took a voluntary pay cut.
Centenary College has reduced its costs by 10 percent since 2009. It privately refinanced $15 million of debt at a lower interest rate; renegotiated its outsourced dining services contract to reduce expenses by over 25 percent per year; outsourced its facilities management, payroll, and human resources; restructured academic and athletic programs; cut administrative staff costs; and redesigned benefit plans. Prospectively, Centenary is engaged in a capital renewal program that is focused on improved energy usage (more efficient heating and cooling equipment, LED lighting, and installation of a modern and expanded building control system). Work-study employment opportunities are being made more professional to improve the experience for the student and provide better support to administrative departments. Centenary is also working with the Associated Colleges of the South consortium to develop and implement cost-effective delivery of academic programs that would otherwise be impractical and expensive to provide.
Senior administration at Connecticut College conducted a comprehensive review of potential cost-reducing measures, leading to steps such as moving to online versions of publications that have historically been printed, and reducing unnecessary travel. The college implemented a new information system to perform purchasing and inventory management more efficiently in its dining halls, and has outsourced its email system to Google Gmail. The college will hire a purchasing manager in spring 2012 to centralize institutional purchasing and achieve efficiencies. To reduce inefficient use of faculty resources on very small classes, the college has phased out or combined 12 rarely-declared majors in the last three years, and has tightened its policies regarding low-enrollment classes. To reduce the amount of the operating budget spent on debt financing, the college refinanced some of its debt under more advantageous terms. To control energy costs, Connecticut College is implementing several new conservation measures, including installing geothermal heating and cooling in its new science center.
Drake University outsourced its facilities services and dining operations several years ago, which has generated major savings and minimized costs to students. A managed printing program implemented recently is projected to reduce paper use and expense by 25 percent over time. Drake has also consolidated intra-campus orders, and implemented further local outsourcing of services.
Through several green initiatives, Fairfield University reduced its carbon footprint by 7 percent last year, while generating cost savings. Fairfield implemented a combined heat and power plant system three years ago that requires approximately 22 percent less fuel than typical on-site thermal generation and purchased electricity; and installed new high-efficiency, front-loading washing machines and dryers in all residential facilities in 2010, reducing water consumption by nearly 1.2 million gallons. The university's student dining hall has been "trayless" for three years, reducing water and electrical use, and reducing solid food and beverage waste. The university has set its total emission reduction goal at 20 percent by 2020.
George Washington University has implemented an Innovation Task Force, a university-wide effort to engage staff, faculty, students, and stakeholders in finding $60 million per year in reoccurring annual savings in existing business processes around the university by 2015. The savings are used to moderate tuition increases, and also to re-invest in new academic programs, research, and other efforts that will improve the quality of a GW education. Eighteen initiatives are currently under way, and over $34 million in annual savings have already been identified.
The board of trustees at Graceland University initiated an aggressive program review of all administrative, athletic, and academic areas at the institution that resulted in a 15 percent reduction in costs. The college eliminated or suspended academic programs where there were few students; eliminated redundancies in the way it handles online and distance education programs; and increased productivity by upgrading computer systems and enhancing technology. Graceland has also outsourced the book store, and moved to textbook rental to save students money. In response to the economic downturn, the college updated its strategic plan, and formed a university budget committee that includes staff, faculty, and administration to increase transparency, accountability, communications, and ownership. The committee prepares and recommends budget decisions to the president.
Heidelberg University froze salaries for two fiscal years for faculty and staff, and three years for senior administrators. The institution left multiple faculty and staff vacancies unfilled. Heidelberg has reduced utility expenditures by 11 percent by using new energy suppliers; and is working with a firm to negotiate with all major vendors for cost reductions.
Holy Cross College has reorganized its academic structure, reducing nine divisions to six departments, which provides for pooled resources and fewer faculty with release time. Support functions in the library, computer lab, and student center have been assigned to student workers, reducing operating costs for the college, and increasing opportunities for student employment on campus. Holy Cross outsources its facilities maintenance to further reduce costs.
Lewis & Clark College saved $1 million by eliminating administrative positions through a voluntary employee severance program, and by re-engineering business practices.
Lipscomb will consolidate student services - registration, financial aid, and more - into an integrated operation that is more cost-efficient to the university and time-efficient for students. These services will be available to students online through the myCampus system. The university is reviewing recent task force recommendations that, if implemented, would save $5 million annually by tightening employee travel guidelines, reducing utility costs, consolidating overlapping functional areas, making academic minors optional, and eliminating academic offerings with low student demand.
Lynn University is entering a performance contract to reduce energy costs on campus by a guaranteed 30 percent, and ensure a sustainable campus. It also hired an external consulting firm to review many areas of administrative costs, including plant maintenance, fleet management, and telephony - and implemented many of the recommendations.
Ongoing initiatives practiced at Madonna University include streamlining all administrative offices; a carefully constructed balance of full-time and adjunct faculty members; practicing energy conservation, often through the use of new technologies; and a focused effort to construct buildings only when absolutely needed.
Marywood University has capped annual spending increases at 3 percent over the past few years, while rolling back expenditures on general expenses and supplies by 7 percent in the current year. The institution has implemented cost-cutting measures, while maintaining student service through ongoing development of electronic and web-based solutions.
Over the past four years, New York University has reduced its base administrative operational budget by nearly $66 million, accomplished by minimizing administrative support costs to only the required level, rather than the preferred level, to support the university's academic mission. NYU has reduced its non-faculty, full-time workforce by 7 percent; reorganized and consolidated multiple offices and operations (e.g., human resources, finance, IT, environmental services, student housing); renegotiated service and supply contracts; implemented a hiring freeze and review process; reduced fixed IT equipment costs; and cut discretionary spending (e.g., travel, catering).
Otterbein University reduced compensation by limiting pay raises to 1 percent in the last two years. The college has restructured or consolidated some offices in the past two years to improve efficiency and reduce costs, including combining adult and transfer services, and centralizing marketing efforts.
The Rhodes College Student Associates Program has offered mid-level staff-level jobs to students on a basis comparable to that of other employment opportunities, since 2003. Offices on campus compete for positions to offer, and students compete for the jobs that are offered. If hired, the students are expected to hold the job for a minimum of two years. In exchange, the associates receive job training, including management training, and are given a substantial wage. The students benefit from the jobs, which complement their academic training, and the institution benefits significantly from the partial FTEs represented by the students. In terms of cost avoidance, the institution saves $750,000 per year from its 100+ student associates. Each student associate is paid around $4,500 per year to do one quarter of a job that would require the college to hire someone at $35,000 to $40,000 per year plus benefits, for a total of $47,000 to $53,000 per year. The program has increased student persistence; added value to the education; lowered costs in departments benefiting from the student's labor; and added richness to the college's options for practical student experiences.
St. John's College is relying more heavily on philanthropic dollars than ever before in its annual operations, has cut a huge amount in expenses, and froze base salaries for all for three years.
Saint Mary's University of Minnesota is aggressively negotiating contracts with vendors to control operating costs. Contracts for bookstore, food service, copiers, and insurance have been renewed with minimal or no increases. Any new or replacement positions are carefully analyzed to determine need and cost benefit to the university. The budgeting process for 2012-2013 year includes a modified zero-based budget. Specifically, administrators are being asked to identify dollars that may be redirected toward university priorities and initiatives.
Reduced costs and increased energy efficiency have both resulted from sustainability efforts at Sewanee: The University of the South. For example, the university has put in place lighting retrofits and controls; automation of campus HVAC systems (including central chilled water plant, variable flow pumps and fans, very high efficiency boilers); and water conservation measures including in residence halls (low flow showers and toilets, energy saving appliances). The newest buildings on campus are LEED-certified, and include features to reduce cost and energy use, such as solar panels, a chilled beam cooling system, heat-exchange wheel, low heat gain window glass, natural lighting, and re-use of existing materials. A new extended holiday break from Dec. 23 to Jan.3 allows a campus-wide energy conservation effort that is expected to save more than $25,000 this year.
Since 2009, Simmons College has adopted and methodically executed a plan to reduce its cost structure and increase productivity, through personnel reductions, strategic savings in procurement, and strict cost controls. The college also has implemented mindset-changing initiatives, including full transparency of financial data across all units and consistent emphasis on the fact that every spending decision really amounts to a decision to spend students' money. All requests for replacement or new hiring must be approved directly by the college president, and all requests for non-salary expenses over $5,000 require full justification and ultimate approval by the senior vice president. Simmons is saving 30 percent on print production costs by using common design templates and bundling printing costs.
Southwestern University has reduced its operation budget by 7.5 percent.
Texas Christian University is using LEEDs designs in new and renovated buildings, which should produce $2 million in savings each year; improving workflow to reduce overhead costs significantly; moving some publications to digital formats; exploring the future of textbooks, including the adoption of E-textbooks; and planning an expanded information commons, eventually allowing reducing printed library book acquisition costs. TCU has created a new position that is dedicated to reducing procurement costs; and is putting a greater emphasis on endowment fundraising to support strengthening scholarship offerings.
Over the last three years, the University of Chicago has eliminated $75 million from its operating budget, much of it from cost reductions within administrative units. A rigorous and focused effort, across the institution, led to more efficient structures, improved practices in procurement, and heightened productivity, including better use of technology. It also allowed the university to continue to invest in its core academic mission, including a continuing expansion of the faculty.
At the University of Dallas, the president's cabinet reviews all faculty and staff positions that open to see whether they can be eliminated or combined, without hurting educational quality. The university is participating with other colleges in a health-care consortium to negotiate better healthcare premiums; centralizing all marketing and printing materials to insure better pricing; and replacing 20-year-old food services equipment to save energy cots.
The University of Hartford has shifted its winter intersession schedule and other activities to allow full closure of the campus the week between Christmas and New Year's Day -- resulting in substantial energy savings due to reduced heating for buildings, lights being turned off, certain computers being shut down, and other cost-saving measures. Under new procedures, hiring managers are asked to consider creative alternatives to filling vacant positions to determine if the essential functions of the position could be accomplished in a more efficient and effective manner without hiring a replacement.
Since 2008, the University of Rochester has saved more than $10 million in the procurement of goods and services, and generated approximately $4.3 million in energy savings. The university has taken steps to recast its benefits programs, especially employment health insurance, resulting in a realized savings of approximately $23 million for the university during the most recent fiscal year.
For the past several years, the University of Saint Mary has frozen departmental operating budgets. Supplemental increases to operating budgets have to be justified, during the annual budget preparation process, and generally only one-time expenditures (e.g. accreditation fees) or expenditures producing revenues are approved.
Since 2008, Vassar College has reduced its workforce by 10 percent. On a continuing basis the college determines whether open positions can be accomplished differently, or whether the service provided can be eliminated, without harming the education provided to students. The changes have increased the productivity of its smaller workforce, and allowed the college to maintain competitive compensation for all of its continuing personnel. Vassar also froze administrator and faculty salaries for a year, followed by modest cost-of-living pay increases; re-organized - and, in some cases, merged - administrative and service departments; reduced overtime hours; restructured health insurance; and reduced employer contributions to pension plans for salaried employees. The college has also reduced the frequency of technology updates, increasingly replaced print publications with digital publishing; re-bid contracts for energy and other commodities; and renovated older buildings to improve energy efficiency and reduced costs.
Over a four-year period, Wesleyan University reduced facilities costs with no reduction in service by eliminating several service contractors, modifying cleaning frequency, consolidating physical plant operations, and renegotiating and rebidding service contracts.
Academic and Administrative Consortia
More private colleges are forming and expanding consortial partnerships that allow institutions to pool resources to better control costs and improve services. Private colleges are leveraging their joint purchasing power for lower costs on energy, insurance, and information technology; reducing administrative and academic redundancies; offering students new learning opportunities; and share best practices. Metropolitan, regional, state, and national partnerships all continue to take root and innovate.
The 16 member institutions of the Associated Colleges of the South are offering online and blended courses to students on any of the campuses within the consortium, giving students more course options, and letting participating colleges avoid academic redundancies. The process is seamless for students.
AIKCU works with member colleges and business partners to leverage collaborative opportunities that help campuses control operating costs. Two dozen preferred Business Partners offer the association's 20 member campuses preferred pricing or select services that an individual campus could not achieve alone. AIKCU is also exploring opportunities for shared "back office" administrative activities (including group purchasing) aimed at cutting costs. One-half of the association's members belong to the AIKCU Benefit Trust, a collaborative health care network and stop-loss insurance purchasing authority that provides services to several thousand employees and their families. Since its inception, none of the Benefit Trust members have seen an increase in their cost for employee health insurance.
The 14 members of the Baltimore Collegetown Network have come together to offer class exchange agreements, helping to eliminate unnecessary duplication of courses; library reciprocal borrowing privileges; and administrative cost sharing. The network operates a shuttle service that carries students, faculty, and staff between six campuses and several area destinations; has undertaken a marketing campaign to position Baltimore as a welcoming city for college students; and coordinates community service and serving-learning activities for students.
CCCS helps small to medium sized independent institutions in 27 states enhance efficiency through joint procurement agreements for several services and products. Joint contracts for comprehensive asset management programs and employee long-term care insurance are also offered.
CCIC has a multi-pronged administrative collaboration effort that is focused on group purchasing, shared services, and the development of new markets. Members have access to shared staff training and contracts for various products. Other services include student health insurance, workers compensation insurance, and collaborative emergency planning and training. Work groups meet on a regular basis to explore options, expand services, and share best practices. The conference is currently working on a next generation student health plan that will meet the mandates of federal health care while holding costs to a reasonable level for students. 5 colleges are sharing a $1 million loan to boost energy efficiency.
The Five Colleges of Ohio ("Ohio 5") is a consortium of five private colleges that actively collaborate to cut operating costs while improving the quality of respective educational offerings. The Ohio 5 uses its joint purchasing power for lower institutional costs on computer equipment and software licensing, energy, insurance, and other institutional expenses. Through the sharing of resources, the consortium works to reduce administrative and academic redundancies; offers students new learning opportunities and better services; provides joint training and professional development; participates in peer review; and shares best practices. The colleges share staff appointments in the area of library storage, and have recently created a shared procurement officer position.
ICE is a consortium of eight private colleges in West Virginia, Virginia, North Carolina, Tennessee, and Massachusetts. Member institutions share all of their administrative computing services in a single computer center housed on the University of Charleston campus. ICE owns and operates the hardware and software that support the financial management, human resource, financial aid, admissions, alumni, development, and student records processes for all eight schools. In 2012, ICE announced plans to hire a faculty member to teach students at five separate campuses. This will reduce the cost of instruction and help hold down tuition costs.
LVAIC's six member colleges and seven associate non-college member institutions collaborate to enhance student academic experiences, and to purchase goods and services collectively as a group to maximize financial resources and generate substantial cost savings. In addition, LVAIC supports several longstanding and emerging programs and projects including strategic planning, business services, faculty exchanges, counselors' tours, cross registration, study abroad, and sustainability.
MICUA offers collaborative purchasing programs for its 18 member colleges, including student, property and casualty, group life, and long-term disability insurance; as well as student tuition payment plans. The association has been working to reduce the costs of its members' employer-provided healthcare benefits, and is exploring the feasibility of establishing an employee benefit group captive to provide employee healthcare coverage for participating institutions.
The New York Six consortium works together to share resources and expertise in order to improve options for faculty and students "while reducing colleges' individual and collective operating and capital costs." The consortium has multiple projects it collaborates on including the Educational Technology ITAP Program which gives students hands on experience with IT systems. The Administrative Initiatives program aims to reduce costs by eliminating certain duplications of effort. Other programs include the MediaShare Project, Faculty Network, Student Affairs Network and Diversity Network.
In 2006, more than 80 nonprofit, private colleges joined together to launch OCICU, which allows member schools to have access to classes taught by seven provider schools. By joining the consortium, member schools are able to offer all of the OCICU courses to their students at a much smaller cost than developing everything on their own. Students benefit from having more classes to choose from.
On behalf of its member institutions, the alliance has initiated and sustains: volume purchasing programs for all voice and data telecommunications; multiple lines of software and hardware; a self-insured workers compensation benefit trust; a self-insured employee health benefits trust; moving vans; public notices; and management training. Students at member institutions can cross-register, without cost, at other schools to complete required courses not offered in a given term at their home campus. Seven members of the alliance formed a Multiple Employer Welfare Association to reduce health insurance expenses and volatility by pooling their exposures. Over the past eight years of operation, the collaboration has help to keep down the growth in health and dental insurance premiums.
More than 270 private, nonprofit colleges and universities have come together to offer the Private College 529 prepaid tuition plan. The program gives families a guaranteed way to purchase tomorrow's tuition at today's prices - for up to 30 years after it was purchased - at participating private institutions across the country. Private College 529 provides the same potential tax advantages that come with other 529 plans, including federal income, gift, estate, and state tax benefits, in states that offer tax parity with the state's own plan.
TICUA offers its 37 member institutions a self-funded health insurance program; and has its own $30 million procurement program that offers discounts with over 40 vendors, ranging from computer software to electrical services.
The Wisconsin Association of Independent Colleges and Universities offers the 20 members of the WAICU Collaboration Project more than 45 cost-saving collaborations. These include joint administration of health plans, a study abroad consortium, professional development for faculty and departmental chairs, environmental safety audits, and data sharing and management. The documented savings between 2005 and 2010 were $38 million. WAICU develops specifications for products and services in consultation with members, conducts bids, completes the due diligence, and analyzes market trends. The Congressional Commission on College Costs called the WAICU Collaboration Project "comprehensive" and "transformative." In 2011, the Lodestar Foundation recognized the WAICU Collaboration Project as one of the eight top nonprofit collaborations in the country-the only higher education organization to be so recognized.