Doing More with Less

cost-reduction strategies


Operating a college or university has always been an expensive proposition. But the challenge of containing costs may be more important today than ever before.

“Governmental funding sources are level or declining, and student tuition cannot continue to increase,” says Melissa Hopp, vice president of administrative services at the Community College of Baltimore County in Maryland. “The only way to make real progress is figuring out how to do more with less.”

In striving to achieve cost savings, campus leaders can be both responsive and proactive. Darrell Bazzell, vice chancellor for finance and administration at the University of Wisconsin–Madison, says such efforts are especially important as institutions operate in an increasingly challenging fiscal environment and face greater expectations for accountability.

“We have an obligation to make sure students and the state are receiving a strong return on their investment,” he says. “We’ve been focused on structured cost-reduction strategies for many years — not only as a response to the realities of declining state support but more importantly, as an opportunity to reinvest resources in our primary missions.”

In that spirit, colleges and universities are taking a variety of measures to reduce costs. Here is a look at some of the most promising approaches.

Organizational Focus

At Wisconsin, a central point for cost-reduction efforts has been the Administrative Process Redesign (APR) unit, developed several years ago to provide a framework for creating efficiencies and improving customer service. Staff members in this unit have expertise in areas such as process design and redesign, project management, financial and data management, change management and performance measurement.

“APR has partnered with staff and faculty on dozens of process improvement initiatives and has helped embed a culture of responsible resource stewardship across the campus,” Bazzell says. “It has helped identify and implement numerous enterprise-level opportunities for the campus to become more effective and efficient.” Recent enterprise projects have focused on IT infrastructure, strategic purchasing and use of instructional space.

Taking matters in a different direction, measures to consolidate organizational units or services may also bring savings. That has been the case at the Community College of Baltimore County, where what had previously been three component colleges were merged into one. The restructuring process has included reducing administrative posts by assigning college-wide authority and responsibility to key positions and appointing coordinative officers for campus- level oversight.

An enterprise-level initiative at the University of Wisconsin has focused on reducing costs by eliminating duplicative data centers across campus. Campus leaders are also consolidating email and calendaring systems across the campus into one system.

“This will enable the university to gain savings through improved productivity and by reducing costs of duplication,” Bazzell says.

Certainly organizational changes may bring challenges, but if undertaken with care, they can bring significant savings.

“While it is often difficult to dissolve ‘internal kingdoms,’ it is absolutely imperative that all efficiencies be gleaned from the operations,” Hopp says. “If there is not willpower to do this through an in-house business practice review, than an outside consultant should be brought in to do a top-to-bottom review and recommend standardization of best practices.”

Savings in Purchasing

Renegotiating purchasing contracts or pursuing other efficiencies in buying can also be a winning strategy.

At Oregon’s Portland State University, staff have negotiated deeper discounts on several contracts including lab equipment and furniture, desktop and laptop computers and office supplies, according to Kevin Reynolds, vice president of finance and administration. “With the implementation of a new e-procurement system, campus users are assured of getting the best pricing,” he says.

At the Community College of Baltimore County (CCBC), relationships with other colleges play a part.

“CCBC has occasionally taken advantage of the camaraderie of the community colleges in Maryland,” Hopp says. “We have surveyed our sister colleges regarding various purchases to ensure that CCBC is paying a proportionate amount for similar services. When we are not, we dive into the business process or the vendor contract to seek out savings.”

Even something as simple as buying refurbished furniture can be worth considering, Reynolds notes. At Portland State, this has included contracting with a local supplier to obtain refurbished office furniture as on alternative to purchasing new items.

“The furniture is of high quality and the pricing is significantly less than the national cooperative contracts available to the university,” he says.

Also bringing improvements is Wisconsin’s Surplus With a Purpose (SWAP) program, which finds new homes for equipment and furniture by redistributing it to other departments, selling it to the public or selling or donating the equipment to nonprofit agencies. The university is also realizing hundreds of thousands of dollars in increased savings through the use of remanufactured printer toner cartridges rather than single-use cartridges.

Energy Savings

Regardless of the size or type of the institution, one area that seems to hold great potential is conserving energy.

“Energy conservation and a commitment to sustainability are crucial components of an institution’s resource stewardship,” Bazzell says. Under this philosophy, UW–Madison launched a “We Conserve” environmental stewardship program in 2006. Since the program’s initiation, the university has experienced a 30 percent reduction in energy usage per gross square foot of campus buildings. Complementing this program, an Office of Sustainability was created in 2012 with the objective of integrating sustainability into teaching, research, operations and public service missions.

At CBCC, a two-pronged approach has focused both on reducing the demand for energy and embracing innovative approaches to energy delivery. The college has created an energy conservation calendar that capitalizes on pauses in the academic and operating calendar. During semester breaks and holiday weekends, operating temperatures in campus buildings are adjusted so that maximum energy can be saved. At the same time, employees are asked to power down and unplug equipment ranging from computers to coffee makers. As a result, annual utility bills have been reduced by more than $100,000.

The college has also updated lighting systems and has achieved energy price stabilization by installing solar arrays. With the latter, the college buys the electricity produced by the arrays rather than purchasing the equipment itself, which is owned by a third party. The new system is expected to provide 25-30 percent of energy needs. And by negotiating a flat rate for electricity over the next 20 years, the savings should increase as the comparison price for utility-provided electricity increases. Total savings over the next two decades may reach $4 million to $6 million. At the same time, the institution has reduced the price variability of more than a quarter of its electricity cost.

Open Communication

Whatever measures are taken to reduce expenses, keeping the campus community informed is an imperative.

“It’s important that a proper explanation be provided to faculty and staff when undertaking cost savings,” Hopp says. “This explanation needs to come from the highest level of the organization. Always keep your staff informed of the state of the budget, and allow them to participate in suggesting and implementing cost-effective or more efficient business processes.”

This article originally appeared in the March 2015 issue of College Planning & Management.

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