ST. LOUIS — Consulting firm PricewaterhouseCoopers outlined between $44 million and $74 million in opportunities for UM System budget cuts Friday, including benefits, facilities and information technology.
The administrative review to seek out areas for improved efficiency was described by UM System President Mun Choi before the PwC presentation as a “very important topic that really defines the future of the university.”
“This is not meant to depress anyone,” system finance vice president Ryan Rapp said. “But it is sobering to look at the challenges we have going forward.”
Potential budget cut numbers are subject to change going forward, said PwC consultant Breck Marshall. But he warned that if no action is taken, by 2023 there will likely be $160 million more spent by the system than received, based on current trends in inflation, tuition increases and other factors.
“Everyone is working hard — that is clear. The question is, is everyone working smart?” Marshall said. “The current way of operating is actually snowballing more work, not less.”
To no great surprise, the report identified budgetary issues as stemming mainly from declines in state funding and enrollment. Missouri is 46th in the United States in higher education appropriations per capita, according to the PwC report.
“The future looks pretty dire when it comes to state resources,” Choi told the UM System Board of Curators.
The system cut $100 million over the summer already, and Choi estimated that 450 to 500 people lost their jobs. In the wake of the administrative review, the system will now survey all staff members and look at data to determine further action or areas where duplication of efforts is occurring.
Choi said in a news conference after the meeting that he could understand how staff may be concerned for their jobs over this news, but no decisions have been made yet. He emphasized that, in the future, employee responsibilities may shift or unfilled positions may be eliminated, but this process doesn’t necessarily mean people will lose their jobs.
Final results of the staff survey and analytics, as well as decisions for further action, will be shared with the public by early summer 2018, Choi said.
By far, benefits is the biggest single area identified for potential budget cuts in the PwC report.
“I understand I’m on a live mic, and this is a contentious issue,” Marshall said, but a lot of money could be saved by cutting benefits. The PwC report estimates between $17 million and $30 million could be saved from such cuts.
While considering cuts to employee benefits, it’s important to balance the need to be good stewards of public resources versus recruiting and retaining high-achieving faculty, Choi said.
The right way forward, Choi and the PwC consultants said, is to identify a management model and build around it. This management model wouldn’t work for everything, as it might not be the most effective way to manage human resources, information technology or other divisions in the exact same way. The likely way forward is a mix between the two, Choi said.
PwC estimated that by spending more efficiently, the system could save up to $14 million in facilities and up to $8 million in information technology.
The report offers two possible models:
- Core management — where a larger office at the system level makes decisions for the campuses and measures the success in collaboration with the campuses.
- Strategic management — where the system allows campuses to monitor and make decisions for themselves, while a smaller system office would work to coordinate among the four campuses.
Aligning the interests of the four campuses into a single platform is a difficult process and a discussion that needs to be had, said curator David Steelman, who was elected Friday as board chairman.
“There’s no question we’re going to have that discussion,” he said.
“Having a stronger system isn’t the goal,” Choi said. Rather, the driving goal is academic excellence — a stronger system would just help accomplish that.
At the same time, “there has to be some level of autonomy at the campuses to be nimble enough to meet the needs of the campuses,” Choi said.
The kind of change that PwC has recommended may be painful, Marshall said, but it is important.
“Some, when executing change with highly educated individuals, have experienced pushback,” he said, but, “It’s too hard to ignore the opportunities.”
The UM System owes it to the state to find a way to be successful and sustainable, Choi said.
PwC was contracted for $428,000 for eight weeks of work.