If you have questions about the Washington University in St. Louis efficiency initiative that took place in 2014, explore the answers to frequently asked questions.
Why does the university feel it needs to become more efficient?
Washington University is on solid financial footing. Like most major research institutions, however, we are facing a challenging financial environment. Today we are feeling the serious effect of economic trends, changes in national policy, and changing needs of our students and faculty. The collective force of these pressures threatens the extent to which we are able to achieve our strategic plans.
As part of this, in 2012-14 we took a hard look at how we operate at all levels and areas of the university. We must ensure that we are managing our finances effectively and efficiently and that our resources are focused on our core mission: research, teaching and patient care.
Why is efficiency an issue now in 2014?
- Taking inflation into account, federal research revenue (which supports 83 percent of the university’s research activities) has declined by $52 million over the past 10 years.
- Our endowment has not yet fully recovered from the major economic downturn in 2008, reducing funding for operations.
- We are committed to keeping undergraduate tuition increases to a minimum, while increasing our spending on financial assistance.
- Even with constrained resources, we must make greater investments to continue to attract and retain top-notch students and faculty.
- Dramatic changes in the nation’s health care delivery system put pressure on the university’s entire financial model.
- Nationwide, there has been a sharp decline in demand for certain professional training programs – making it harder to recruit graduate-level applicants.
Does the university have specific goals for its efficiency efforts?
The university will try to identify $5-10 million in annual savings in the CFU and $10-20 million across all of the schools. This represents 2-4 percent of the current CFU and 1 percent percent of the school budgets. Savings in the schools will be available for the schools to reinvest. It should be possible to find savings in this range given the size of the total budget involved.
The goals are to identify ways we can become more efficient in our administrative operations without compromising critical service standards. We also want to make sure that the university is staying abreast of new ways of doing business and applying them where it’s appropriate for us.
My unit/school is fiscally strong. Do we need to think about efficiency?
In order to make the university as a whole stronger, all departments and offices need to look for opportunities to be more efficient. Each unit and school ultimately feel the impact of both the successes and challenges experienced by other units and schools.
It is important, now, that we come together as a university – thinking beyond individual schools, departments and units – to avoid serious financial challenges in the future.
What has been done at a university level?
In November 2012 the university engaged the Huron Consulting Group to conduct an assessment of the potential for cost savings and improved efficiency in four areas:
- Research administration — including services provided by Sponsored Projects Accounting and the Office of Sponsored Research Services as well as school and departmental research administration support,
- Facilities services,
- Procurement/Resource Management, and
- Shared services — Administrative support within the departments of the Central Fiscal Unit (the university’s central administrative, academic and student support services).
After receiving the consultants’ recommendations in March 2013, the university began the process of developing these ideas into full-fledged proposals.
Why did we choose these four areas?
These are areas where other universities conducting similar reviews have had success in finding opportunities for efficiency improvements and cost reductions.
Who was involved in the efficiency effort? Who was making decisions?
A University Efficiency Efforts Steering Committee was established in 2012 and was co-chaired by Provost Holden Thorp and Hank Webber, executive vice chancellor for administration. This committee included representation by deans and administration from both the Danforth and Medical campuses. The committee reviewed the report and recommendations provided by Huron Consulting and charged an Implementation Working Group with the responsibility to further explore these recommendations.
The Implementation Working Group was comprised of “senior level implementers,” meaning that these were people largely at the assistant/associate vice chancellor and associate dean level who were responsible for directing central support areas that are critical to the changes we anticipate, or who lead administrative affairs within one of the schools. This group met monthly and provided feedback on the four areas under review. They also evaluated proposals and decided when plans were developed well enough to forward to the steering committee and university leadership for consideration.
A few members of the Implementation Working Group were identified to serve as chairs to lead the efforts in each of the four areas: facilities, procurement, research administration and CFU administrative support (shared services). The chairs of each of these work groups provided regular updates to the Implementation Working Group.
What were the next steps?
Over the following year, university leadership began rolling out efficiency efforts in the four initial areas and engaging the university community in identifying other ways to provide support services more efficiently.
During the month of March 2014 we provided communications on these efforts from the chancellor and Hank Webber, executive vice chancellor for administration. These communications were followed by “WUSTLnomics” forums open to the community providing a basic understanding of the university’s finances and allowing for conversations about the efforts.
Work groups developed proposals in the four areas under review. As they continued their review, meetings or questions were posed to employees to gain a better understanding of their day-to-day responsibilities and workflow. Supervisors were contacted prior to such discussions.
Did we look at additional areas in addition to the ones already reviewed in the initial assessment?
While most of our focus was on developing the ideas that came out of the assessment phase, we looked for additional ideas across our campuses. The initial assessment was the beginning of a process. We were interested in the ideas that our staff could propose for how to work smarter and stretch our resources. Faculty and staff at the university constantly think about how to work smarter and we need to make sure we tap into our community’s insights.
How is the School of Medicine responding to the challenges in the current environment?
Some of the largest financial challenges facing the university related directly to the clinical and biomedical research activities of the School of Medicine – declines in federal research funding and changes in the nation’s health care delivery system. In order to prepare for these potential funding threats, in January 2013 the Management Council of the Medical School established a number of work groups to look for ways to achieve efficiencies, reduce costs and enhance revenue. These work groups met to identify and analyze options and develop recommendations that were reviewed by the Management Council and other leadership groups within the Medical School.
Why are we still building major facilities if we face potential fiscal challenges?
Much of our major facility construction is funded through gifts or other resources that are earmarked for this purpose. These investments are important to support the development of the university as disciplines continue to emerge and evolve, and we look for opportunities to expand the impact of our programs.
Will there be layoffs?
The goals of the university’s efficiency efforts included reducing costs. Since salaries and benefits make up over 60 percent of our budget, we assumed that some reductions in staffing would result from our efforts. At the time of our efforts, it was too early in the process to know what specific changes would come from the ideas under consideration, and therefore we did not know how many fewer staff we would need, or how quickly we would make any changes.
Our goal was to achieve as much of the reductions as possible through regular patterns of retirements and staff attrition.
I have heard that the Central Fiscal Unit (CFU) is not hiring new staff. Is this true?
The chancellor, in consultation with the provost and the executive vice chancellor for administration, has concluded that the number of CFU employees would not grow. Any new positions within the CFU would be offset by a reduction in staffing either through attrition or reorganization within the area or elsewhere in the CFU. However, increases to staff would be considered if it provided a direct financial benefit for the academic units (schools). New positions or filling of vacant positions required approval by the vice chancellor for human resources, the provost and the executive vice chancellor for administration.
What was the timeline for the university efficiency efforts?
Changes in the procurement area were implemented as new arrangements with vendors were negotiated and put into effect. Some notable improvements such as a new office supplies contract with Office Max had been in place for a year, and recent developments included new contracts for medical supplies and remanufactured printer cartridges. The groups working in other areas were asked to present proposals in the spring. Some proposals needed further refinement, and most required an implementation process that ran from several weeks to many months. However, finding ways to be more efficient in our daily work should continue beyond the work focused on these four areas. Identifying how to be more efficient needs to become a part of our culture.
How was day-to-day work life affected?
Until we got further along in defining specifics, it was premature to speculate. However, it was important to note that one of our goals was to maintain service levels and continued operation of our fundamental cores: teaching, research and patient care. It is also worth remembering that the way we do our work changes all the time — the needs of the people we serve change, new techniques and technologies emerge, and we respond to new legal and regulatory requirements. Washington University employees have long responded well to changing times. Whatever changes come next will build on the Washington University community’s proven ability to adapt and deliver high quality service.
How did the university’s efficiency efforts relate to recent changes in faculty and staff benefits?
Benefits are constantly under university review with a goal to provide high quality benefits to employees while also managing the costs incurred by both the university and those receiving the benefit. Health rates are evaluated every year, but it has become more challenging to balance the rising costs of the health care industry without impacting our employees. The university is and will continue to be committed to maintaining a generous and affordable benefits package.
Will the tuition benefit remain?
Salaries and benefits make up over 60 percent of our budget. The costs that make up this percentage of the budget will be reviewed, but it is too early in the process to know what specific changes may be made.
Did the university’s efficiency efforts consider faculty appointments and tenure?
The efficiency efforts started with the core areas of facilities, procurement, research administration and organization of the CFU. Many of our peer institutions have successfully found savings in these areas. Faculty appointments and tenure decisions were not a part of the efforts.
Were you considering revenue initiatives as part of these efforts?
Many of our schools were doing enterprising work in expanding their revenue efforts through new programs and educational offerings — this is essential. We also looked at how we can maximize the use of our campuses and facilities. There was great energy around increasing activities on the Danforth Campus during the summer months. We are fortunate to have outstanding facilities, and a goal is to utilize these assets year round.
How could the campus community get involved?
The campus community was invited to contact the efficiency effort working group chairs:
- Facilities: Tara Bone, assistant vice chancellor for operations
- Procurement: Alan Kuebler, assistant vice chancellor for resource management
- Shared Services:
- Research Administration:
What is the SAVE Committee?
In the spring of 2014, Washington University launched efforts to identify opportunities for reducing costs and improving productivity across its campuses. As part of this initiative, employees submitted many ideas on how the university can improve efficiency. These ideas varied, with some requiring a small team to gather information, discuss and analyze the feasibility of implementing the suggested efficiency idea.
To this end, the university convened the Solutions for Achieving Value and Efficiency (SAVE) committee of university employees that addressed many of the submitted efficiency ideas. Committee members were chosen through an application process. Individuals serving on the SAVE Committee were assigned to a team and each team addressed an assigned efficiency idea. The role of the SAVE Committee was to:
- Work as part of a team to gather information regarding the team’s assigned efficiency idea.
- Conduct multiple interviews and information gathering sessions with different resources across the university who could provide input or guidance on the efficiency idea.
- Discuss and analyze, as a team, all findings. Based on these discussions, determine if the university could potentially implement the idea.
- Present to the SAVE Review Board (and potentially the Efficiency Initiative Implementation Working Group) the team’s findings and recommendations on the assigned efficiency idea.
The SAVE Committee was led by Tara Bone, assistant vice chancellor for operations. The committee met on a regular basis, and in these meetings each team provided updates to the committee chair and other teams on their progress.
The length of committee membership was one year with an opportunity to rejoin for a second term.
The initial deadline to submit applications for the SAVE committee was Nov. 5, 2014.
What changes were in the area of procurement?
Procurement is the process of buying goods and services from vendors outside the university. The university’s Resource Management department takes the lead role in this area, negotiating contracts for many of the goods and services all departments need, helping departments with their specialized needs, and developing the tools to find suppliers and place orders. In 2013, Resource Management, led by Alan Kuebler, assistant vice chancellor for resource management, negotiated and implemented a new office supplies contract with OfficeMax that resulted in annual savings of $1 million that primarily provided relief to departmental budgets. Resource Management also negotiated new agreements to supply less costly printer cartridges and provide medical supplies at a reduced cost. New contracts for pharmaceuticals were developed and are saving the university almost $2 million per year. Additional initiatives were explored related to desktop and laptop computers, scientific supplies, and services and supplies used by facilities management.
Will there be limits on what I can buy for my department in the future?
Resource Management was able to achieve significant savings by negotiating with vendors for favorable pricing and terms for an array of goods and services. Most of the resulting agreements provided departments with a range of choices, for both products and vendors. In some cases, however, in order to achieve the maximum level of savings, the range of products along with the number of contracted vendors might be reduced. Cost savings will not interfere with our ability to fulfill the needs of our faculty and researchers.
What is Shared Services?
A Shared Service Center (SSC) is a cooperative arrangement through which a group of units share administrative resources instead of maintaining their respective administrative staffs.
What is the process for determining where a Shared Service Center will occur on our campus?
A working group to refine our definition of Shared Service Centers and articulate the organizational options in the CFU met over a few months. This working group was chaired by Mike Dunlap, associate vice chancellor for finance & controller and Jill Totten, associate dean for administration & finance – School of Engineering. The working group included representatives from CFU departments and Danforth schools. This group interviewed and gathered a substantial amount of information from a handful of our peers who already have a Shared Service Center(s) in place.
What are the benefits of a Shared Services Center?
There are several benefits to establishing a Shared Service Center which include enabling units to focus on their core mission, improving operational effectiveness and reducing the cost of administrative “chores.” This provides a higher level and a more consistent level of service and better staff performance.
Where do you plan to implement shared service centers?
The initial proposal for shared services covered departments in the Central Fiscal Unit and focused on FIS and HRMS transaction processing. The Shared Services Working Group reviewed business transaction statistics, process flows and other details to determine the best way to structure a pilot program starting in the CFU. An understanding of the day-to-day work performed by employees in the CFU was required and occurred over a few months. One-on-one discussion with employees was be necessary but supervisors were informed in advance. Once a program is successfully in place in the CFU, consideration of applying this model to administrative services within the Danforth schools will occur.
What changes occurred in facilities management?
At the time, the university provided facilities maintenance through several units that served the Danforth Campus, the Medical Campus and housing (both on and off campus). We explored opportunities for efficiency within the operations of each of these groups and looked at ways for these units to more regularly collaborate and share resources. Most faculty, staff and students were not expected to see any significant difference in service they received from our facilities groups.
Led by Art Ackermann, associate vice chancellor for Danforth facilities, Mary Campbell, assistant vice chancellor for real estate and Justin Carroll, associate vice chancellor for students & dean of students, a thorough review of the Danforth Campus facilities organization and the maintenance operations of both on and off campus housing were conducted. The staff in these areas developed proposals for improved efficiency and worked with Huron Consulting Group, which helped facilitate the review process and provided technical advice.
What aspects of research administration support were reviewed?
Research Administration refers to administrative support provided by central offices such as the Office of Sponsored Research Services and Sponsored Projects Accounting and staff in the academic departments which are conducting the research. Huron reviewed research administration support in both the central offices and academic departments. They saw the biggest opportunities for efficiencies in organizing departmental research support on a shared services model, improvements in grants management information systems, and strategic management of core research facilities.
Sponsored research occurs across the university, but consistently around 85% of the funds awarded are received by the Medical School, so we organized our subsequent work in this area to reflect the different scale of research in different schools.
How was research administration at the School of Medicine addressed?
In the School of Medicine, work groups were established by the Management Council prior to Huron providing their assessment to the university. These work groups looked for ways to achieve efficiencies, reduce costs and enhance revenue in the research enterprise. One early achievement of this process was the formation of a Research Management Council, patterned on the School of Medicine’s (WUSM) Clinical Management Council that provides a forum for WUSM senior administrators to request and exchange information and to provide input on decisions that impact research operations. The work groups also developed metrics to analyze research administration support and considered new options for expense management and organizational models for research administration in the Medical School. These groups incorporated Huron’s recommendations into the options they considered.
How was research administration addressed on the Danforth Campus?
For Danforth Campus schools, a Danforth Research Administration Work Group was convened to generate ideas to improve efficiency or reduce cost in school, department, or central research administration support. This group assessed the needs and opportunities for improved efficiency in research administration support at the Danforth schools (primarily Arts & Sciences, SEAS and the Brown School). Denise McCartney, associate vice chancellor for research administration, Christa Johnson, assistant vice chancellor for research administration and Joe Gindhart, assistant vice chancellor for finance & director of sponsored projects accounting provided leadership in this area. This group also included representatives from the School of Medicine’s Management Council to facilitate coordination between the Medical School, the Danforth schools and central research and sponsored program services.
What about technology needs in the area of research administration?
One of the most important tools for research administration at the university is the Grants Management System. A small group of central administrators over the course of a year reviewed options to improve the systems. They evaluated the university’s needs, the gaps between those needs and what is currently in place, and the options available. This group considered systems available from several vendors and evaluated the option of continuing to develop tools internally.