|UC's Working Smarter initiative, which seeks to redirect money from administration to academics and research, has produced $461 million in cost savings and new revenue so far.|
By Katherine Tam
The University of California has generated $460.9 million in cost savings and new revenue by operating more efficiently over the past three years and funneled that money directly to campuses to support the university's core academic and research missions.
Whether by buying insurance in bulk or rethinking the way campuses invest working capital, UC has found $294.3 million in cost savings and produced $166.6 million in fresh revenue since launching the Working Smarter initiative three years ago. The initiative is on track to reach or exceed its goal of producing $500 million in positive fiscal impact over five years.
In its third year, the initiative produced $171.3 million in administrative efficiencies through 10 different projects, making it Working Smarter's best year so far. Successful projects included negotiating discounted rates for employees traveling on UC business to save $7.9 million and better managing liabilities to save $32.0 million in insurance and workers compensation claims.
"Working Smarter is a critical investment in our future," said Nathan Brostrom, executive vice president of business operations. "These projects save UC money, generate new revenue and help the university become a more efficient, financially sustainable public institution. Although we are proud of our progress so far, we know there is a lot more work to be done systemwide."
Brostrom and Chief Financial Officer Peter Taylor will discuss Working Smarter's progress at the Board of Regents meeting on Sept. 18.
UC launched Working Smarter in 2010 to improve its administrative operations and generate cost savings and new revenue — often by updating antiquated systems or pooling resources — as the state cut back funding for the university. The initiative currently consists of 34 projects, many of which are still in the early phases of development or implementation and have not yet realized cost savings or generated new revenue. In the 2012–13 fiscal year, Working Smarter produced $94.1 million in cost savings and $77.2 million in fresh revenue from about a third of the initiative's projects.
"Given the uneven nature of state funding in recent years, we're working hard to do everything we can to preserve the quality and excellence of the university," Taylor said. "Every dollar from these projects goes directly to the campuses for academics and research."
Among the projects is the Statewide Energy Partnership, in which the university negotiates with California utilities for grants that, combined with other resources, help pay for hundreds of lighting, heating and air conditioning upgrades at its campuses. The improvements created a safer and more comfortable environment for students, faculty and staff while lowering utility costs by $18.5 million last year.
Through the Liquidity Management Program, campuses adopted a coordinated strategy to move some of their money into a longer-term investment pool that generated higher returns. The strategy, which involved studying historical trends and ensuring that campuses would have enough short-term liquidity on hand to meet operational needs, paid off and UC generated an additional $33.2 million in investment income in 2012–13.
Some Working Smarter projects may not produce significant cost savings, but lead to better coordination across the system and allow the university to meet its strategic goals.
UC TRIPS, for example, enables the university to buy travel insurance for researchers and students traveling on UC-related projects, regardless of which campus they are from. Before, campus departments purchased their own coverage for individual trips. By consolidating, the university reduces costs and can buy a more comprehensive policy that offers better protection.
Through UC TRIPS, the university has safely evacuated researchers and students from dangerous situations in foreign countries. For example, staff members have been evacuated from Haiti and Chile following earthquakes, Europe after a cloud of volcanic ash fell over the continent, and Egypt and Yemen when political unrest threatened security. UC TRIPS also assists when an employee or student has a medical emergency that requires treatment. By assessing the risk of traveling somewhere before the trip happens, the program can sometimes prevent the need for these emergency evacuations, which also helps reduce costs. In the 2012–13 fiscal year, UC TRIPS provided medical assistance or safely evacuated more than 700 employees and students.
UC also is looking to its counterparts for ideas. The university is partnering with California State University for opportunities where the two can share services and improve operational effectiveness. Building on existing cooperation, the two universities began exchanging ideas at their first shared services conference in July.
In Working Smarter's fourth year, the university will continue to look for systemwide administrative efficiencies but will also turn its attention to campus-specific projects.
"All of our campuses work hard to find ways to streamline the day-to-day operations and better serve their students, faculty and staff," said Cathy O'Sullivan, director of Working Smarter. "What works at one campus might work at another location too. We'll look closely at these smaller-scale projects and see where we can produce efficiencies at the local level."
Katherine Tam is a communications coordinator at UC's Office of the President.