Monday, February 11, 2013

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Efficiency strategies yield more than $2 billion in cost savings for UT System over past six years

AUSTIN - The University of Texas System has realized savings of more than $2 billion since 2007 thanks to targeted efforts to be as efficient as possible and employ innovative approaches that allow UT institutions to pool their resources, often providing more tools and options for students while reducing costs.

In 2012, the UT System saved $383 million, according to Executive Vice Chancellor for Business Affairs Scott Kelley. UT Board of Regents Chairman Gene Powell said he’s looking forward to hearing an update from Kelley, who is scheduled to give a report at Wednesday’s Regents meeting in Austin.

“This board has emphasized the need to find savings where we can and direct those savings to mission critical areas,” Powell said. “We still have a long way to go, but we have made some major progress. We are continuing to find ways to be more efficient, and we have some exciting initiatives on the horizon that will make a big impact.”

Methods for the impressive savings over the past five years include energy use reductions, supply chain alliance purchases, regional data centers, shared software applications, centralized investment and outsourcing.

“Productivity and efficiency are a central part of my Framework for Advancing Excellence and are issues we have been focusing on with laser intensity at The University of Texas System,” Chancellor Francisco G. Cigarroa said. “Wherever possible, we are looking for ways to maximize the impact of every dollar we spend and ensure that our students receive the ultimate benefit.”

The supply chain alliance was implemented in 2007 as a sophisticated strategic sourcing alliance and supply chain management project that allows the system to consolidate the considerable buying power of UT’s 15 institutions. Since 2007, the alliance has saved U.T. System institutions more than $91 million.

“We’re well positioned because our 15 institutions allow us to come together and look at things collectively and holistically,” Kelley said.

Of the $2 billion in savings from 2007-2012, about one-quarter is considered value added.

An example of value added: Use of the Texas Digital Library. In 2005, the UT System joined with four other Texas universities to establish the Texas Digital Library. Since 2007, the consolidated purchasing power and collective sharing of the digital library have saved participating institutions $426.7 million in scholarly journal subscriptions. Not every UT institutions would have purchased subscriptions to the journals they now can access, so for those institutions there is a value-added measure rather than a direct cost savings.

Individual campuses are doing their part as well. A panel put together by UT Austin President Bill Powers reported last month that the university could generate as much as $490 million over the next decade by doing things such as consolidating purchasing, selling excess electrical power and promoting the licensing of UT-generated technology to produce revenue.

Kelley estimates that by 2016, current efforts will have saved the UT System nearly $4 billion. But the approach must be thoughtful and deliberate, he said. Sometimes cutting costs can make a department less productive, while a careful investment can pay big returns later on.

About The University of Texas System

Educating students, providing care for patients, conducting groundbreaking research and serving the needs of Texans and the nation for more than 130 years, The University of Texas System is one of the largest public university systems in the United States, with nine academic universities, six health institutions and a fall 2012 enrollment of roughly 216,000. The UT System confers more than one-third of the state’s undergraduate degrees and educates nearly three-fourths of the state’s health care professionals annually. The UT System has an annual operating budget of $13.9 billion (FY 2013) including $3.1 billion in sponsored programs funded by federal, state, local and private sources. With more than 87,000 employees, the UT System is one of the largest employers in the state.

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