September 2, 2009

Cornell Hires Outsiders to Ease Budget Woes

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As part of its campus-wide campaign to drastically cut costs, Cornell has hired global consulting firm Bain & Company to examine the University’s non-academic infrastructure and spending.
The administration believes that despite the large price tag associated with such prominent consultants, the University will reap the benefits of an outside perspective for years to come.
Although administrators have pledged for a transparent strategic planning process, the University is not disclosing the details of its arrangement with Bain, and has yet to announce a decision about releasing Reimagining Cornell reports.

Selecting a Consulting Firm
Provost Kent Fuchs said in an interview with The Sun last week that he was originally opposed to hiring an outside consulting firm because he was planning to lead his own review of the University’s budget.
“When I decided that I wasn’t personally involved in a number of those areas [e.g. support services and procurement], I realized we needed professional support,” he said.
Fuchs conceded that the consultants will cost “a lot.”
“The cost of the consulting company is expensive … but it’s one-time work and the savings we get are recurring every year,” he said.
The University has asked Bain to find $100 million of yearly savings in the budget, though Fuchs expressed some doubt that it could be achieved. He said that Cornell’s Ithaca campus is facing a $135 million deficit over the next few years, even after $70 million in budget cuts was made in the spring.
Fuchs said that the University chose Bain after interviewing two other consulting companies.

Bain’s Work at UNC
Bain consultants arrived in Ithaca just weeks after completing a review of the finances and administrative structure at the University of North Carolina at Chapel Hill. UNC’s hiring of Bain earlier this year sparked some degree of controversy there.
UNC Chancellor Holden Thorp’s decision to use money from an anonymous donor to fund Bain’s work led some faculty members and employees to claim that the university was operating in too much secrecy.
At Cornell, Deputy University Spokesperson Simeon Moss ’73 confirmed that Bain will be paid by University funds, though he declined to discuss how much enlisting their services will cost or which university funds will be used.
Some UNC faculty members were also troubled with the confidentiality agreement that Bain struck with the UNC administration. It mandated that university employees speaking about Bain’s work had to adhere to “talking points mutually agreed to by the university and Bain.”
“That sounds like an abridgment of free speech to me,” Steven Wing, an associate professor of epidemiology at UNC, told Inside Higher Ed in April.
Moss declined to say whether the University had struck a similar agreement with Bain, saying that he wouldn’t discuss the nature of any agreements between Bain and the University.
Bain was also criticized by some at UNC for having minimal experience in the higher education industry.
Brenda Denzler, vice chairperson of the UNC Employee Forum, a group that represents university workers, told The Daily Tar Heel in April: “We think that there is some reason to be concerned that, of all the companies that might have been hired, the choice of Bain might be questioned because of little experience.”
Bain spokesperson Cheryl Krauss refuted this assertion, maintaining that the company has “more than 20 years” of experience with “dozens” of higher education clients, though she declined to disclose the names of those clients.
In July, Bain issued its final report for UNC, finding that the university’s administrative structure was too top-heavy — with as many as 10 layers of bureaucracy in some departments — and too decentralized, both of which create significant inefficiencies.
The 107-page report suggested, among other things, that the university cut back on administrative costs and centralize some of its services in order to save an estimated $89 million to $161 million annually. Only 40 to 60 percent of those savings would be realized at UNC due to the “regulatory constraints” of a public institution, Thorp told The Daily Tar Heel.
UNC-Chapel Hill enrolls about 28,000 students and has an annual operating budget of about $2 billion, compared to Cornell’s approximately 20,000 undergrads and expenditures of $1.797 billion this year for the Ithaca campus.

Scope of Consultant’s Work at Cornell
Cornell administrators stress that the consultants will only be evaluating non-academic units of the University and that Day Hall administration will be retaining the authority to make the final decisions on all changes. Cuts to academic programs will be proposed by eight Cornell-led task forces.
Fuchs said that Bain consultants will make very specific recommendations about where Cornell can save money and reduce costs.
“President Skorton and I agreed that, in the end, we will have to make those [final] decisions. There won’t be any non-disclosure,” Fuchs said.
Asked whether either Bain’s final report or the academic-related task force reports would be made public when complete, Moss deferred to comments Skorton plans to make later this week.