Streamlining the System in North Carolina

This article by James Smith, Krista Tillman, and Hilary Coman is from NACUBO's Business Officer magazine. The Presidents Advisory Committee on Efficiency and Effectiveness identified $32M in cash savings in the first year of the new presidency of Erskine Bowles:

The PACE project took a fundamentally different approach from cost-cutting exercises typically used on college campuses. Rather than simply reducing budgets by a certain percentage to meet a specific goal, PACE called first for cost identification. Core faculty functions—instruction, research, and public service—were not within the scope of this project.

The remaining costs, dubbed “enabling activities,” were then divided into 12 functional categories:

• Academic administration and support.
• Accountability activities.
• Advancement activities.
• Auxiliary services.
• Enrollment-related activities.
• External activities.
• Facilities management.
• Fiscal activities.
• Human resources.
• Information technology.
• Sponsored-project activities.
• Student-service activities.

Notably, the committee did not dismiss these enabling activities—many of which directly support students—as mere administrative overhead. As Barbara Carroll, vice chancellor for human resources at North Carolina State University, Raleigh, observed, “Employees perform such functions so that faculty members don’t have to—thereby freeing faculty to teach, conduct research, and extend public service.”

Next, the committee asked managers at each campus and within the general administration office to match employees’ time and effort against the range of enabling functions. PACE’s six-month schedule didn’t permit detailed time-and-effort analyses, so managers provided their best estimates of how employees allocated time among the functions. For example, if a dean spent 20 percent of his or her time on development, that portion of the full-time-equivalent position and the proportional cost was reported under the category of advancement activities, rather than academic administration.

Not surprisingly, this exercise of matching time and effort to core and enabling functions produced mountains of data. On behalf of all the campuses, North Carolina State University hosted the information-gathering process and built a database that allowed the committee to see where UNC was spending its money based on what employees were actually doing—not on chart of accounts definitions or on employees’ roles in their particular organizations.