AUSTIN, Texas—The University of Texas at Austin is expected to save about $5 million annually by using a series of “best practices” to reduce expenses at a time of decreasing state funding for public higher education.
Money-saving initiatives have included consolidating the university’s purchasing power by creating a centralized purchasing program, making more efficient use of office equipment to make better use of technology and reduce the cost of supplies, implementing new credit card payment options and replacing an old power generator with a more efficient model that also will serve future needs.
Kevin Hegarty, the university’s chief financial officer and vice president for financial affairs, said numerous financial challenges faced by the university have compelled administrators and staff to seek creative ways to continue providing essential needs of the university and its community. Some of these creative measures required a “culture change” on campus because they were so different from practices and procedures that had been in place for many years, he said.
Such a change was essential, for example, when the university moved from a decentralized system of purchasing goods and services to a more centralized system. The change did not come easily, Hegarty said.
“There was resistance to changing the culture of purchasing, with one obstacle being the thought by some that while change indeed was needed, it was needed in every area other than their own,” he said.
Hegarty said that office supplies, for example, previously were purchased from more than 200 vendors at varying prices. By consolidating the university’s combinedpurchasing power with two vendors, Office Depot and Hurricane Office Supply,the university was able to take advantage of substantial discounts it previouslylost, he said.
Hegarty said that while some people on campus regretted dropping their old vendors, the recurring savings to The University of Texas at Austin under centralizedpurchasing for office supplies, including purchase price, personnel savings,inventory reduction, space reduction and process savings, is estimated to be$2.7 million annually.
The university also has the potential to save about $1.5 million annually through an office equipment efficiency program recommended by the Office of FinancialAffairs. This program could reduce the thousands of individual machines the universityuses to copy, fax, print and scan to a 10th the number by using multi-functionmachines that do it all and are conveniently located for shared use.
“I’m not asking someone to walk down the hall to pick up their print but I am asking them to get up from their desk,” Hegarty said. “Sharing equipment just makes sense. We are doing it today in my portfolio and I can tell you it works.” He said most people don’t realize how expensive it is to operate individual function machines such as the personal printer on someone’s desk.
“Generally speaking, purchase two or three replacement cartridges for the machine and you have invested more than the original cost of the machine. Per page printing costs on such devices are generally two or three times the cost of a printed page from a multi-functional network connected device,” he said. “In a right-sized environment, the document production and reproduction process would be highly automated and sophisticated with machines that would do printing, faxing and scanning. The greatest savings would be on toner and supplies, maintenance agreements, phone lines, mainframe connections and additional soft costs.”
Another money-saving business practice that already has saved money for the university is the implementation of a new credit card policy that went into effect last April. Hegarty said it was needed to defray the growing cost to the university of providing electronic options for paying tuition and fees. The new policy has assessed a 1.75 percent convenience charge on credit card and debit card payments for tuition and mandatory fees. It also changes options by no longer accepting Visa debit, credit and check cards and by adding Discover to the list of payment options. Several meetings with student groups and a public hearing were held before the new policy was adopted.
“This change will benefit the university and all of its students by reducing the university’s projected budget shortfall by nearly $2 million each year,” Hegarty said.
He said many other areas of the university also have taken steps to save money and be more efficient, including the Utilities and Energy Management Department which is replacing some of the campus’ old power generation equipment, including some equipment that is about 50 years old. A 1958 cooling tower replaced last summer was so old it used wooden pipes.
The new equipment includes a 200-ton, 25-megawatt steam turbine generator that arrived on campus in November. It is expected to meet 30 years of energy growth needs for the university and complete a utilities infrastructure upgrade. Officials with the Utilities and Energy Management Department said the new equipment projects will pay for themselves in 30 years, while enabling the university to maintain the highest level of reliability and reduce emissions by as much as 70 percent.
Hegarty said the university will continue to explore innovative business practices and other opportunities to increase efficiency and save money. Tuition increases approved recently by the Board of Regents of the University of Texas System will help with some of the university’s immediate and short-term needs, but saving money now wherever possible will certainly earn the appreciation of students and taxpayers in the future, he said.
For more information contact: Robert D. Meckel, 512-475-7847.
