If the University accepts proposals to outsource on-campus dining, parking and housing services, it would be the latest step in a long history of outsourcing at UT stretching back through the early 1990s.
President William Powers Jr. appointed a 13-member Committee on Business Productivity last year, which spent almost $1 million in University funds to perform an efficiency study of the University and to identify potential untapped sources of revenue. The committee claims that by reorganizing the University’s administrative functions, assets and commercialization practices, the University could save $490 million in the next decade.
Since the report’s delivery last month, Kevin Hegarty, UT’s vice president and chief financial officer, has begun forming a task force to examine the proposals and look at ways the University could move forward. There are several options on the table, including outsourcing or raising rates on on-campus food, parking and housing services.
The Committee on Business Productivity estimated UT would stand to save $92.2 million in 10 years should it outsource all of these functions.
Such a move would not be unprecedented, Hegarty said. Unlike Texas A&M University, which outsourced 1,647 maintenance, landscaping and dining service jobs for the first time last year, UT has already integrated significant outsourcing in its maintenance, landscaping and custodial jobs.
“If you look around today, we already have a lot of outsourcing,” Hegarty said. “The people at Wendy’s don’t work for us. Eight million square feet of our 20 million square feet is maintained by independent custodians. A&M has not taken that over time. We had a lot more opportunity, and I think we did it in a very thoughtful way.”
He said his office does not have an estimate of the number of outsourced workers employed on the 40 Acres as of press time.
Outsourced services at UT range from University email accounts managed by Google to food services run by Compass Group USA at the AT&T Executive Education and Conference Center. Outsourcing does not always mean replacing existing staff and can include the use of contractors to fill new jobs.
Recently, the University outsourced custodial services at the J.J. Pickle Research Campus to SSC Service Solutions. Thirty-five employees were returned to the main campus, while seven employees in managerial positions were laid off.
This restructuring saved $500,000 in labor costs, which was put in its reserves. Of the seven managerial employees, only one is known to have been rehired at the University, said Steven Kraal, senior associate vice president of the Office of Campus Planning and Facilities Management.
Facilities Services alone outsources two million square feet of cleanable space to contracted custodians, which Kraal said allows the University to bring in outside assistance in the event of a sudden event on campus that demands additional assistance.
The University’s relationships with its outsourced services are bound by their contract, Kraal said, meaning outside hires are only one of many factors determining the quality and condition of work done on campus.
“I think that saying outsourcing is totally bad or outsourcing is totally good is probably thinking too small,” Kraal said. “I think [the Committee’s proposals] are applied reasonably. The report has given general outlines, and it’s been very clear that there is going to be a lot of engagement.”
AN OPPORTUNITY TO SELF-DIRECT
As UT continues piecemeal outsourcing, the condition of workers affected by contracting is an important question not just for current workers, but also for future ones, said Anne Lewis, a radio-television-film senior lecturer and Texas State Employees Union organizer.
“The workers outsourced don’t really get impacted [because of promises for wages and benefits], but the future workers will not get those state worker jobs,” Lewis said.
But not all employees, including those whose positions face consolidation as the University centralizes administrative functions, will be able to avoid layoffs.
A former employee of the Cockrell School of Engineering, who asked to remain anonymous because he has family employed by UT, said the University consolidated his managerial position before winter break in 2008.
“I had been working for UT for 13 years, and it had been my hope that I could have continued to work with the University or another state institution to preserve the benefits I had accumulated,” said the former employee, who now works for Austin Community College after three years of unemployment. “All I can say is that the guy they brought in to replace me was a younger person, and I can see why it made more sense to go to him because he didn’t have the same payment obligations I had.”
Regarding the report, Martha Hilley, Faculty Council chairwoman and professor of music, said the proposals for bringing University assets closer to “market value” should have included equal emphasis on the competitiveness of faculty salary.
“We’re kind of also below market price of salaries,” Hilley said. “There’s a lot of wisdom in what the committee turned in, and I liked that one of the first things Powers said is that the University is not a business. That’s a fear that a lot of faculty have, that the University is just turning into a business.”
Among the country’s 1,251 doctoral-granting institutions, the salaries of UT assistant and full professors rank in the 80th percentile and the salaries of associate professors rank in the 67th percentile, according to a 2012 study by The Chronicle of Higher Education.
Some faculty members are concerned about the impact price increases could have on student debt, Hilley said, which has also increased as the cost of tuition has increased 40 percent from its 2004 levels.
“Any time you see that housing, food and parking are going to go up, and you're thinking about student debt in the first place, you hate to see that this is something like will probably happen,” Hilley said. “Maybe it will happen over a long period of time, but it still will.”
In an interview with The Daily Texan, Hegarty said higher rates of outsourcing may mean wealthy students will have to pay more for housing, parking and food than students from low-income households.
“An increase in a housing or food rate may result in zero net sum new funds for the University,” Hegarty said. “It may mean that that son or daughter coming from Highland Park is going to pay more so that person coming from a very distressed area in Texas that can’t pay receives the benefit of that subsidy so they don’t have to incur more debt.”
By addressing the proposals, the goal of the University is to gain its own financial independence as state funding declines, Hegarty said, including gaining funds to sustain research and pay for competitive employee salaries. State funding makes up about 13 percent of the University’s current budget.
Hegarty said the University can try to argue for more state funding, which has not worked in recent years, or “continue to look for opportunities to do our business in a different way in an area that is not core to our mission.”
“It’s an opportunity to somewhat self-heal or self-direct,” Hegarty said.
A BRIEF HISTORY OF OUTSOURCING
Over the past few decades, UT has outsourced various functions, ranging from custodial maintenance to email accounts.
In 1990, UT’s Division of Recreational Sports outsourced custodial jobs through Royal Kim Maintenance, which employs between 10 and 12 contractors seasonally at UT. Recently, RecSports also began outsourcing custodial and landscape services as well as cardio equipment repair, employing an additional five to six contractors.
“Because recreational facilities are unique spaces with lots of specialized areas, outsourcing some services was the best choice for us,” RecSports associate director Jennifer Speer said. Speer added that no jobs were lost in this process because the University did not employ staff in these areas.
In the following year, 1991, the University Union began outsourcing its cafeteria services, bringing in businesses like Taco Bell and Wendy’s to provide concessions.
Texas Athletics started outsourcing labor for dining previously employed by the University at all athletic events in 1994 through Marriott Management Services, which was bought by Sodexo in 1998. As detailed in a report last spring by The Daily Texan, the French-based Sodexo has been accused of numerous worker rights and human rights violations, some in the United States.
Following a 2010 Human Rights Watch report on Sodexo’s alleged labor practices, the company lost 11 contracts with universities and athletic programs in 2011. Sodexo netted $3 million in profits for Texas Athletics in 2011.
Sodexo was paid $1,515,472 by UT in fiscal year 2012-2013, according to state comptroller reports.
In 2005 the University outsourced its Central Receiving and Delivery division to MagRabbit. Central Receiving at that time managed all deliveries on campus from suppliers of office and workplace supplies.
The move was estimated to save the University about $200,000 a year, and 19 employees then working at MagRabbit were fired but offered seven months time to find a new job. Despite “priority status” as applicants to UT job openings, 13 of the former employees had yet to find new jobs after three months of unemployment, according to articles from The Daily Texan.
There are currently 1,009 staff in the Division of Housing and Food Service, of whom 374 are full-time and eligible for work-related benefits. No plans currently exist regarding how these jobs will be affected by the proposals discussed in this article.
Printed on Thursday, February 21, 2013 as: UT may continue history of outsourcing