Committee on Business Productivity

Photo Credit: Graeme Hamilton | Daily Texan Staff

The Parking Strategies Committee recently announced its report and recommendations for University parking, which include permit rate hikes for at least the next five years. These hikes were solicited in January 2013, when a group of 13 businesspeople released the Committee on Business Productivity’s report for UT. This report called for various rate hikes, privatization plans and budget cuts. The University administration has been faithfully implementing these recommendations despite campus opposition. The Shared Services plan, which called for eliminating 500 staff positions and centralizing the remaining workers (removing them from their home departments), was met with a rally, mass faculty letter, staff speak-outs and a student sit-in, all of which decried the plan as an undue step toward corporatization of the University. Corporatization is an openly stated goal of President William Powers Jr., who endorsed the Business Productivity recommendations and stated that the University ought to follow the “best business practices.”

On Tuesday, the parking committee presented its report at a campus-wide town hall meeting, at the Graduate Student Assembly meeting and at the Student Government meeting. The committee presented on Thursday at a Staff Council meeting. The permit rate hikes are not intended to fill in budget gaps, but simply to increase University revenue. This revenue will not return to the campus community, through employee wage increases or otherwise, and thus this move can only be understood as a business operation that seeks to increase profit from customers. (Bob Harkins, chair of the committee and associate vice president for campus safety and security, told the Texan it is to fund the construction of new parking garages, but this is not the same information that was presented at the town hall.) Indeed, Parking and Transportation Services is designed as a business to begin with, as its sole revenue stream is from paying customers. In FY 2013 - 2014, for example, PTS made about $1.1 million from citations, $2.7 million from permits and $11.7 million from parking facility fees — that is $15.5 million in total. 

This economic model leads to an antagonistic relationship between PTS and the University community it serves, as PTS can only increase revenue by charging the community more. The alternative would be to bring PTS into the public sphere by appropriating University funds to it — in FY 2013 - 2014, however, PTS received a whopping $0 from this coffer. So rather than abide by the cooperative mission of a public university, UT’s proposed permit rate hikes push PTS in a privatized direction. This is an openly stated goal, as the Parking Committee’s report states that the primary motivation is to tack toward market-level rates, which are higher than the University’s. For a public university concerned with affordability, this lesser cost is appropriate — for a business, it is simply lost revenue.

In fact, $0 is a misleading figure. To be more exact, PTS actually receives negative dollar amounts from the University coffer. In FY 2013 - 2014, it had $8 million in excess income over budgeted expenses, and this was returned to the University in its entirety, through debt service and transfers to various departments (such as UTPD) and reserves. PTS has had steadily increasing excess income since at least FY 2009 - 2010, when it was $6.7 million. Every year, however, this surplus has been drained by the University administration — the Parking Committee recommends intensifying this policy, and by Year 4 it has PTS in the red for over $200,000. This is not an unprecedented move by the corporatized administration. For FY 2013 - 2014, PTS had requested additional funds to prevent UT shuttle bus cuts but was denied even though there was a reserve fund of $800,000 from past PTS surpluses. As a result, Capital Metro announced cuts to shuttle routes in the fall of 2013, and these cuts especially impacted financially precarious graduate students.

However, the corporatized University administrators have outright contempt for the idea of affordability. In a Daily Texan news article, the Parking Committee’s chair, Bob Harkins, cited the 2012 Campus Master Plan’s recommendations as another motivation for the permit rate hikes. Harkins notes that these recommendations included the replacement of surface parking lots with more expensive garage structures. However, the plan also states that this will “eliminate spaces that currently provide relatively low-cost options for faculty and staff” — Harkins doesn’t mention this, which is curious given that he was on the committee for the Master Plan as well. The permit rate hikes will obviously exacerbate this affordability gap, but the Parking Committee’s report does not include any discussion on these issues. Whether this is contempt or simply negligence, it is clear that affordability is not a priority of the University administration. 

For students, it’s worth noting that “student leaders” like Student Government President Kori Rady match the administration’s priorities – Rady recently told the Texan that “there’s nothing [they] can do” to prevent PTS from raising parking rates. This blasé attitude is consistent from student leaders on affordability issues, such as tuition hikes. Rather than take initiative to discuss tuition, they consistently wait for UT System intervention, whenever that may happen. Last year, an ad hoc tuition committee pushed through tuition hikes within a three-week time frame, and then-Senate of College Councils President Andrew Clark stated that hikes were inevitable because “we are at the mercy of the UT System.” This failure of leadership continues, as Rady told the Texan he is unconcerned that the student leaders haven’t formed a new tuition committee this semester, and Senate of College Councils President Geetika Jerath said they may simply repeat the ad hoc process.

This contempt for affordability — whether about Shared Services, tuition hikes or parking rates — is particularly outrageous because the administrators have alternative and direct ways of increasing revenue. The most obvious is to request additional funds from the UT System’s massive Permanent University Fund, which currently holds over $17 billion — this is the largest public university endowment in the country. Alternatively, an in-house solution could address the fact that UT has some of the highest rates of executive pay in the country — over 100 (and increasing) University administrators earn more than $200,000. An administrative salary cap at $200,000, an amount that is still excessive compared to the average staff worker salary of $52,000, would annually save $20 million in revenue. The Parking Committee projects that its recommendations will generate $40 million in 10 years — the salary cap, which puts a minor dent in inequality at a public university, would generate $200 million in that same time. Those who want to fight for a public university can sign the petition against the hikes. 

Rathi is a computer science honors junior from Austin. 

Photo Credit: Graeme Hamilton | Daily Texan Staff

University parking rates are likely to increase over the next five years, according to the draft of a report by the Committee on Parking Strategies, which will present recommendations on how to increase parking revenue to the UT community next week.

Bob Harkins, chair of the committee and associate vice president for campus safety and security, said an increase in the cost of daily parking rates and faculty and student permits will be used to support the expenses of Parking and Transportation Services, or PTS, and the construction of new parking garages. 

“We haven’t raised parking rates a lot — less than 2 percent per year over the last 10 years,” Harkins said. He said PTS wanted to keep parking fees down since faculty salaries were not rising and the cost of attendance for students is increasing.

The Committee on Parking Strategies — made up of faculty, staff and students — was created in 2013 after the University’s Committee on Business Productivity published a report titled “Smarter Systems for a Greater UT,” stating that PTS could earn $96 million in revenue over the next 10 years by increasing parking prices.

“Currently, there is an annual gap of $9.2 million between market rates and what UT charges for parking,” the report said. “A rate increase of 7.5 percent per year for 15 years would put UT equal to the market.”

According to Harkins, after the Committee on Parking Strategies did its own research, it determined PTS could more realistically earn about $38 million in 10 years in revenue. The draft of the committee’s report shows the cost of Class C and Brazos Garage resident parking permits are expected to increase $6 and $23.60 per year, respectively. Resident permit costs in Manor Garage are not anticipated to rise.

Harkins said, even if the Committee on Business Productivity had not published its findings about University parking, PTS still needed to look into increasing parking rates.

In 2013, the UT System Board of Regents approved the 2012 Campus Master Plan, which outlines development of the University campus for the next 30 years. Harkins said, according to this plan, the University intends to build buildings on current surface parking lots, creating the need for the construction of more parking garages.

PTS director Bobby Stone said the number of parking spaces in surface lots is presently equal to the number of spaces in parking garages. Once new buildings begin replacing surface lots, Stone said he expects 75 percent of parking spots to be garage spaces.

“The impact that will have on the community at large is it costs me a lot more money to build a parking garage space than it does a surface space,” Stone said. “And it costs me a lot more money for me to maintain that space.”

Stone said, since PTS is an auxiliary department — meaning no faculty or staff salaries or tuition dollars go toward supporting the parking system — it needed to find a way to pay for new parking garages to be able to provide about the same number of spaces the University has now.

The Committee on Parking Strategies will present its recommendations to Student Government, and the Graduate Student Assembly and at a campus-wide town hall meeting Tuesday, along with the Staff Council on Thursday. 

SG President Kori Rady said it makes sense that PTS plans to increase parking rates. 

“Obviously, we don’t want the money to come from students, but there’s nothing we can really do about it, unfortunately,” Rady said. “The money has to come from somewhere.”

Photo Credit: Chelsea Purgahn | Daily Texan Staff

Administrators call the program a cost-saving, centralization initiative. Student protestors and some members of faculty council claim the plan will “dehumanize” certain University services, lead to an undetermined number of layoffs and increase the pressure on the staff who remain. Amidst the controversial claims, one fact is certain: as Kevin Hegarty, vice president and chief financial officer, told The Daily Texan in January, “Shared Services is not a matter of if, it’s a matter of when.”

The Committee on Business Productivity, a group charged with identifying ways for UT to cut costs, first introduced the idea of Shared Services in January 2013. Since then, the Shared Services Steering Committee has worked to determine how to implement the initiative on campus. The committee presented its final report and recommendations to President William Powers Jr. earlier this month.  

Since its introduction, Shared Services has been defined in many ways by different parties across campus, and the steering committee itself has undergone multiple roster changes at the request of student and faculty governance groups. Student protestors also oppose the involvement of Accenture, a consulting firm with a controversial history, in the plan’s development. Meanwhile, across the country, other universities have begun to adopt Shared Services plans — with varying levels of success. 

For administrators, Shared Services means cutting costs by centralizing services. At present, various colleges, departments and units across campus organize and deliver their procurement, finance, human resources and information technology services in different ways. According to Hegarty, 500 positions will be eliminated through the centralization process — ideally through natural attrition and retirement.

“Rather than Shared Services, it’s really sharing resources — sharing people,” Hegarty said. “We have people all over the campus, down to the department level, that do very similar activity. … These people do essentially the same thing. This whole concept is, if you amalgamate that work into fewer, more concentrated units, you achieve potentially a different result.”

According to the steering committee’s report, implementing Shared Services will cost the University approximately $35-$40 million. Each year thereafter, the University’s projected savings will sit somewhere between $30-$40 million annually, Hegarty said.

Some members of the UT community have voiced their concerns about the limited amount of hard data and evidence currently available to support the administration’s claims of increased productivity. The Faculty Council passed a resolution in January requesting more information about Shared Services and also asked the committee to add two non-administrative UT employees to its ranks. After the resolution passed, one faculty member and one staff member were added to the committee. 

A month later, the Graduate Student Assembly also passed a resolution regarding Shared Services, requesting more information about the initiative and for a graduate student to be added to the committee. A graduate student was added to the committee after the resolution was passed.

“The issue isn’t with Shared Services; The issue is with the manner in which it’s being rolled out,” said David Villarreal, communications director and president-elect for GSA and one of the resolution’s authors. “The only thing we really need is our involvement. At the end of the day, we’re not trying to stop Shared Services in its tracks. We’re just saying, as it’s being developed, let us know what’s going on so that we know and so that we can be part of the conversation.”

Villarreal said he is concerned about the projected elimination of 500 positions.

“[Hegarty] has outlined a plan that explained how this would happen, under the assumption that those 500 jobs would be voluntarily eliminated within an extremely short calendar,” Villarreal said. “If he had given a more realistic plan and one that just didn’t paint the rosiest of pictures on the job loss, I would probably have helped him and supported him at the end of the day.” 

According to Hegarty, UT already lays off 150-200 individuals every year. Hegarty said individuals criticizing the plan do not understand that the University’s current business model is not sustainable.

“We’re getting starved on the academic end for dollars to hire teachers and retain people,” Hegarty said.

In February, hundreds of students, university employees and community members marched on campus against the Shared Services Plan. Bianca Hinz-Foley, Plan II junior spokeswoman for United Students Against Sweatshops, said she is primarily concerned with Accenture’s involvement in the Shared Service initiative.

As well as assisting in the project management of the Committee on Business Productivity, Accenture also played a role in collecting data for the steering committee. According to Hegarty, the combined cost of these services amounted to more than $4 million. Two members of the Committee on Business Productivity and one member of the steering committee are former Accenture employees.

“Some of the big movers and shakers behind the Shared Services Plan at UT are either current or former Accenture executives,” Hinz-Foley said. “That’s troubling because we want the University to make changes the community wants and not something an outside corporation wants to implement.” 

In 2006, the legislature outsourced the call centers for the state’s food stamps and Medicaid programs to Accenture in an effort to save money. The state terminated the contract in 2007 after issues with technical operations led to problems with benefit distribution. According to a report from the Austin-Statesman in 2009, the state of Texas paid Accenture approximately $243 million for their services.

UT is not the only university with ties to Accenture. The University of Michigan has an approximately $11.7 million contract with Accenture for cost-cut consulting, including Shared Services. Since 2003, the University of Michigan has paid Accenture a total of about $19.4 million, according to documents provided by Michigan spokesman Rick Fitzgerald. 

“We used Accenture, the consulting firm, to help us identify areas [conducive to shared services], how much we might save, what the scope of the operations that could be pulled into a shared services operation — so that’s been going on for a couple of years,” Fitzgerald said.

In November 2013, approximately 1,000 faculty members signed and submitted a letter to Michigan administrators, criticizing the centralization efforts. Fitzgerald said Michigan’s plan for implementing Shared Services was altered as a direct result of this sort of feedback from faculty.

“What we found as we started rolling this out is that the campus community, primarily the faculty, didn’t really have enough information about how [shared services] would be working,” Fitzgerald said. “We learned that we needed to slow down the process and make sure we gave the schools and colleges more time to figure that out.”

The University of California-Berkeley is currently in the process of finalizing the implementation of shared services on their campus. According to Berkeley spokeswoman Melanie Hurley, Campus Shared Services, which was launched in January 2013, currently provides business and financial services to 60 percent of the campus. 

Hurley said Campus Shared Services was developed through more than 20 “work groups” on Berkeley’s campus. 

“Throughout implementation, the team has relied on campus work groups made up of staff, faculty and students who collaborate with [Campus Shared Services] staff to identify the most effective processes for Berkeley,” Hurley said in an email. 

According to Hurley, savings will not actualize until the 2016 fiscal year, when Berkeley will see $6.9 million in annual savings. Hurley said, by 2020, annual savings are predicted to increase to $13.7 million.  

At UT, Hegarty said the end goal of Shared Services is to ensure that the University can operate efficiently.

“We want to minimize administrative costs to maximize investment in our core missions,” Hegarty said. “We’re not in the business of just doing administration for the sake of doing administration. We’re not in the business of just employing people for the sake of employing people.”

President William Powers Jr. speaks in the Avaya Auditorium in January. He called for increasing UT’s efficiency by cutting costs.

Photo Credit: Pu Ying Huang | Daily Texan Staff

On Jan. 29, 2013, President William Powers Jr. gave a speech called “Smarter Systems for a Greater UT,” which announced a report written by the Committee on Business Productivity, which consists of 13 business leaders, about how to increase revenue. The recommendations ranged from increasing food and parking costs to layoffs and downsizing.

Since then, UT has rolled out one of the report’s proposals: the “UT Shared Services Plan.” Shared Services consolidates essential administrative functions such as IT, HR, Finance and Procurement into one administrative organization, displacing localized personnel devoted to providing these services to departments and other units. Although UT Chief Financial Officer Kevin Hegarty has been telling a happy story about this plan, members of the UT community should be alarmed for the following reasons:

Shared Services is expensive and risky. UT, under the guidance of recommendations from the consulting and outsourcing firm Accenture LLP, plans to spend more than $150 million over 10 years to consolidate and to reduce its workforce by 500 people in IT, HR and Finance over the next five years. The projected net benefit is only $120-$140 million over the 10-year period. The proposal presents no measures of likely success or failure. We urgently need a transparent discussion of the plan’s risks.

Shared Services is not transparent. Accenture was paid $960,000 for the work they did to produce a report that relies on undisclosed research. The committee, chaired by Steve Rohleder, an executive of Accenture, also has representatives on the Shared Services implementation committee. The University must make public the extent of Accenture’s involvement and how much the company stands to gain. 

Accenture is a bad choice. In 2005, the state of Texas awarded the company an $899 million contract to operate the state’s food stamp authorization system (along with oversight of the Children’s Health Insurance Program and Medicaid enrollment call centers), which they tanked, leaving thousands of Texans unable to feed their families. In 2011, Accenture was sued for defrauding the federal government in a boondoggle that cost taxpayers millions. What’s in store for us?

University workers do not like Shared Services. Four years ago, Shared Services was implemented with Accenture at Yale, and contrary to what Hegarty might tell you, professors, staff and students have protested its effects, including the loss of department administrative personnel and the doubling of work for employees who remain. 

We can raise our voices. The Texas State Employees Union, which includes faculty, staff and graduate student employees, opposes this cloakroom plan because it takes away jobs, involves a scandalous corporate privatizer and entails great expense and financial risk.

We call on UT to release all data related to the plan including an itemized list and timelines of specific job classifications which will be eliminated, an itemized list and timelines of the specific jobs which will be consolidated, including salary levels, and an itemized list of projected quarterly expenses/investments and savings/profits over the next 10 years. TSEU is further calling on UT to give employee and student groups (including TSEU) representation on the “Shared Services” planning committees and make committee meetings open to the public as well as release recordings and transcriptions of these meetings.

We invite readers to an information session with UT alumnus and scholar Richard Ovetz, “Shared Services and Other Bad Ideas,” on Thursday at 7 p.m. in Room 3.124 of Sid Richardson Hall (LBJ School). The talk will be introduced by Democratic Texas State representative Elliot Naishtat.

Tallman is a graduate student in linguistics, a member of the UT Graduate Student Workers and the Texas State Employees Union. Cloud is an associate professor of communication and of rhetoric and writing.

A brief history:

In January, the Committee on Business Productivity released a plan titled “Smarter Systems for a Greater UT” that outlined recommendations on how to increase the University’s productivity and efficiency. This plan recommended a centralization of University services, leading to the birth of the “UT Shared Services Plan”.

President William Powers Jr. called the initiative to centralize services a “no-brainer” in a report to the University community on Jan. 29.

The Shared Services Committee was formed in order to provide feedback and guidance on the plan through its development.

 

Goal:

To create a more financially efficient and productive operation of the University by centralizing human resources, IT, finance and procurement operations.

 

Recommended Actions:

§  Create a singular administrative organization for human resources, IT, finance and procurement operations — rather than having individual services offered at different colleges and departments, as is currently the case.

 

§  Replace the current virtual administrative network, “DEFINE,” with new system, “Workday” in order to keep up with current technology.

 

§  Reduce the work force of the administrative fields in question — human resources, IT, finance and procurement — by 500 jobs over four years. The report projects that this can be done primarily through attrition. Currently, there are an estimated 4,500 employees in these fields. Kevin Hegarty, vice president and chief financial officer, said the quota of 500 is a conservative estimation and could be subject to change. 

 

§  Hegarty said the University will implement a pilot program on a large university unit before applying the plan campus-wide.

 

Dollars and Cents:

§  Projected savings of the plan: $280 million to $320 million over 10 years.

 

§  Projected cost of the plan: $160 million to $180 million over 10 years.

 

§  Projected net benefit of the plan: $120 million to $140 million over 10 years.

 

 Timeline:

§  A final copy of the plan will reportedly be released in January of 2014.

 

§  Hegarty said the pilot could be expected in eight to 10 months.

 

§  The elimination of all 500 jobs is expected to be complete by the fourth year of the plan’s implementation.

 

§  The sixth year of the plan’s implementation is expected to yield a payback.

Students rally against the Smarter System privatization plan during a street performance put on by the Save Our Community Coalition. The performance outlined the creation of the Smarter System plan and was followed by a march into the tower by protesters.

Ethan Oblak | Daily Texan Staff

Photo Credit: Ethan Oblak | Daily Texan Staff

Chants rang through the halls of the Tower as members of Save Our Community Coalition went to deliver a letter to President William Powers Jr. Wednesday, expressing their concern with an outsourcing plan Powers’ Committee on Business Productivity released last year.

The committee, composed of business leaders outside the UT community, wrote the plan titled “Smarter Systems for a Greater UT” to identify untapped revenue sources and methods the University might use to increase efficiency. One recommendation the report made was a potential increase in parking, food and housing prices.

The group began its protest with a street performance providing background on the Smarter Systems plan. After the performance, the coalition walked into the Tower to
request a meeting with Powers about the group’s unhappiness with the plan.

The coalition began last semester in response to the Smarter Systems plan, and is composed of student organizations, faith leaders, local nonprofit organizations and the Texas State Employees Union, which protests the outsourcing and privatization of on-campus job and services. The coalition was formed by the United Students Against Sweatshops, a group which aims to protect the rights of student workers on and off campus. 

“Taking outsourcing off the table is a basic, minimal request from the community because this plan is wide reaching and we already know that outsourcing and privatization has a devastating effects on local economies and our community as a whole,” Plan II junior Bianca Hinz-Foley said.  

The president’s office was locked when the group marched up the narrow staircases of the building. 

According to coalition member Sophie Poitier, a philosophy and rhetoric senior, the group plans to send an email since they were unable to deliver the letter directly. Poitier said the coalition will keep running the campaign until they get an acceptable response.

“We don’t think it’s right for a university to cut costs when humans are involved,” Poitier said. “There are other ways costs could be cut than a person’s livelihood.”

Alonzo Mendoza, a 2012 UT alumnus who graduated with a masters in special education, has been involved with the United Students Against Sweatshops for several years. Mendoza has been in the coalition since it was founded in January.

“[The protest] is important to me because even though I’m not being directly affected by this, the reputation of UT is at stake,” Mendoza said. “As an [alumnus], I want to be proud of my university.”

President William Powers Jr. speaks in the Avaya Auditorium in January. He called for increasing UT’s efficiency by cutting costs.

Photo Credit: Pu Ying Huang | Daily Texan Staff

Committees established by the University are set to deliver efficiency reports five months from now in response to proposals to restructure non-academic functions at UT.

In January, President William Powers Jr. released findings from an outside commission of industry leaders he appointed to examine ways the University could cut costs as state funding to UT declines. In its report, the Committee on Business Productivity claims that various changes to administrative functions, assets and commercialization practices could save the University $490 million over the next decade.

A task force headed by Kevin Hegarty, vice president and chief financial officer, has now developed several committees and subcommittees that will consult with staff members, students and industry professionals on ways to increase efficiency in University operations and address the proposals. Several options are available, including centralizing functions, raising rates or outsourcing labor in some services.

A number of student groups on campus have rallied against the proposals in multiple protests and meetings since January. Members of United Students Against Sweatshops, who met with Hegarty in May, have been especially concerned with the involvement of Accenture, a consulting company, in crafting the efficiency proposals.

The state terminated a contract with Accenture in 2008 after the company mishandled the management of Texas’ food stamps and children’s health care programs. Stephen Rohleder, a UT alumnus and executive at Accenture, chaired the Committee on Business Productivity.

Hegarty said the University had established a trustworthy relationship while working with Accenture, and the University had full control over the direction of the future implementation of proposals.

“You may have one opinion of the brand, but what matters is the people,” Hegarty said. “What we have found when working with Accenture are people we know now we like who have deep experience at institutions like ours, Berkeley and UNC.”

Mary Knight, associate vice president in the Office of the Chief Financial Officer, will head the committee on shared services, which will examine ways to centralize administrative services and business functions. 

A former managerial employee told The Daily Texan in February he believed he had been fired because the University did not want to pay his state benefits. Knight said these situations would be unlikely during future centralization efforts, which she said would rely on natural employee attrition.

“Although there might be isolated cases, I don’t know of any situations where decisions [on layoffs] have been made based on benefits,” Knight said. “A lot of the benefits are paid centrally anyways, so leadership is not looking at who costs more based on insurance coverage.”

One department facing changes is Parking and Transportation Services, which could either outsource some of its functions or raise rates by as much as nine or 10 percent a year for the next 15 years, said Bob Harkins, associate vice president for campus safety and security and chairman of the parking committee.

Harkins said the difficult choices between raising rates or outsourcing services echo patterns in other states where financial resources for higher education have tightened, such as Arizona and Ohio, and could pose some additional financial burden on students.

“I think quite frankly everybody is going through the whole outsourcing bit,” Harkins said. “How much more can we ask the students to pay until we price ourselves out of business, and how much can we afford to pay for the quality education that constitution of the state of Texas calls for?”

Chair of staff council Erika Frahm leads a discussion about UT staff interests at the UT Staff Council General Assembly on Thursday afternoon. 

Photo Credit: Yamel Thompson | Daily Texan Staff

To prepare questions for UT administrators, the Staff Council asked University employees to share concerns about coming employment changes affecting the 40 Acres at the council’s monthly meeting Thursday. 

The council’s officers will meet with President William Powers Jr. on Friday to ask administrators about how last month’s report from the Committee on Business Productivity will affect various departments across campus, and how staff will be involved in that discussion.

The 13-member committee, formed by Powers last spring, recommended a number of proposals to cut costs for the University, including centralizing administrative functions and raising rates or outsourcing parts of UT food, housing and parking services.

“What we are hearing now from the president’s office is that this is going to be a very slow process, not an immediate mandate,” said Staff Council chairwoman Erika Frahm. “We understand nerves are frayed and tensions are running high, but that’s what we’re hearing right now.”

Vicki Grier, a research coordinator in the College of Natural Sciences, said she is concerned about the quality of work done if services like custodial work are outsourced in the future.

“We’ve already had custodial outsourced at [The Dell Pediatric Institute] and the people we’ve brought in have been absolutely horrible and [there have] been constant complaints,” Grier said. “The savings cannot be worth whatever the quality loss is.” 

Stuart Tendler, a graduate admissions coordinator in the College of Liberal Arts and liaison for Parking Transportation Services, said PTS would have to completely reconfigure its business model to adjust to the new proposals. The Committee advised UT to raise parking rates by 7.5 percent every year for the next 15 years to reach market value. 

“The bottom line is that PTS is changing and being told that it has to contribute money to the University,” Tendler said. “Until this year they’ve only funded their own operations and now they’ve been identified as a unit that can contribute a return to the University’s budget. And that has implications for everyone on campus.”

Lizbell Bevington, an administrative associate in Facilities Services, said she was already worried about the possibility of losing her job because of restructuring. 

“In this harsh economy, people are wondering where they are going to go if something happens,” Bevington said. “In my office alone, I’ve had two managers and one assistant go. I fear that it’s going to happen, although it may not happen soon. And if it happens, how much time will I have [to find a job]?”

Powers will be present at the next Staff Council meeting in March to meet with any staff wanting to share their concerns. In the meantime, the Staff Council is also trying to organize an open forum meeting to engage UT community and administration in a discussion about the proposals, Frahm said.

Published on February 22, 2013 as "Staff council to hear budget worries". 

This UT alumnus’ managerial position was terminated in 2008 after 13 years of service at UT. He said he was the sole breadwinner for his new family of two kids and a stay-at-home wife at the time of his layoff. He asked not to be named because his family members are still employed by the University.

Photo Credit: Marisa Vasquez | Daily Texan Staff

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 

President William Powers Jr. speaks in the Avaya Auditorium in January. He called for increasing UT’s efficiency by cutting costs.

Photo Credit: Pu Ying Huang | Daily Texan Staff

Stressing efficiency as a means for increasing revenue, President William Powers Jr. called for instituting cost-saving measures in administrative functions and employing University assets thoughtfully as recommended by a report on the University’s operational structure.

The report, produced by the Committee on Business Productivity, which Powers formed in April 2012, contains recommendations for optimizing finances in three arenas: administrative services, energy-producing assets and technology commercialization. The report claims that the recommendations will yield roughly $490 million for the University if implemented over the course of the next 10 years.

Among the recommendations geared toward raising revenue is a proposal to raise UT’s food, housing and parking rates, which would bring them “more in line with market values,” Powers said. He stressed that there will not be a flat increase in services applied to UT students.

“Some students need more help in their dorm rate than other students,” Powers said. “We will take into account the different needs of
different students.”

Business freshman Rachel Swaldi said she felt it was unreasonable to consider raising parking prices. “Parking is already ridiculously expensive here,” Swaldi said. “Fewer people will be willing to park here if it gets any worse.” 

Helen Smith, math and Plan II honors freshman, said she agreed that parking was expensive, but that she trusted the administration. 

“It’s important to brainstorm ways to pay for growth, so I would accept raises on parking and food, even if I would prefer other options,” Smith said.

The report also recommends consolidating several services to create a centralized administrative model. Kevin Hegarty, UT’s executive vice president and chief financial officer, will lead the eventual implementation of some of the committee’s strategies. Hegarty said combining similar positions in different departments is an example of a move that can be made to increase efficiency. 

“Implementation of shared services is a very common practice, almost a given practice in the for-profit world,” Hegarty said. “But even in the education world, where it’s not a common practice, there are other institutions that have done this. It’s leading edge, not cutting edge.”

Erika Frahm, chairwoman of the University’s Staff Council, said the long-term nature of the report will help minimize job loss as UT. 

“A 10-year slow, steady and thoughtful plan is a smart move, and hopefully not something that people are immediately nervous about,” Frahm said. “Transforming services doesn’t necessarily mean slashing and burning jobs — it just means adjusting the work we do and how we do it.”

Frahm said natural staff attrition will also contribute to a smooth transition. 

“I think our attrition rate of 4,000 jobs over the course of five years actually creates a maneuverability we need to adapt towards new and more efficient processes,” Frahm said.

In his speech, Powers also emphasized that outsourcing does not necessarily mean immediately eliminating a long list of jobs. 

“Our staff will naturally want to know, in plain English, ‘What will this mean for my job?,’” Powers said. “There is no one answer to that. For some, the answer may be that their job will remain but in a different building or with a new supervisor, or in a different structure.”

Regarding efforts toward asset utilization, the report recommended that UT consider selling surplus electricity on the open market and incentivizing deans to conserve power within their colleges.

Finally, the report recommends commercialization efforts focus on quantity and let the market decide what works.

“The committee found that the best performers were universities who concentrated their efforts on increasing the sheer volume of licenses, and did not focus on trying to prejudge which pieces of intellectual property would prove to be winners or losers in the marketplace,” Powers said in his speech.