Administrative Re-engineering
| To: The NYU Community | Date: 10/8/2008 |
| From: Executive Vice President Michael Alfano | |
| Re: An Update on the NYU Re-engineering Effort | |
In March, I wrote to you about the efforts the University would be undertaking to produce savings from the administrative budget to be redeployed into academic programs. The goal was and remains to re-engineer administrative processes over an 18-month period to produce structural annual savings of at least $25 million. Seven months have passed, and I write to update you on the highly productive efforts of our colleagues to date.
Administrative Savings
Guidelines established in March have been carefully followed. Specifically, there have been no changes that have had a negative impact upon either student or faculty services, individual school budgets, or faculty hiring. Also, it is important to note that the headcount of the University Administration has been reduced through attrition, not layoffs. Although the entirety of the $25 million savings are to come from the University Administration, a few schools have decided to engage in parallel re-engineering efforts to improve their own ability to invest in academic programs. We believe that these savings - re-invested in our academic programs - are necessary to sustain and accelerate the transformational momentum of NYU's past two decades.
I am pleased to report that, with almost a year remaining in the re-engineering process, more than $20 million in savings has been secured. Moreover, while some units produced more savings than others, every component of University Administration participated. Therefore, there is a high probability that the program will conclude successfully in fiscal year 2010.
Savings were achieved in a myriad of ways: energy efficiencies; staffing reorganization; reduction in incidental expenses like travel and supplies; and use of vendors who can provide equal service at lower cost to the University. For example, we will now use a company called Unum to administer sick pay and FMLA; WageWorks will administer our commutation reimbursement program; and we expanded our relationship with CBS, a facilities service and maintenance firm that has been our vendor for our classroom and administrative buildings, to include student residence maintenance. No NYU employees lost their jobs as a result of these steps, as they were either redeployed to other open slots in the University, or were hired by the contractor at the same pay and benefits. A progressive approach to administration also requires NYU to consider new organizational structures. In this regard, some human resource units have been consolidated for better service, and last week the merger of the Offices of the Controller and Treasurer was announced in anticipation that these two respected groups of people can be even more effective by sharing resources and career pathways.
The Work of the Task Forces
You may recall that five task forces were formed at the outset of the re-engineering effort to draw more widely on the formidable talents of NYU faculty and administrators. These task forces were charged with reviewing the effectiveness of a broad range of University-wide management functions: revenue programs, human resources policies, construction and facilities management optimization, information technology, and financial systems.
I am pleased to report that task force chairs - Sr. Vice Provost Dianne Rekow, Dean Charles Bertolami, Dean Robert Lapiner, Dean Richard Revesz, and Dean Thomas Cooley - have completed their guidelines to shape the work of each task force. They have initiated meetings, collected data and documents, and met with representatives of the University departments relating to their assignments. The membership and work of the taskforces is summarized on the following website: http://www.nyu.edu/task.forces/. Task force members welcome any suggestions you may have on their respective assignments. Our experience from various processes over the past year - the Framework 2031 process, the NYU Plans Space 2031 process, and the University Benefits Assessment Task Force - has taught us that these efforts are much improved when our community engages them and participates in the discussion.
Economic Distress in the World
Many in the NYU community have expressed concern about the current economic crisis now being felt worldwide and its impact on NYU. They also wonder about the linkage of NYU's efforts at re-engineering to produce savings and the state of the global economy. The announcements on re-engineering by President Sexton and me this past spring explained that NYU was not undertaking this effort because of financial stress at NYU, but rather to generate new funds to invest in academic programs and physical infrastructure needs. This continues to be true even in the face of the general widespread economic problems. However, NYU would be foolish not to acknowledge the worsening economic climate, which may make it more difficult both for our students and the University to borrow money respectively for tuition or construction programs. Indeed, Boston University announced last week that it has frozen all hiring and suspended new construction projects. NYU has no such plans now; however, we will redouble our efforts to find additional operational efficiencies, and we will carefully manage the expenditure of these savings as the world moves forward in confronting the credit crisis.
The University has taken several other measures in the past couple of years to make its budget more robust. For example, budget assumptions about tuition and cost increases are more cautious. Also last year NYU began to build a contingency reserve which will equal 10% of its operating budget in a few years. Further, at the direction of the Trustees, the NYU endowment has been shifted somewhat to more conservative investments in recent months. Finally, tuition revenue has been bolstered by a substantial increase in financial aid; NYU has proven its ability to draw down federal funds to provide loans directly to students in the event of additional bank failures; senior administrators continue to focus on the availability of traditional loan funds; and working capital and insurance plans are under intense scrutiny to ensure safety.
In Appreciation
Since the re-engineering plan by definition does not directly impact schools, students or faculty, most of the heavy lifting to deliver efficiency has come from the administrators in the University. Their restraint in spending, courage to embrace change, and creative thinking about better processes has catalyzed the success of the program to date. Our administrators are a tremendous asset to NYU, and we owe them a deep debt of gratitude. I thank them for their commitment, and encourage you to do the same. I also invite your continued support and ideas in the coming months.