- Operational Review Update - October 12, 2015
- Operational Review Update - May 21, 2015
- Budget Review Update - March 5, 2015
- Operational Review Update - March 5, 2015
The Operational Review was designed to find ways to operate more effectively and more efficiently to ensure that resources are available for Tulane University to advance its academic mission. The initial wave of the Operational Review effort resulted in the following priority initiatives:
- Procurement and Travel Management
- Summer Programming
- Student Housing Utilization
- Employee Healthcare Management
- Renegotiation of Energy Contract
- Student Health Center Third Party Billing
- Enrollment Strategy
- Voluntary Separation Program and Workforce Policy Changes
Implementation plans are being developed for each initiative described here:
PROCUREMENT AND TRAVEL MANAGEMENT
The Case for Change: The review of procurement indicated that the function is widely distributed across Tulane, with limited policy and process enforcement, suggesting disaggregated and unleveraged spending. The evaluation of approximately $80 million in university spending, across nine commodities areas, suggested an opportunity to save 3% to 6% on selected commodities.
Initiative Description: Implementation efforts will focus on both strategic sourcing and demand management (e.g., directing users to negotiated products and services), as well as the implementation of purchasing technology to streamline processes (e.g., electronic catalogues). Initial implementation plans are to focus on a phased implementation, starting with strategic sourcing for desktops, laptops, and office products. While savings are expected to accrue quickly, it is anticipated that these implementation efforts take 12-14 months. This initiative also will include the utilization of a travel agency and booking tool to improve the traveler experience and reduce travel costs.
The Case for Change: During initial campus interviews, numerous stakeholders pointed the Steering Committee to summer programming as an opportunity to better utilize capacity and resources during the summer months. Upon studying the issue, the Committee learned that summer programming activity had been somewhat stagnant in recent years, despite increases in academic programs serving students during the fall and spring semesters.
Initiative Description: The recommendation emerged to more effectively coordinate the marketing and pricing of credit-bearing and non-credit-bearing summer programs. Implementation efforts are initially focused on establishing roles for the coordination and marketing of summer offerings and augmenting on-campus summer programming services. Implementation efforts are underway and the Committee anticipates seeing initial results in the summer of 2016.
STUDENT HOUSING UTILIZATION
The Case for Change: Working with Tulane’s Department of Housing and Residence Life, the Committee agreed that housing capacity could be better utilized. In recent years, housing vacancies were driven in part from the need for a systematic approach to forecasting and tracking occupancy for incoming students (freshmen, transfers, and incoming study abroad students). There was also an opportunity to utilize housing spaces for student populations such as international graduate students who would prefer to live on-campus in apartment-style housing. Further, opportunities appeared to exist to increase on-campus housing utilization by sophomores, juniors, and seniors.
Initiative Description: Implementation, which already has been initiated by the Department of Housing and Residence Life and has yielded significant success, focuses on the utilization of new software to effectively manage occupancy, the establishment of new graduate student residential communities, and a commitment to transfer student housing to fill idle capacity.
EMPLOYEE HEALTHCARE MANAGEMENT
The Case for Change: After utilizing self-insurance in the 1990s, Tulane converted to a fully insured model in 2001. Since then, the self-insurance market has evolved with more than 90% of 5,000+ FTE organizations and more than 50% of higher education institutions, including several peers, utilizing some form of self-insurance. Switching to a self-insurance model and actively managing employee health through on-site clinics can create significant financial savings and improve overall employee wellness.
Initiative Description: The Committee is now working through a detailed feasibility analysis for opening a wellness clinic for employees. Assuming the feasibility study proves out the initial expectations, the clinics can be implemented in 2016 and a new self-insurance model could be implemented in 2017.
RENEGOTIATION OF ENERGY CONTRACT
The Case for Change: Following Hurricane Katrina, Tulane partnered with XTnrgy to provide leased energy management equipment for selected buildings on the Uptown campus. The negotiated contract allowed for energy savings to be shared between XTnrgy and Tulane, allowing the university to avoid costly upfront investments in lieu of monthly lease payments. This arrangement has been beneficial to the university; however, in recent years the cost of natural gas has dropped. As savings are shared with XTnrgy, the university’s incentives to control energy consumption costs are diluted.
Initiative Description: The Committee has elected to proceed with an early exit from Tulane's contract with XTnrgy in an effort to recoup a greater share of energy savings. Successful implementation of this initiative will result in the university owning, not leasing, selected equipment. Contract review is underway and, if successful, savings should accrue in fiscal 2017.
STUDENT HEALTH CENTER THIRD PARTY BILLING
The Case for Change: The Tulane Student Health Center currently provides subsidized goods, services, and office visits to the Tulane student community free of charge and/or at below-market rates. Historically, the Student Health and Wellness fee and fees charged for Student Health Center services were intended to cover all charges for visits. Today, increased utilization of services are imposing financial strains at many universities and, therefore, a number of peers have contracted with insurance companies and health plans to obtain insurance reimbursements for office visit charges, ancillary services, and preventative care services.
Initiative Description: Assessments are underway to design a model that is appropriate for Tulane without adversely affecting student access to key services. Implementation efforts will focus on modernizing business operations through the incorporation of third-party billing capabilities, which will simplify access to health care for students, while allowing the Student Health Center to improve funding.
ADMISSION AND ENROLLMENT
The Case for Change: Almost 40% of total revenue to support Tulane’s operations comes in the form of tuition; therefore, the Committee felt it was important to explore enrollment and tuition pricing policies as a component of their review. A work group studied how to balance academic quality, class composition, and net tuition revenue as a part of the institution’s enrollment strategy moving forward. The work group developed a strategy that preserves the single-portal entry model and focuses on maintaining Tulane’s academic quality, reputation, and access.
Initiative Description: The enrollment modeling efforts indicated that Tulane should increase the number of transfer students, improve retention, and make minor adjustments to the discount rate. These changes would allow for a phased reduction in the size of the freshman class, helping Tulane to maintain access and continue to improve quality. Implementation efforts for this opportunity are underway and will continue with the onboarding of a new VP of Enrollment Management.
VOLUNTARY SEPARATION PROGRAM and WORKFORCE POLICY CHANGES
The Case for Change: The majority of Tulane’s expenditures are related to its workforce, with wages and benefits comprising more than 50% of total expenses. Organizational redesign efforts have the potential to yield savings through fewer staff, though the President’s Cabinet felt it was culturally important to minimize the potential need for layoffs.
Initiative Description: Efforts to optimize organizational structures will focus first on the implementation of a voluntary separation program for staff members meeting thresholds. Upon the completion of this program, units will be re-evaluated and potentially reorganized if needed. Additionally, the President’s Cabinet agreed to change university policies for overtime pay, sick leave, and vacation time. The planned changes to sick and vacation policies were vetted with the university community in 2014, but have not yet been implemented. Specifics about these policy changes, which will be effective July 1, 2016, can be found on the Workforce Management Office website.
In January, President Fitts appointed two steering committees to identify revenue generating and cost reduction opportunities, and to develop a budgeting system that is better suited for our future.
As the chairs of the Operational Review Steering Committee, we committed to be collaborative and to seek input from across our campuses. This commitment began with the make-up of our steering committee, which includes faculty, staff, administrators, and students, and it has continued, through our partnership with Huron Consulting, who engaged almost 200 Tulane individuals, held numerous focus groups, and conducted a university-wide survey of faculty and staff members.
This process of interactions and data reviews resulted in Huron's documentation of over 500 ideas, which were consolidated and organized into more than 150 opportunities for discussion with the Steering Committee. The Steering Committee then developed and utilized an assessment framework to evaluate and prioritize opportunities based on their perceived financial, reputational, cultural, and service-level impacts. Ultimately, in coordination with the President and the President's Cabinet, we decided to initially focus on seven initiatives. The Steering Committee identified leaders and established work groups to conduct additional due diligence and evaluation. The initiatives include:
- Student Housing Management: This initiative, led by Dusty Porter, Vice President for Student Affairs, is focused on efforts to optimize the utilization of on-campus housing.
- Employee Healthcare Management: This initiative, led by Anne Banos, Chief of Staff and Vice President for Administrative Services, is focused on evaluating opportunities to more effectively manage the University's employee healthcare portfolio.
- Campus Energy Management: This initiative, led by Doug Harrell, Vice President for Finance and Controller, is focused on reevaluating Tulane's contract with XTnrgy, an external organization that owns energy conservation equipment utilized on the Uptown campus.
- Enrollment Management: This work group, chaired by Earl Retif, Vice President for Enrollment Management, is focused on evaluating opportunities to increase net tuition revenue through optimization efforts focused on student recruitment, composition, retention, and financial aid.
- Procurement and Travel Management: This work group, also chaired by Doug Harrell, is focused on exploring demand management and strategic sourcing opportunities related to the University's purchasing of goods and services.
- Summer Program Management: This work group, chaired by Rick Marksbury, Dean, School of Continuing Studies and Summer School, and is focused on investigating opportunities to enhance the coordination and scale of summer programming.
- Organizational Design: This work group, consisting of a subgroup of the President's Cabinet, is studying the University's organizational design to assess how effectively we are deploying resources to support administrative and operational functions across the institution.
For each of these initiatives, the work groups will report their findings regarding financial and service-level impact assessments, recommended implementation plans, and anticipated timelines for implementation. We anticipate that their efforts will be completed in the coming weeks and months, and we will update you on their recommendations.
We are committed to keeping you informed, and will work to do so through the efforts of our work groups, continued engagement and additional campus letters and town hall discussion. In the meantime, if you have any questions or would like to make a suggestion, we encourage you to share your feedback by emailing us at firstname.lastname@example.org, email@example.com or firstname.lastname@example.org.
Co Chair, Operational Review Steering Committee
Co Chair Operational Review Steering Committee
Huron completed interviews with approximately 40 academic and administrative stakeholders regarding the current budget process.
Huron reviewed budget model options and market trends with the Budget Redesign Steering Committee.
In collaboration with the Budget Redesign Steering Committee, Huron developed a set of principles to guide all future decisions surrounding the redesigned model, stating that Tulane's budget model should:
- Promote funds flow consistent with Tulane's mission and strategic priorities;
- Include both University-wide and unit-level authorities and responsibilities;
- Create clear and appropriate connections between desired performance and rewards, with appropriate accountability measures in place;
- Have enough flexibility to allow for change, strategic investment and disinvestment;
- Include incentives that encourage innovation and entrepreneurship, consistent with Tulane's mission and brand; and,
- Be transparent, understandable and predictable.
Huron has assessed the University's current fund flows, budget incentives, financial reporting capabilities and budget timeline against the guiding principles that have been developed.
Town Hall meetings are scheduled for March 11, on both the uptown and downtown campuses.
Huron completed over 180 interviews with Tulane stakeholders. Huron has received and reviewed over 2,200 data sets and files provided by Tulane's academic and administrative units.
Collaborating with the Operational Review Steering Committee, a framework to evaluate prioritize potential opportunities has been developed. The framework considers: financial impact, service impact, reputational impact, cultural impact and implementation complexity.
A preliminary list of over 150 opportunities for operational improvement opportunities was developed, along with initial estimates of impact; the Operational Steering Committee reviewed the list and provided feedback.
Huron continues to catalog new potential opportunities as well as to refine understanding of identified items.
A survey soliciting ideas and feedback from faculty and staff on operational improvement opportunities will be done in March. A series of student focus groups will also occur in March.
A final report on identified opportunities will be delivered to the Operational Review Steering Committee at the end of March.