Purdue team recommends budget actions to reduce operating plan by $67 million; proposes plan to continue effort
WEST LAFAYETTE, Ind. - As Purdue University nears its goal of identifying approaches to save $67.4 million from the West Lafayette campus budget, it also is taking steps to continue the effort.
"We plan to institutionalize the approach that we used to come up with this plan," said Al Diaz, executive vice president for business and finance, treasurer. "We not only are identifying plans to save money in the near term, but we also are building an organizational framework to continue our efforts toward continuous improvement."
Ken Sandel, director of physical and capital planning and manager for the project called Sustaining New Synergies, outlined the effort for the Finance Committee of the Board of Trustees on Thursday (Feb. 3).
The steps recommended by the team to achieve the $67.4 budget reduction include:
* Reducing projected pay increases, cutting $26.8 million.
* Implementing the information technology plan developed by Gerry McCartney, vice president for information technology, expected to save $10 million by fiscal year 2013 and $15 million long term.
* Reallocating $8 million in additional revenue from interest income; administrative cost recovery from University Residences; and facility and administrative cost recovery from sponsored programs.
* Conducting a retirement incentive program taken advantage of by 509 full-time equivalent employees, with an estimated savings of $6.6 million.
* Enhancing efforts to reduce health-care costs ($5 million). A proposal is expected by a blue ribbon committee in March.
* Implementing strategic sourcing, increasing buying power to save $2.9 million by fiscal year 2013 and more as the initiative develops and expands.
* Reducing energy costs ($2 million).
Moving forward, the university will establish an implementation and oversight structure to ensure goals and financial targets are achieved, Sandel said. Organizational changes also will help institutionalize the governance of strategic sourcing and information technology.
Sustaining New Synergies began 15 months ago.
"We started by soliciting and evaluating ideas from across the campus and then worked collaboratively to identify and assess our primary targets," Sandel said. "Many other ideas were shared with colleges, schools and areas and could be considered for action as we move forward. We created models for consistent, fact-based methodology, change management, and clear and frequent communication.
"Those efforts helped to minimize job loss, ensured the success of our strategic plan and preserved the quality of a Purdue degree. They also set us on a path to continuous improvement."
The $67.4 million shortfall comes in addition to a $35.8 million budget rescission that the West Lafayette campus experienced last year and is on top of the $20.9 million reduced from its operating appropriation in the current biennium.
"This team has clearly done a comprehensive job in identifying and evaluating approaches to save money and operate more efficiently," Diaz said. "It is a great start to something we need to continue."
Writer: Jeanne Norberg, 765-494-2084, firstname.lastname@example.org
Sources: Ken Sandel, 765-496-6300, email@example.com
Al Diaz, 765-494-9750, firstname.lastname@example.org