Cost savings of $16.7 million identified under recommendations
COLLEGE STATION, Texas – Annual cost savings of $16.7 million for The Texas A&M University System could be realized through shared services optimization recommendations presented today at a regular meeting of the Board of Regents.
The recommendations were in an initial report from a special shared services opportunities committee created by the regents June 26 to increase efficiencies and reduce expenses in the A&M System through collaborations and best practices. The report focuses on shared services and cost reductions between the system offices and Texas A&M University. Subsequent evaluations will expand to include all parts of the A&M System.
“This is a great start to finding savings,” said Morris Foster, chairman of the Board of Regents. “The board is determined to keep tuition and fees as affordable as possible. We want to have a second phase report that includes all of the regional campuses and a real emphasis on streamlining functions and reporting structures.” The second report would be presented to the regents at the January board meeting, Foster said.
The initial report was presented by the committee’s co-chairs, Frank Ashley, vice chancellor for academic affairs for the A&M System, and Greg Anderson, associate vice chancellor and treasurer. It incorporated the findings and recommendations from the committee’s nine teams, which include representatives from Texas A&M, system universities and agencies, and System Offices. Most of the savings would come from coordinated use of administrative programs, such as information technology, treasury and state governmental relations.
The recommendations from the teams added up to approximately $13.3 million in annual cost savings, some of which include systemwide savings. All projections were reviewed and verified by internal audit. Additional cost savings of $350,000 from System Offices reflect a one percent reduction of departmental budgets. An additional $3 million of savings already have been implemented at Texas A&M, for a total of $16.7 million.
Further anticipated facilities planning and construction fee re-structuring could increase savings to $21.3 million in 2010 and $20.2 million in 2011. Additionally, the report cited $5.7 million of cost avoidance and revenue enhancements of $247,000.
Some specific areas of savings in the initial phase include: $2.5 million in annual savings through shared systemwide purchases of desktop computers; $6.1 million at A&M through master purchasing agreements; and $500,000 for internal insurance for construction projects.
“This is a great start to our efforts,” said Chancellor Michael D. McKinney, M.D. “I look forward to working with everyone as we improve our operations so that we may continue to provide the highest quality education to our students and to the state of Texas, and that savings are used for teaching and research, not administration.”
About the A&M System
The A&M System is one of the largest systems of higher education in the nation, with a budget of $3.2 billion. Through a statewide network of 11 universities, seven state agencies and a comprehensive health science center, the A&M System educates more than 109,000 students and makes more than 15 million additional educational contacts through service and outreach programs each year. Externally funded research expenditures exceed more than $676 million and help drive the state’s economy.