UT-Austin Considering Outsourcing Some Campus Services

A new report released Tuesday by the University of Texas at Austin calls for the university to rethink its approach to housing, food and parking services. It also called for gradually raising the prices for those services up to market rates.

The report, which is the product of a committee on business productivity that UT President Bill Powers assembled in April 2012, recommends consolidating business and administrative functions that are currently duplicated in individual colleges, improving the process for commercialization of technology developed on campus, and becoming more energy efficient.

The committee, composed of business leaders from around the country, estimated that its recommendations, if followed, could generate up to $490 million in savings and revenue over the next decade.

Powers delivered a speech Tuesday laying out the report and endorsing its objectives, though he said the specific proposals and possible implementation still needed to be reviewed.

"Universities are not simply businesses, but in some ways they are like businesses," Powers said in his remarks as prepared, adding that none of the recommendations would affect the educational activities of the university. "In these areas, they ought to be following the best practices. As a recipient of both tax dollars and tuition dollars, to do otherwise is to betray the public trust."

The report and Powers, in his speech, cited the example of Texas A&M University, which recently outsourced a number of campus services to a private company. Significant savings and revenue are expected and most employees kept their jobs, but the transition also stirred significant controversy and concern.

"I understand the anxiety these ideas engender, but we simply can't afford to ignore possibilities for saving money that we can put into our academic mission," Powers said.

He also said that the changes, if they occurred, would not happen overnight and decisions will be made deliberately to minimize the negative impact on individuals' livelihoods. "I'm confident that the vast majority of the savings coming from labor costs can be achieved through natural attrition," he said.

While many details of the recommendations have yet to be evaluated and worked out, Powers said he was adopting one of the report's initial recommendations: appointing an individual to champion efforts to increase business efficiency in these areas of the university.

Steve Rohleder, chief executive of Accenture Health and Public Service and the chairman of UT's committee on business productivity, wrote in the executive summary of the report, "Without a person of significant leadership skills and power pushing these reforms full-time, the committee feels that this report will go the way of many another well-intentioned but ultimately ignored blue-ribbon panel reports."

Powers tapped Kevin Hegarty, UT's vice president and chief financial officer, to will lead the effort to boost productivity over the next several years and see to it that the committee's recommendations do not suffer such a fate.