Universities turning to consultants for help trimming tight budgets

When Holden Thorp, the chancellor of the University of North Carolina, was looking for ways to cut the university's budget, he did what many executives in private industry do — hired a management consultant.

The consultant, Bain & Co., came up with recommendations that it said could save the university more than $150 million a year. They included centralizing some of the university's widely dispersed procurement operations (up to $45 million) and information technology functions (up to $19 million) and simplifying its organizational structure (up to $12 million).

And since Thorp hired Bain, both Cornell University and the University of California, Berkeley, have followed suit. In each case, the management consultants examined business functions but stayed away from academic issues like course loads and tenure.

"Like any other large organization," Thorp said, "we hire people, we buy stuff, we connect to the Internet, we build buildings and take care of our property, and we wanted Bain to look at how we could carry out those functions as efficiently as possible."

"I thought someone from outside the university world would provide a new perspective," he added.

In addition to the recommended changes that could save up to $161 million a year, the report suggested reining in the more than 100 centers and institutes that have sprung up around the university, many with their own finance, information technology and human resources departments.

"We've already done some of that," Thorp said recently. "The Institute for Outdoor Drama isn't getting any more state funding."

Shrinking endowments and cuts in state financing have forced many colleges and universities to turn to hiring freezes, layoffs and furloughs. But for long-term solvency, many will need to find longer-term ways to trim their budgets without damaging their academic mission.

At the same time, parents and politicians alike have become increasingly angry that tuition has been rising far more quickly than inflation — and that the growth in support staff in recent years has far outpaced the growth in enrollment.

Still, some university employees criticize the hiring of Bain, or any corporate-oriented consulting firm, to advise on university budget cuts.