Managing the budget in challenging times

The second stream session I attended was a lightning round of presentations from CIOs on the actions they were taking to address budget cuts.

Two of the universities undertook reviews in order to inform their budget decisions. Louisiana State University had undertaken an internal review in 2005 to look at how they could streamline their operation but were forced to repeat the review in 2008 when the economic climate began to worsen and cuts in state funding were predicted. The target was a 5% cut and the review focused on outsourcing and redundancies as the main tools to achieve that reduction. In addition to these planned cuts, the review team also looked at scenarios for cuts of up to 25%. When considering these cuts the focus was not on sharing the pain but on identifying which were the priority services that must be kept and the remaining services that were dispensable. However, in all the planning exercises there was a continued focus on services/investments that help provide institution with competitive advantage to ensure that these were ring fenced. The challenge is for the CIO to make the case for those services/investments to make sure they aren’t cut.

Miami University also carried out a review but used a panel of three higher education CIOs to establish guiding principles for making budget decisions. Having established these principles, they looked at which services could be cut then evaluated the initial plan looking in particular for any unintended consequences. The output from this review was the final plan. There was some concern that some of the investments to deliver competitive advantage may be lost and so Miami sought to make greater operational cuts to protect that investment.

Reed College was one institution that has been only marginally impacted by the recession. They suffered fiscal difficulties in the early 90s but some of the measures taken then was giving them protection now. They had taken the decision at that point to establish a technology innovation fund. This fund is controlled by the CIO who may use if for development and capital costs with no strings attached to how the money was spent. Although it is not intended that this fund will be used to meet operational costs, it may be used for this purpose at times of crisis. They also built equipment replacement costs as a budget line so it was not necessary to request capital funding to replace equipment. Finally they got agreement from some of their staff that they would consider part-time working at times of crisis. It was estimated that this could realise up to an 18% saving on staff costs.

One of the points that the CIO at Reed College made was that it is possible to overcut during difficult times which makes the road to recovery harder than when staff resources and services had been protected. Both Miami and Louisiana State talked about protecting the investments and services that delivered competitive advantage. Their future success may depend on how successfully they manage to do that and how they manage to maintain the expertise they need within their service to help them move forward in better times.

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