Financial Sustainability - Deficit Reduction Plan
September 7, 2015
Members of the Brown Community,
The financial health and vitality of the University is essential in carrying out our mission of teaching, research and service. Over the last year, special attention has been placed on addressing the University’s modest structural deficit and solidifying its fiscal position. While the University’s overall finances are strong, to move forward and achieve the aspirations outlined in our strategic plan, Building on Distinction, we must ensure that we have a sustainable budget model in place that is both responsible and responsive.
We are pleased to report that after careful review of the recommendations of the Deficit Reduction Working Group (DRWG), which were submitted in April 2015, and the substantial community feedback we received, we have identified a set of actions that - in addition to cost management initiatives - will eliminate the University’s deficit over the next three years. It is particularly gratifying that we will be able to achieve this while maintaining our commitment to the quality of our teaching, research and campus services, and reaffirming our position as an employer of choice, offering desirable and fair benefits for our faculty and staff.
The DRWG focused their attention on the areas of the University that represent the largest sources of spending: Faculty and staff benefits; computing and information services; facilities management and utilities; libraries; procurement (purchasing); and the Dean of the Faculty budget.
While we accepted many of the recommendations put forth, we benefited greatly from the community’s comments and modified, omitted or deferred a number of the original proposals. The DRWG website has a complete listing of the working group’s recommendations, the more than 650 community comments, and the action plan the University will implement. What follows are highlights of the actions we will take.
Faculty and Staff Benefits
As you might expect, the DRWG proposals relating to employee benefits prompted the greatest number of community responses. Reading through the comments informed our overall decision-making. Based on this feedback, the University will move forward with:
- Aligning the UnitedHealthcare office visit copays with those paid by Blue Cross Blue Shield customers (moving from $5.00 to $10.00 per visit).
- Adopting a new pharmacy benefit manager, Optum Rx, effective January 1, 2016.
- Eliminating the health insurance buyout program, effective January 1, 2016.
- Projected savings: $1.3 million over two years.
It is important to note that the University will not enact the following proposals this year:
- Increasing health insurance contribution rates for those currently contributing 5%.
- Introducing annual health insurance deductibles.
- Freezing the Tuition Aid Program (TAP) benefit.
We are pleased to have been able to address these areas of greatest concern while still achieving our necessary cost savings goals.
Although it was not a DRWG recommendation, we received many suggestions to offer another voluntary staff retirement incentive program as we did in 2010. Our analysis revealed that the program would not result in savings because most staff that would be eligible for such a program (based on age and years of service) would need to be replaced. Therefore, we have decided not to offer the program again.
Dean of the Faculty Budget
- Reducing a portion of the Dean of the Faculty budget that is allocated to temporary teaching. We will implement this approach with great caution and care, ensuring that we maintain the quality and character of our distinctive programs.
- Projected savings: $1 million over two to three years.
Computing and Information Services
- Identifying opportunities to align or consolidate IT services across the University, and reducing through attrition some positions that support computing and information services.
- Projected savings: $1 million over three to five years.
- Identifying opportunities for greater energy efficiency to decrease the University’s utility costs.
- Reorganizing staffing and leveraging strategic sourcing to generate savings that will not impact the quality of services to the community.
- Projected savings: $1.35 million over three to five years, with $900K from a reduction in utilities costs.
- Developing a more strategic approach to purchasing and identifying opportunities to leverage the University’s purchasing power by negotiating or renegotiating contracts with external vendors.
- Projected savings: $500K over three to five years.
- Reviewing and potentially modifying library services and hours of operation, such as during summer and holiday periods.
- Exploring pricing models for visitor borrowing.
- Projected savings: $400K over three to five years.
Visitor Scholars Housing Program
- Adjusting the price of visiting scholar housing and promoting long-term leases.
- Projected savings: $250K over three to five years.
There were other recommendations proposed by the working group, such as evaluating the Brown First policy, which we will continue to explore to determine potential opportunities for savings and improved service delivery.
While the actions we have selected call for the reduction of some positions through attrition, we have worked diligently to avoid the need to eliminate any filled positions to reduce the deficit. That said, we recognize that many of these steps will not be easy and will require changes in our policies and practices, and that success will depend upon the cooperation and collaboration of the entire community.
We are grateful for the work of the 23-member DRWG, and for the valuable feedback provided by members of our community to help us reach this goal. This effort has been an important component of a broader University process designed to allocate resources responsibly and strategically to achieve our highest priorities. As responsible stewards of Brown, we will need to remain nimble and build the capacity to respond effectively to dynamic external forces that may affect our revenue and expenditures. We look forward to working with the University Resources Committee on the annual budget development process, and to continuing to promote transparency and broad engagement so that our resources are allocated in ways that reflect our values and critical mission.
Richard M. Locke
Executive Vice President for Finance and Administration