When Sean M. McGoldrick began his new job as assistant vice president of facilities management at Minnesota State University at Mankato several years ago, he was confounded as to why the institution purchased natural gas at whatever rate it was selling for that day.
He began watching natural-gas markets, and started buying one- and two-year contracts for the university when prices looked low. His first year he saved the university about $700,000, he said.
As higher-education institutions across the country struggle with constrained sources of funds, a significant majority of colleges are focusing on similar cost-saving efforts. More than 80 percent of state institutions said they have relied on energy-management initiatives to reduce operating costs, according to a report to be released today by the American Association of State Colleges and Universities.
The report, based on a survey of 114 Aascu members and conducted from November 2007 to January 2008, found that while three in four colleges are satisfied with their cost-containment efforts, few keep track of their progress. A majority of institutions—more than 60 percent of the responding institutions—said they do not regularly quantify their efforts to save money.
The 29 institutions that did keep records reported a median savings of approximately $135 per student, or some $1-million a year per college, as a result of cost-containment activities.
While many colleges and universities reported cutting costs in energy management, through conservation and energy-efficiency programs, for instance, a sizable number of institutions—61 percent of those responding—indicated that they participated in purchasing consortia. What those groups most often buy collectively are computer services, liability insurance, office supplies, and library resources, according to respondents.
More than half of institutions surveyed said they look to efficiencies in food service and residence-hall operations to save money, and many campuses said they have outsourced those services to cut costs.
At Francis Marion University in Florence, S.C., administrators began privatizing dining services in 2002, and have since outsourced management of the campus bookstore and some residence halls.
The food-service operations went from losing $150,000 a year to generating more than $500,000 a year, Luther F. Carter, the university's president, said in an interview. He added that outsourced employees with more than 15 years of service to the institution were allowed to continue as university employees with the vendor.
"We've essentially increased the level of returns to the university," said Mr. Carter. "Since these are auxiliary services, in many instances, these returns go directly into a student scholarship fund."
However, some universities are finding that keeping those types of operations in-house saves money.
Ed Magee, vice president for administration and finance at Shepherd University in Shepherdstown, W.Va., said that bookstore and dining services there are staffed by the university. That allows the institution, which he said already runs a lean operation, to more easily monitor costs that can rapidly grow under vendors looking to increase the bottom line.
"We pocket any profit margin for ourselves," said Mr. Magee.
The survey found a number of other ways colleges are containing costs, including a migration to paperless accounting and directly depositing employees' paychecks in their bank accounts, as well as the use of contingent faculty members and online distance learning. However, few institutions have developed consistent cost-cutting mechanisms.
"The approach to cost containment has been more ad hoc and less strategic," said Daniel J. Hurley, Aascu's director of state relations and policy analysis.
The association recommends that colleges do more to measure and communicate cost-cutting efforts, especially as state leaders call on higher education to be more accountable. The group also encourages college employees to come up with ways to reduce expenses.
The survey, which was conducted in collaboration with SunGard Higher Education, will be available today on the Aascu Web site.
For the story, go to the Chronicle Web site at http://chronicle.com/daily/2008/04/2317n.htm
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