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UI shuns advisers on budget

BY EMILY BUSSE | NOVEMBER 30, 2009 7:20 AM

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While several large universities have hired outside consultants to help trim their budgets — the University of California-Berkeley dropped $3 million for its evaluation — UI Provost Wallace Loh said the UI doesn’t need the help.

“It’s very hard for an outside consultant who knows nothing about the university to waltz in here and start advising us,” he said, and the UI’s “complicated finances” make it difficult for an outsider to help quickly.

When the University of North Carolina Chancellor Holden Thorp decided to hire the consultant Bain & Co. in September 2008, he said he was met with the same opinion as Loh’s.

“Initially, people were skeptical that folks not from the university would not understand,” he said.

But the company’s newness to campus was a benefit, he said.

“They hadn’t been looking at the same [problem] over and over like we had,” Thorp said. “They won’t come in with some magic plan to save you a bunch of money, but they … bring a fresh perspective.”

Thorp said the University of North Carolina took roughly $60 million out of its budget last summer and followed Bain & Co.’s recommendations for $40 million of that.

The University of California-Berkeley also hired Bain & Co. for consulting, according to spokesman Steve Montiel.

Instead of needing an outside consultant, the UI uses a divided “shared governance” system of deciding where and what to cut from the budget, Loh said.

A vice president runs each division of responsibility — academics, hospitals, business operations, and student affairs — and President Sally Mason is ultimately in charge, Loh said.

Although Loh said the vice presidents deal with different sets of revenues and employees, they must keep Mason’s “certain common principles” in mind. For example, her promise of minimizing layoffs is a goal each division must strive for, Loh said.

But with administrators trying to cut costs in their own area of work, Thorp said there is always a possibility of a conflict of interest, something he feels Bain & Co. helped North Carolina officials avoid.

While Loh admitted there is potentially a conflict of interest in the way officials make budget-cut decisions at the UI, that possibility is outweighed by Mason’s overseeing the process.

“If [Mason] thinks there is a conflict of interest, she has the final say,” Loh said. “That’s why you have one person ultimately make the call … unless you say the president of any university also has a conflict of interest because she’s responsible for everything.”

Although Loh said officials did not consider hiring an outside consultant to deal with recent budget cuts, he said they did meet with a company two months ago after the consultant volunteered to meet with him and other UI officials for free.

He wasn’t impressed.

“At the end of the day, they didn’t tell me anything I didn’t know,” Loh said. “Quite honestly, the real challenge is not coming up with ideas. The real challenge is to have the courage, the fortitude, to make those cuts because people are going to be very upset. No consultant can help you in that area.”


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