Parts of a highly touted cost-savings push at Iowa's three public universities may not save as much money or happen as fast as initially projected, according to consultants' reports released this week.
The news comes a year after the Iowa Board of Regents and Deloitte Consulting LLP said the universities could save $16 million to $40 million over the next two years by negotiating joint contracts for goods and services with lower prices. A report given to the regents then estimated the annual savings in purchasing at $22 million per year.
Continue Reading Below
Mark Braun, a University of Iowa administrator leading the effort to find efficiencies at the three schools, conceded Wednesday that Deloitte's recommendations on purchasing were "much more aggressive in their approach and their timeline" than will be reality.
A report released Tuesday from Huron Consulting, which was hired to review and refine Deloitte's recommendations, projected that the universities would save between $3.9 million and $7.8 million per year in buying seven categories of items such as food and computers. Braun said that figure represented the initial contracts that will be renegotiated to get better prices and that additional savings could be pursued in other areas in the future.
He said the universities have taken a "more deliberate approach" that involves agreeing on items to be included in a contract before seeking to renegotiate with vendors or seek out new ones. Huron, which received $385,000 in consulting fees for its report, has been retained at an additional fee of $510,000 to help lead that process, he said.
Over the last 18 months, the regents have been leading the cost-savings review, nicknamed TIER, to make the universities more financially sustainable and effective. Dozens of jobs are expected to be cut through attrition as schools restructure how they deliver services and perform administrative tasks. The savings are expected to be used for other priorities, such as keeping tuition affordable and investing in key academic programs.
Another report released Tuesday from consultant Chazey Partners said the University of Iowa will save millions less than initially projected in ongoing plans to restructure its finance, human resources and information technology services. The main reason is that the university has decided to exclude the Carver College of Medicine from participating in the changes to staffing and processes, according to Chazey, which is receiving $550,000 in consulting fees plus expenses for its work.
Braun said the medical school had already begun a similar cost-saving effort with University of Iowa Hospitals and Clinics. "It didn't make sense to reinvent the wheel," he said.
The Chazey report said the changes to finance, human resources and IT staffing and services could save $14 million per year across the three universities beginning in 2017. But it warned those savings would require nearly $20 million in implementation costs, such as purchasing new technologies.
With the changes to purchasing and administration, Deloitte told the regents last year that the universities could save between $30 million and $80 million per year. Deloitte, which received $3.3 million in consulting fees for its work plus expenses, had cautioned that its numbers were rough estimates that were subject to change. Many university employees said they were overly optimistic.
Braun said he doesn't know whether Deloitte's ballpark range is still accurate, and he doesn't have a new aggregate figure of expected savings. Two additional consultants are working on reviews related to academics, with recommendations expected this fall.