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Report illustrates how replicating system services would cost additional millions for the campuses and health system
ST. LOUIS – It would cost an additional 80 to 90 million dollars annually to replicate the services currently provided by the University of Missouri System to its campuses, according to a report released today by the UM System. The university’s annual Efficiencies and Effectiveness Report included an analysis to evaluate the costs of replicating on the campuses the same services now provided by the UM System. The report was presented during the University of Missouri Board of Curators meeting at the University of Missouri-St. Louis.
Nationwide, state university systems exist to realize administrative efficiencies and coordinate needs. For the UM System specifically, the UM System is able to:
- Provide a single focus of university accountability to public authorities;
- Allocate state resources to campuses in accordance with their missions and strategic priorities;
- Develop cooperative academic programs;
- Maintain an economy of scale;
- Serve as a unified, leading voice in higher education within Missouri; and
- Ensure the institution can meets its corporate responsibilities.
“The sole function of the UM System is to serve our four campuses and the health system,” Interim President Michael Middleton said. “In order to do that, we have to provide an efficient mechanism to reduce costs for Missouri’s taxpayers and our students. With the cost-savings we generate from these efficiencies, we are able to allot more resources directly to our core mission of teaching, research, service and economic development.”
The UM System delivers economies of scale through shared services. These support services eliminate administrative costs and redundancies and improve efficiencies systemwide. Based on recent data, the UM System institutional support cost per full-time equivalent student is 39 percent less than its peers. Institutional support costs include general administration costs, executive-level positions, legal and fiscal operations, logistical services and development activities. For example, the UM System:
- Facilitates technology transfer, which in FY16 alone has led to 184 invention disclosures, 39 patents, 55 new licensing agreements and three new startup businesses.
- Manages three research parks that provide regional economic growth and partnership with the university in the areas of workforce and research needs.
- Executes essential finance functions necessary to run a multi-billion dollar enterprise including budget and planning, accounting, facilities planning and development, management services, supply chain and treasury. By performing treasury functions centrally, the UM System saves $10.1 million per year on debt-related interest and investment management expenses. Moreover, the UM System saves more than $14 million per year on supplies.
- Consolidates legal services, which provide attorney expertise in specialized areas reducing the cost for external legal spending. The UM System saves the four universities and the health system $3 million annually on risk insurance alone, and lowers the reserves each campus must have on hand to cover self-insured reserves.
- Delivers centralized insurance and retirement benefits for more than 18,300 benefit-eligible employees, significantly reducing costs. University employees pay an average of $135 less per year for medical insurance than the average American. The university saves an estimated $42 million per year in related medical insurance costs.
- Secures cost-efficient, enterprise-wide contracts for IT hardware and software, and also delivers software management for email, account management, employee data management and service requests for the entire enterprise. Through MOREnet, the university passes enterprise savings and expertise on to more than 700 schools, libraries, governments and not-for-profits across Missouri.
- Coordinates internal and external communication to all employees regarding IT, HR and Finance functions, as well as to the state and federal legislature, to provide a unified voice on university processes and priorities.
“We have always known that the value the university system brought to the state was unmatched,” Middleton said. “This year’s report, which puts a dollar amount to that value, reiterates the message we have been sharing for decades. This new data also provides an opportunity to further these efficiencies and rethink normal business processes to not only seek new revenue streams but also to deliver our mission in even more resourceful ways.”
As part of Missouri’s performance funding, universities are evaluated on the percentage of total expenditures spent on their core missions. The UM System continues to perform above the top third of doctoral institutions. The UM System continues to reduce administrative costs by expanding shared services, evaluating employee benefits and streamlining business policies and practices.