The Duke Administrative Reform Team working is working behind the scenes to cut Duke's budget while maintaining its mission.

Durham, NC - The change represents more of a cultural shift for Trinity College of Arts & Sciences than a financial one.

Last year, a business manager and four support staff in different Trinity departments within the Friedl Building accepted early retirement. Soon after, members of the Duke Administrative Reform Team, known as DART, met with Trinity leaders to discuss how schools could balance budgets during the severe economic downturn.

The result for Trinity was the birth of a business service center model: four existing support staff members and a new business manager will provide shared services for payroll, event planning, account reconciliations, and budget preparations to multiple Trinity departments -- all under the same roof on East Campus.

"We took the opportunity to rethink how we do business," said Sandy Connolly, Trinity's senior associate dean for finance and administration. "We began by asking what are the business functions that are common across all departments versus what functions are truly unique within a department."

Trinity will have fewer people, "but we will gain efficiencies, especially with smaller departments that didn't have much capacity or back up," Connolly added.

This pooling of resources across departments highlights one way DART is working behind the scenes as part of an intensive effort to analyze ways to cut $100 million from the operating budget without affecting the university's core academic mission.

Since forming in February 2009, DART has directed efforts that have led to $60 million in projected savings -- more than half of what is needed by 2012. Efforts include two early retirement incentives, tighter restrictions on overtime and travel, computer purchasing standards and regulation of building temperatures.

The DART group, co-chaired by Provost Peter Lange and Executive Vice President Tallman Trask III, includes 16 people, a cross-section of deans, faculty and administrators who provide broad perspective and input.

"We acknowledged at the beginning that we needed a thoughtful and strategic process," Trask said. "We didn't want to do what some other institutions were doing in bringing in someone from the outside to begin cutting."

A different approach

In the first few months of 2009, universities such as Stanford, Yale, Harvard, Cornell and Dartmouth announced deep cuts to programs and jobs. Duke took a different approach.

"The best way to address the budget issue is not to begin hacking away without knowing fully the impact of the changes so that you look back and regret making certain changes or don't fully realize the savings you expected," said DART member Warren Grill, professor of Biomedical Engineering and chair of the University Priorities Committee.

DART began by assembling an analysis team that compiled and assessed financial data to help identify savings opportunities and inform their decisions.

Tim Walsh, assistant vice president and controller for Duke, led the analysis team, which conducted more than 200 interviews to generate and deliver potential savings opportunities and supporting data to the DART group and leaders in the schools and departments throughout Duke.

A bulging six-inch thick binder on his desk contains presentations made to DART during the first year. Based on the analysis for each presentation, he estimated the reports supporting the presentations would likely stand 30 to 50 feet tall if printed.

Walsh used a simple formula for determining the best opportunities to pursue.

"You want to start with the areas that represent high payoff and low complexity and work your way down to areas of lower payoff and greater complexity," he said.

For example, one of the early initiatives involved moving the telephone system to Voice over Internet Protocol (VoIP). The project, which began prior to the formation of DART, caused little disruption, provided similar service and offered more than $2 million in savings toward the university's overall budgetary shortfall.

Data to dollars

The first phase of implementation began with central administrative efforts, and then moved into academic areas. Two early retirement incentive programs and greater scrutiny on filling vacant positions have accounted for the largest savings to date -- about $35 million.

A new computer purchasing program, projected to reduce expenses by $2 million a year, reflects a main project theme for DART -- taking advantage of Duke's aggregated spending to negotiate steep discounts.

"My sense was that we had more money tied up in buying the wrong stuff," Trask said. "We didn't have any standards, so people were buying more than they needed for most jobs. By standardizing the specifications and negotiating prices based on expected volume, we brought the average price for a computer down from $750 to $500. Instead of a 3 to 5 percent discount, we got a 15 to 20 percent discount."

Ed Gomes, associate dean for Trinity Technology Services, served on the Duke-wide committee of faculty and IT professionals to develop computer standards. The standards offer two levels that support most functions for faculty and staff, and a third level that could be customized with high-end processing power for research and other special needs.

"We will be replacing about 200 computers in Arts & Sciences this year and expect to save about $32,000 based on the additional discounts from the program," Gomes said.

Gomes said that people can still buy a computer outside the program, but there are cost implications for support that many may not consider. "If you have problems with that computer, your costs go up for support because we don't have replacement parts or service agreements," he said.

More recent DART efforts have focused on discussions with deans and department chairs in the School of Medicine, who have been presented with aggregated financial data across all schools and a toolbox of options for reducing expenses -- everything from using preferred vendors to reducing fleet and related fuel and maintenance costs.

(For a chart of annual university expenditures by category, click here.)

"The discussion with deans has been a rock-turning exercise, and we've learned some things through the process." said Lange, the provost. "These meetings presented data to the deans about where some savings opportunities might be and allowed them to determine which areas they want to pursue."

Such discussions led to rethinking processes like communication. Law School communications staff members worked closely with Dean David Levi to redesign the school's alumni magazine, reducing the number of pages from 80 or so to 48. Also, the school changed the magazine's paper and bid the job to new printers. The cost was cut by 50 percent without changing distribution to nearly 20,000.

"We now have a monthly online publication that delivers news, but the magazine is a better instrument for building reputation, sharing faculty and student achievements, and providing context on the latest research and legal trends," said Melinda Vaughn, executive director of communication and events at the Law School. "We've tried to use the different mediums for what they do best."

Walsh, the assistant vice president and controller for Duke and DART analysis team lead, has also led the discussions with deans. He said the exercise highlighted best practices from different areas that may not have emerged.

"These numbers helped provide benchmarks so deans could compare how their spending in different areas compared to other schools, which led to conversations about how they might do things more efficiently in some areas," Walsh said. "We talk often about interdisciplinarity among schools, but we are now starting to use the term administrative interdisciplinarity more frequently to refer to working across organizational lines to be more efficient administratively and share best practices."

$40 million more

Now halfway through the three-year period to reduce the operating budget by $100 million, Trask said tough cuts remain.

"I worry that people have become too complacent because we solved half the budget problem in the first year," Trask said. "But we have picked the low-hanging fruit. The second half will be much more difficult."

To return to a sustainable budget, the university still needs to reduce the number of employees, which Trask said he hopes can be done through attrition. Trask and Lange continue to monitor and sign off on filling vacant staff positions to reduce the university's largest expense -- compensation.

"Most of the requests that come to me now reflect some level of restructuring to consolidate positions, expand responsibilities to support other needs or reduce the level of support needed," Lange said. "That type of creative thinking at the department level is what will help us continue to address this situation."

Kyle Cavanaugh, vice president for Human Resources, said he has worked with Trinity and other departments seeking to restructure.

"As people retire or leave Duke, departments are giving more consideration to how they can reorganize and share resources in ways that reduce costs and continue to provide effective services," he said. "Human Resources has partnered with departments to think strategically about ways to do that."

Such opportunities are being evaluated across the university, including a decision not to fill the vacancy for vice president of Campus Services. A transition team chaired by Cavanaugh is working to redistribute the units within Campus Services within existing structures to ensure continuity of service.

Despite the university's financial challenges, Trask said that Duke is in a better situation than most other universities and is able to advance its academic mission in ways others cannot.

"A lot of places essentially suspended hiring altogether," Trask said. "We saw this as a time of opportunity."

That opportunity has led to key faculty appointments this year, including three National Academy members.

"In five years," said Lange, "we may look back and lament some of the sacrifices we had to make, but we will also be able to look around and see the results of what we were able to accomplish to become a much stronger institution during this time."