Bain Study Points to Future Savings at UNC

University officials confronted an extraordinarily difficult state budget
this year.  But they are confident a study by Bain & Co. will equip the University to cope with more budget strains to come.

UNC-Chapel Hill Chancellor Holden Thorp commissioned the Bain study with an eye toward making the University more efficient.  The study identified multiple layers of management and found that the University’s administrative expenses have grown faster than its academic expenses.

Bain’s report outlines potential strategies to improve operations, and Thorp says the findings are timely.  Legislative economists say it could be 2013 before state revenues return to the levels budgeted for 2008-09.

“First, the economic crisis isn’t over,” Thorp wrote in The News & Observer. “Implementing the recommendations described in the Bain report could help us prepare for additional cuts without affecting research and teaching.

“Second, public confidence in the way that universities are managed is strained.  Legitimate concerns are being expressed about the growth in our administrative costs.  We’re proud that Carolina has been ahead of the curve in addressing these concerns this year, and this report shows that we are serious about changing the way we do business.”

UNC President Erskine Bowles told a legislative committee recently that as officials encountered shrinking state revenues, they reduced administrative costs by 23 percent across the UNC system (24 percent at Chapel Hill) while reducing academic costs by just 5 percent (6 percent at Chapel Hill).

“Because of the Bain study we did in Chapel Hill,” Bowles said, “I think we were not just able to make cuts – we were able to make smart cuts.

“Don’t think for a minute that this was easy to do,” Bowles said. “Most importantly, we wanted to protect our academic core – that is our principal business.”

Such changes take planning, Bowles said.  “Like any organization that has 40,000 employees and 220,000 students, we can do things better,” he said.

Gov. Bev Perdue praised the effort in her remarks at University Day.

“Leaders at this University have focused on efficiency and effectiveness, performing a broad study and putting it into action.  You tackled the challenges, you made public the results and you’re now implementing change.  As governor, I believe that’s exactly what we have to do for the State of North Carolina,” Perdue said.

The Bain study has led the way not just in North Carolina, but nationally.  Cornell University and the University of California at Berkeley have now hired the global business consultants at Bain to perform similar studies.

To review highlights or the full Bain report, click here.