University of Kentucky plans to hire consultants to help efficiency

Eli Capilouto shown in a Herald-Leader interview at the UK HealthCare retreat at Keeneland race track on Monday, June 13, 2011 in Lexington, Ky.  Photos are for a profile of new University of Kentucky president Eli Capilouto.  Photo by David Perry | Staff
Eli Capilouto shown in a Herald-Leader interview at the UK HealthCare retreat at Keeneland race track on Monday, June 13, 2011 in Lexington, Ky. Photos are for a profile of new University of Kentucky president Eli Capilouto. Photo by David Perry | Staff

President Eli Capilouto has spent much of his first few months at the University of Kentucky pushing a renewed commitment to undergraduate education and a major building campaign to replace aging dorms and classrooms.

Now, Capilouto wants professional consultants, who will be paid about $1.2 million out of university reserves, to drill down on four pointed questions:

■ Does the administrative structure at UK work, or is the issue of administrative bloat a serious problem?

■ Does the university's budgeting and finance system work as well as it should?

■ What is UK's total debt load, and how much more can it borrow as it moves forward with an ambitious new building program?

■ Does UK appropriately review tenured faculty, provide enough professional development and offer proper incentives for innovation?

Huron Consulting of Chicago, which has been working with a university committee on UK's goals and strategic plan, will start studying those issues immediately and could work on them through June 30, officials said.

Capilouto said the bottom line is that UK must operate as efficiently as it can.

"It's the new normal we exist in," he said. "The likelihood of public support is uncertain for the next five to 10 years. We live in a time of great change. How will we respond to great change?"

Capilouto said he also will work with the University Senate to discuss issues of post-tenure review and productivity of UK faculty.

He unveiled his plans with Huron on Monday afternoon at the University Senate meeting, and he will discuss them Tuesday with the Board of Trustees.

The issue of administrative growth is a big one on campuses across the nation, and at UK in particular after faculty trustee Irina Voro sought data from the university earlier this year about the number of administrators. She has since asked university faculty to compile examples of waste, fraud and inefficiency by administrators.

Since 2001, the number of upper-level administrators at UK has increased by 32 percent, to 124 people.

The additions include three associate provosts and several administrators at institutes and centers. Nearly 40 percent of that growth has occurred within the UK Medical Center, which includes the university's medical colleges and UK HealthCare. Among other expansions, UK HealthCare acquired Good Samaritan Hospital in 2007.

Meanwhile, the number of UK faculty has increased by 18 percent in that same time, and the number of students has increased by 11.2 percent.

The issue of administrative growth at UK is complicated, Capilouto said, in part because of UK's status as a land-grant university, which means that it has many auxiliary units, including a hospital and medical school, an agricultural extension program, an industrial park and other programs.

"What astounds me about UK is, I can't find a program that doesn't have, in some ways, a community dimension to it," Capilouto said. "That is part of our soul, part of our mission, part of being a land grant."

Still, he said, the issue of administrative efficiency is one that he has heard about a lot on campus.

"It's a fair discussion to have," he said. "Are we the right size; are we structured in the right way; are we a learning organization that responds to our customers?"

Capilouto also wants Huron to look at debt capacity for UK, which has a $2.7 billion annual budget.

UK has identified about $1 billion in building needs, and it already has issued a request for proposals for a new 600-bed dorm on campus, possibly to be built by a private developer.

When he announced the new dorm in October, Capilouto said he hopes UK can replace roughly 4,000 of the school's 5,184 beds and create 4,000 more during the next decade.

"We want to be careful about our capacity to borrow and build," Capilouto said.

Of the topics Capilouto wants to study, UK's budgeting process could become the most controversial.

UK does incremental budgeting, in which units have a base budget that is adjusted up or down by a small amount each year, depending on available funding.

More universities are moving toward resource-based budgeting, which, for example, could base a department's financing on how many students it attracts.

Capilouto said he wants an "integrated and transparent budgeting system that is in alignment with our mission and values — it allocates resources according to productivity and quality and assigns expenses according to your consumption of resources."

He said this type of budgeting could help bring more efficiencies across campus. For example, two departments might be able to share certain common services, he said.

Capilouto is calling his overall approach the "Kentucky Promise," which encompasses UK's commitment to educate and improve the state.

"It sounded pretty good; it's a decent plan," said Michael Adams, chairman of the Staff Senate, who works in the biology department. "We're waiting to see how it will manifest itself."

Kristy Deep is a native Kentuckian who attended UK and is now a doctor and a faculty member at the College of Medicine. She said she understands how important UK is to the state, and she called herself "refreshingly enthused and supportive" of Capilouto's plan.

"I think it shows promise of how we can move forward in this challenging climate," Deep said. "Much of what he has proposed thus far is driving us toward our missions."

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