In a move aimed at positioning Cornell University for the future, university officials will reallocate $20 million from nonacademic costs to academic and institutional strategic priorities by fiscal year 2004-05, President Hunter Rawlings announced today (Sept. 5).

"The financial health of the university remains strong," Rawlings said. "This strength has allowed us to continue to invest significant resources in our institutional and unit-specific strategic priorities. Many of the resources necessary to fund our collective priorities have come and will continue to come from gifts, grants and contract funding; however, a significant amount will need to come from reallocation of existing resources into these priority areas. As financial stewards, we must ensure that we use the available resources in the most effective and efficient manner possible to fulfill the institution's academic mission and priorities."

Rawlings said he, Provost Biddy Martin and Harold Craft, vice president for administration and chief financial officer, made the decision to reallocate nonacademic support costs with the help of the Workforce Planning Team and key staff throughout the campus. The work-force planning project was launched in November 2001, in conjunction with a hiring freeze, to streamline administrative functions and identify cost savings across campus. The freeze was lifted in June.

Carolyn Ainslie, vice president for planning and budget, noted that despite its financial strength, the university faces significant fiscal constraints for the next several years.

"Endowment payouts are likely to remain flat, resources from the state of New York have decreased and are expected to decrease further, tuition increases must remain modest, and giving levels are uncertain due to the current state of the economy," Ainslie said. She noted that $20 million is approximately 1.4 percent of the total Ithaca campus operating budget and 5 percent of total salaries and benefits for nonacademic staff.

"Achieving this goal will require a combination of efforts, including work-force planning, program reviews and the implementation of targeted budget reductions. It is our intent to minimize the number of layoffs as effectively as possible," Rawlings said. "To position the university most effectively for the future, we must transform Cornell into an institution that is more agile and responsive to academic program needs, and at a lower cost."

Rawlings said that to achieve the $20 million reallocation of resources, he has accepted the Workforce Planning Team's recommendation for greater integration of effort and resources between university functional offices and operating units throughout the university.

"In some situations this may entail greater consolidation of effort and in other instances it may involve less consolidation, depending on which approach better achieves the objectives," Rawlings said. "In all situations we will seek to simplify administrative procedures and practices."

Ainslie said the hiring freeze resulted in a financial savings of approximately $1.5 million, with reductions in both staff hiring activity and actual payroll expenditures during the period. There was a 50 percent reduction in the number of staff positions posted from November 2001 through June 2002, and the number of new positions created was reduced by one-third compared with the previous year, she said.

The Workforce Planning Team is scheduled to report to members of the Cornell Board of Trustees on Sept. 11, and Rawlings said that progress has been made. He also emphasized that the initial objectives of the work-force planning effort remain valid and strong. Those objectives were to:

• Clearly define the roles, responsibilities, standards of performance and accountabilities within each major administrative area and function throughout the university.
• Realize substantial and ongoing financial savings, as well as increased effectiveness and efficiency, in support services across campus.
• Improve the competitive market-pay position for university staff.

The work-force planning project began with a review of the human resource function across campus. In February reviews were launched in the areas of financial transaction processing and alumni affairs and development.

With the initial stages of the human resources review complete, Rawlings said he has accepted the Workforce Planning Team's recommendation to give the vice president for human resources, Mary Opperman, explicit responsibility, oversight and accountability over the resources needed to provide human resource support to all Ithaca campus operating units. Opperman said the specific operating structure and reporting relationships for human resource staff will require further review and discussion with deans and vice presidents before a plan can be established.

The review of financial processing activities is not yet complete and no recommendations have been made. Rawlings said the preliminary indication is that some level of shared transaction processing across departments will be necessary to achieve desired levels of efficiency, and he expects the final recommendations to result in greater integration between central and local unit operations. The finance review is expected to be completed this fall.

Martin said the next step in the planning process is to work with unit leadership to establish a set of principles and expectations that will guide the development of specific implementation plans.

"We recognize that a 'one-size-fits-all-approach' may not be appropriate in departments with unique programmatic support requirements," Martin said. "We remain committed to a system where control over programmatic responsibility and decision-making remains with units; however, we believe that control and responsibility for some transaction processing and other support activities may well change. Establishing guiding principles and expectations will be important to set the standard for quality service and support required after implementation."

The Workforce Planning Team has been asked to develop specific implementation plans for human resource and finance activities by Dec. 31.

In addition, Ainslie said, the work-force planning effort is proceeding with reviews in alumni affairs and development, student services, information technology support, and facilities.

"Much of the alumni affairs and development review has been completed," Ainslie said. "We do not anticipate any targeted reductions of staff directly involved with these activities, since benchmark data indicate that this work is being carried out efficiently and effectively. And with the start of a major campaign pending, we will likely require more, not fewer, direct staff resources in this area."