Deans’ Forum
October 7, 2009
1
Agenda
B&F Overview and Strategic Framework
• Tim Slottow
Highlights – Scope, Accomplishments,
Challenges
•
•
•
•
•
Hank Baier – Facilities and Operations
Erik Lundberg – Investments
Rowan Miranda – Finance
Laura Patterson – Information and Technology Services
Laurita Thomas – University Human Resources
Question/Answer
2
B&F Fast Facts
Q. U-M is one of how many
public universities to have a
AAA credit rating from Moody’s
and Standard & Poor’s?
A.
B.
C.
D.
Q. Approximately how many
Human Subject Fee payments
are made per year?
A.
B.
C.
B.
3
7
13
20
Q. How many tax forms
do we file per year?
Q. Roughly what were the net
assets of the University in
2009?
A.
B.
C.
D.
.
10,000
50,000
120,000
500,000
A.
B.
C.
D.
$12.9 billion
$4.2 billion
$8.7 billion
$8.0 billion
3
None – we are a non profit
1
125
1,500
The CFO and the University
Who is Shirley Smith?
4
The Challenge
5
Strategic Framework
B&F Mission and Motto
We partner with the University
community to provide the
technical, financial, physical,
information and human
resource infrastructure
essential to being one of the
greatest public universities in
the world.
“WE MAKE BLUE GO”
6
Strategic Framework
B&F Vision
We will become a high-performance organization by:
• Being known for our deep expertise (both technical and
business)
• Demonstrating our understanding of the University’s
businesses
• Serving as fiduciaries of the University assets
(physical, financial, human, information and technology
assets)
7
Strategic Framework
Goals and Initiatives
Three B&F Strategic Goals
• Become the University’s PROVIDER of CHOICE for the UM services we
offer
• Become the EMPLOYER of CHOICE for high performing staff members
and teams
• Demonstrate BEST IN CLASS LEADERSHIP in managing University
resources with respect to quality, cost, service and long term impact for
the University
•
•
•
Internal implementation of major U-wide initiatives
Best Practices in Leadership and Management
Cost-Savings and Reinvestment
Top Ten Key Initiatives
•
•
•
Clear metrics
Updated annually to align with University goals
Transparent reporting and performance
8
Goal 1
Provider of Choice
Mean Overall Customer Satisfaction
2007
2009
Mean
Mean
Diff
20072009
B&F OVERALL SATISFACTION SCORE
7.3
7.5
*.2
FACILITIES & OPERATIONS
FINANCE
UHR
MAIS (including ITSS)
7.0
7.1
7.4
7.7
7.2
7.3
7.4
7.8
.2
*.2
.0
.1
B&F Overall % Satisfied (rating of 8, 9,10)
56%
59%
*3
B&F Overall % Dissatisfied (rating of 1, 2, 3)
7.1%
7.1%
0
Number of Surveys Received
6,085
11,526
+ 5,441
OVERALL CUSTOMER SATISFACTION
RATING BY B&F AREA
*Statistically significant differences
9
Goal 1
Provider of Choice
Academic Units Only
SERVICE ATTRIBUTE RATINGS
Academic Units Only
1 Understanding of customer's business needs
2 Explanation of University policies and
procedures
3 Communication of service standards
4 Functional/technical expertise
5 Communication of service changes
6 Implementation of service changes
7 Accessibility of service and/or service provider
8 Level of courtesy
Overall Customer Satisfaction
Number of Surveys Received
2007
Mean
2009
Mean
Diff
20072009
7.3
7.5
*0.2
7.3
7.5
*0.2
7.2
7.7
7.1
7.1
7.4
7.2
7.3
2,530
7.5
7.8
7.3
7.3
7.6
7.4
7.6
3,542
*0.3
*0.1
*0.2
0.2
*0.2
*0.2
*0.3
*Statistically significant differences
10
Goal 2
Employer of Choice
Employee Survey Dimension
Climate
Supervisor
Autonomy/Involvement
Workload
Resources/Environment
Recognition
Co Workers
Communication
Training and Development
Task Significance
Compensation
Benefits
Upper Management
Advancement
B&F Job Satisfaction
Jan 2005
59
69
64
61
71
60
72
58
60
72
51
72
54
64
Oct 2006
60
69
66
62
73
60
74
58
61
76
53
72
57
59
March 2008
*62
69
*67
*63
*75
*62
*74
58
61
*76
*56
*74
*58
61
71
71
72
*Statistically significant differences from 2005 to 2008
11
Goal 2
Employer of Choice
Employee Survey Dimension
Climate
Supervisor
Autonomy/Involvement
Workload
Red indicates
Resources/Environment
dimensions
Recognition
with the
highest
Co Workers
impact on
Communication
Job
Training and Development
Satisfaction
Task Significance
in 2008
Compensation
Benefits
Upper Management
Advancement
B&F Job Satisfaction
Jan 2005
59
69
64
61
71
60
72
58
60
72
51
72
54
64
Oct 2006
60
69
66
62
73
60
74
58
61
76
53
72
57
59
March 2008
*62
69
*67
*63
*75
*62
*74
58
61
*76
*56
*74
*58
61
71
71
72
*Statistically significant differences from 2005 to 2008
12
Customer Survey and
Employee Survey Scores
Employee Satisfaction Score ‘08
B&F Mean (7.5)
Perfect 1:1
Relationship
9.0
8.5
8.0
7.5
B&F
Mean (7.2)
7.0
6.5
6.0
5.5
Customer Satisfaction Scores
5.0
5.0
6.0
7.0
8.0
Customer Satisfaction Score ‘09
9.0
Best in Class
Financial Leadership
Target
•
Three years of budget
savings
•
While maintaining
employee satisfaction
•
And increasing customer
satisfaction
Budget
4-6% total savings
during
FY07-FY09
R
14
Achieved
Goal 3
Facilities and Operations
Hank Baier
Associate Vice President for
Facilities and Operations
15
A Thriving Campus!
Six-year campus growth:
• Research expenditures
• Population
• Space
• General Fund space
 36%
 11%
 12%
 10%
Facilities and Operations performance (six years):
• Operations:
• Utilities:  Fuel costs,  BTU/sf
• Capital projects: $94,600,000 funds returned
16
Architecture, Engineering and
Construction
17
18
Occupational Safety and
Environmental Health
19
Parking and Transportation
20
Plant Operations
21
Public Safety
22
Operations Budget
$100M
$90M
$80M
$70M
$60M
$68M
$68M
$50M
$40M
$30M
$20M
$10M
$0M
-$10M
FY2003
FY2004
Budget
FY2005
FY2006
Base Adjustments
23
FY2007
New Space
FY2008
Inflation
FY2009
Utilities Budget
FY09 total expenditures: $111.7 million
Other, $3.0
Housing, $8.0
Parking , $1.1
General Fund, $71.0
HHC, $22.4
Athletics, $2.9
Auxilliary Units, $3.3
24
Utilities
$120,000,000
200,000
180,000
$100,000,000
160,000
Total Cost
Total Cost
BTUs/SF
$60,000,000
120,000
100,000
80,000
$40,000,000
60,000
40,000
$20,000,000
20,000
$0
0
2003
2004
2005
2006
2007
Fiscal Year
Total cost:
BTUs/SF
 56.0%
 5.9%
25
2008
2009
BTUs/SF
140,000
$80,000,000
Capital Activity
26
Capital Budget
Fiscal Year
Projects
Budget
Final Cost
(millions)
(millions)
Funds
Returned
(millions)
2003
153
$156.7
$149.5
$7.2
2004
165
$414.9
$416.2
($1.3)
2005
131
$101.7
$87.1
$14.6
2006
147
$536.2
$508.6
$27.6
2007
196
$250.6
$235.1
$15.5
2008
174
$239.5
$217.3
$22.2
2009 (est.)
89
$53.8
$45.0
$8.8
$1,753.4
$1,658.8
$94.6
Totals
1,055
27
FY10 and Long-term Challenges
Capital:
• Benchmarking
• Major projects (North Quad, C&W)
Utilities:
• Planet Blue - 6% savings on pilot buildings
• 30 buildings annually
Operations:
•
•
•
•
Custodial-OS1
Facilities Maintenance-Work Control-Payroll
Office of Sustainability
Thriving campus
28
29
Investment Office
Erik Lundberg
Chief Investment Officer
30
University Financial Assets
June 30, 2009 Total Market Value = $7.5 billion
Endowment Funds
Working Capital Funds
Veritas
Other(a)
(a) ‘Other’ includes life income trusts, assets that cannot be commingled in the University's investment
pools, uninvested cash balances and other reserves.
31
Endowment Growth
Endowment Funds – End of Fiscal Year Market Value
$9
$8
$7.1
Dollars in Billions
$7
$6
$5.7
$7.6
$6.0
$4.9
$5
$4.2
$4
$3.5 $3.6 $3.4 $3.5
$3
$2
$1
$0.4 $0.4 $0.5
$0.6 $0.8
$1.0
$1.3
$1.6
$2.0
$2.3 $2.5
$0
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09
32
Endowment Growth
Endowment Funds – End of Fiscal Year Market Value
$9
$8
Dollars in Billions
$7
Compound Average
Annual Growth Rate
20 yrs: 14.2%
10 yrs: 9.1%
$7.1
$6
$5.7
$7.6
$6.0
$4.9
$5
$4.2
$4
$3.5 $3.6 $3.4 $3.5
$3
$2
$1
$0.4 $0.4 $0.5
$0.6 $0.8
$1.0
$1.3
$1.6
$2.0
$2.3 $2.5
$0
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09
33
LTP Investment Performance
Long Term Perspective
Periods Ending 6/30/09
Total LTP (estimates)
Major Markets
U.S. Stocks: S&P 500
Non-U.S. Stocks: BMI ex-U.S.
Bonds: Lehman Aggregate
Endowment Universe(b)
Top Quartile
Median
5 Years(a)
7.2%
10 Years(a)
8.9%
-2.2%
3.7%
5.0%
-2.2%
2.9%
6.0%
4.7%
3.5%
5.3%
4.1%
(a) Annualized returns.
(b) Based on Cambridge Associates’ survey of endowments and foundations at about 130 colleges and universities.
34
Investment Strategy
LTP Actual Allocation vs. Model Portfolio
June 30, 2009
Allocation
Absolute
Return
20%
Cash
1%
Fixed Income
10%
Venture
Capital
8%
Model Portfolio
Absolute
Return
16%
Private
Equity 14%
Fixed Income
12%
Real Estate
12%
Energy
10%
Equities
35%
Equities
25%
35
Venture
Capital
5%
Private
Equity
12%
Real Estate
12%
Energy
8%
Goals and Challenges
Generate sufficient returns to
sustain spending and grow the endowment
in real terms over the long run.
Provide steady stream of distributions
to support University operations.
36
Finance
Rowan A. Miranda
Associate Vice President for Finance
37
Functional Responsibilities
Transaction Processing
Cash Disbursements
Accounts Payable
Travel Expense
Revenue & Debt Cycle
Billing & Collections
Debt Issuance
Grant Billing
Accounting
& External Reporting
Fixed Assets/
Property Disposition
Sponsored Research
General Ledger
Compliance Management
Tax Management
Tax Management
Treasury
Management
Cash Management
Compliance
Management
Internal Controls
Payroll Administration
Payroll Administration
Financial Reporting
Planning and Business Transformation
Budgeting
Capital Planning
Business Analysis
Business Transformation
Budget Development for
B&F (& support campus process)
Business Analysis & Cost Accounting
Efficiency & Effectiveness Initiatives
Procurement
Purchasing
Requisition & PO Processing
Negotiation & Contract
Development
Sourcing &
Supplier Management
38
38
Fast Facts
In FY09…
• Payroll processed $230M+ in monthly payments
• Property Disposition had 16,000+ sales transactions and
returned $1.6M back to schools & units
• Procurement Services processed 270,000+ purchase
orders, 640,000+ invoices, and close to $2.5 billion in
spending
39
Fast Facts (continued)
In FY09…
• Treasury issued 50,000 MCards to
faculty, staff, and students
• We administered and maintained over 85,000 unique
chartfield fund, department, project, and program
combinations
• We tracked nearly 7,000 endowment funds with
over $6 billion of market value
40
Major Accomplishments
• New payment process and initial pilot for human
subject fee participants
• Internal controls certification by all units
• Employment, PCard, cash handling, and journal entry processes
• Collaborative management with Investment Office
of university’s liquidity situation
• Project plan for implementation of revised travel and
business hosting expense policy and pilot of
Concur
41
Budget Wins
• Savings of $10M annually
through Work Connections
• Self-insurance through Veritas produced savings of
$23M over the past six years
• Additional indirect cost recovery of more than $25M
over the next three years due to new rate
agreement
• Continued growth of Strategic Supplier Program and
university-wide contracts
• JPMorgan Chase chosen as new PCard vendor
($1M signing bonus)
42
FY10 and Long-term Challenges
• Support campus-wide
administrative efficiency
efforts
• Benchmarking of select
administrative services
Finance
 HR/Payroll
 Procurement
 Information Technology
 Communications
 Development
 Sponsored Research
 Student Services

43
FY10 and Long-term Challenges
• Procurement Strategic Partnering Program
•
Promote smarter buying in academic and administrative units by analyzing
spending patterns and encouraging greater use of strategic contracts
• Campus wide rollout of Concur
• Federal Stimulus Act Compliance and Reporting
• Support IT rationalization efforts
especially on issues related to
funding model/chargeback approach
44
Information and
Technology Services
Laura Patterson
Associate Vice President
and Chief Information Officer
45
46
Functional Responsibilities
• University-wide Applications
• Financial, HR,
• Student Administration,
• eResearch
• DAC (replacement DART)
• M-Reports
• eMploy
• Wolverine Access
• Business Intelligence &
Data Management
• Central Services
(Directory, eMail, Web,
Kerberos)
• Campus Computing Sites
• Data Center Management
• Voice & Data Networks
• Video Streaming and
Conferencing
• Servers, Data Storage, &
Protection
• Security Services
47
U-M IT Strategy
48
U-M IT Strategy
49
IT Rationalization
Implement IT sourcing strategy that provides more
competitive services for less money
Unit
Provided
Services
Shared
Services
(Units
working
together)
Central IT
Provided
Services
50
External
Provided
Services
MAIS Effort Rationalization
Increased capacity equivalent to $1.6 million
Effort to maintain
administrative
systems.
Effort reinvested in-• Business Intelligence
• eResearch
• Enhanced system
features
= est. $1.6 M
51
Application Rationalization
Shadow Financial Systems
• 16 units eliminated shadow financial systems
in 2009
• 22 additional units in transition
• 28 additional departments in assessment
52
MAIS Infrastructure Rationalization
$3 million base reduction in
hardware/software costs
$8,000,000
New Initiatives (Cumulative)
Original Base
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
FY03
FY04
FY05
53
FY06
FY07
FY08
FY09
Telephone Outsourcing
• Third party analysis of traditional landline service
• Findings:
No cost savings by outsourcing our landline
telephone service (35,615 ports)
Provider
Cost
ATT
$15.00 per port
Verizon:
$7.60 per port
U-M ITCom
$7.03 per port
54
Rationalization Approach
Fall
2009
• Benchmarks
• ITS Services
• Unit Assessments
Winter • Funding Model
2010
20102011
????
• Unit Projects
• University-wide Projects
• Re-measure
55
FY10 Strategic Imperatives
IT Rationalization
Shared Products
& Services
• Benchmarks
• Unit assessments
• New funding model
Shared Infrastructure
• Tiered storage
• Virtual desktop infrastructure
• Consolidated data
center plan
• Calendar integration
(Windows consolidation)
56
•
•
•
•
•
•
DART
CTools stabilization
Concur
eRecruit
Student Admissions App
Security Assessment Services
ITS Organization
• Transition
University Human
Resources
Laurita Thomas
Associate Vice President
for Human Resources
57
V5
Did you know…
that in 2008 and 2009 the University of Michigan was named…
“A Great College to Work For”
by the Chronicle of Higher Education?
In its second annual survey of best workplace practices and policies,
U-M was recognized in nine of 26 areas
within three major categories:
Work Environment, Pay and Benefits, and
Institutional Policies.
58
Did you know…
Voices of the Staff
received the 2009
Arbor Award for Excellence,
the most prestigious human resources award in Michigan.
The Arbor Award honors organizations for
innovative human resource practices & programs.
59
Did you know…
The Medical Center discontinued the sale
of cigarettes on its premises in 1972.
Effective July 1, 2011, the
university will implement a
smoke-free policy designed
to help our community
“kick the habit”
and snuff out smoking on
campus.
60
University Human Resources
Functional Responsibilities
21 UHR service areas:
Academic Human Resources  Benefits Office  Career
Development Services  Compensation and Classification
 Early Childhood Programs  Faculty and Staff
Assistance Program (FASAP)  Health System, Flint &
Dearborn Human Resources  HR Strategy and Planning
 HR Communications  HR/Payroll Service Center
Human Resource Academy  Human Resource
Records and Information Systems (HRRIS)  Human
Resource Development  Kids Kare at Home  Mediation
Services for Faculty and Staff MHealthy  Office of
Institutional Equity Recruiting and Employment Services
 Staff Human Resources  Temporary Staffing Services
 Work/Life Resource Center
Visit us on the web at:
61
hr.umich.edu
Major Accomplishments
1.
2.
3.
4.
5.
6.
7.
8.
9.
MHealthy
Health Benefits Strategy
Learning Services
Talent Management
Union Relations
Regulatory Investment
Child Care Initiative
Emergency Hardship Fund
Engagement Gains Achieved through Voices of the
Staff
62
Investments in Health
By year five of its strategic plan,
MHealthy expects to "bend the
health care cost trend" by
1 percent or more annually.
Long-term metrics for Mhealthy include:
reduction in health risk levels
health status improvements
 improvements in health culture
reductions in health care cost trend
 impact on avoidable costs
 impact on absenteeism, worker’s comp
and disability.
63
Budget Wins
The Committee on Sustainable Health Benefits (COSHB) and the
Committee to Study Retirement Savings Plan Vesting Options were
successful in devising the means to maintain our highly competitive
health care and retirement benefits while curbing our longstanding rate of benefit cost increases.
Implementation of COSHB’s
recommendations will:
Preserve access to U-M health plans.
 Help make the costs more affordable
for those earning lower wages.
Protect children with rates lower than
for dependent adults.
Keep our benefits at or above
market averages.
64
Budget Wins
• By transitioning from primarily insured to primarily self-insured
medical plans in 2008, our Benefits office was able to reduce
overall medical plan expenses by approximately
$15 million dollars.
• Cost savings in our self-insured prescription drug plan in
2008 were nearly $3 million due to generic drug use
increasing over 6%.
• U-M generic drug dispensing, now 73%, outpaces national
averages.
65
Budget Wins
• UHR launched an initiative to transform Human Resource
Development (HRD) into a high-impact learning services
center.
• HRD’s Organizational Development consulting services were
discontinued, reducing the HRD budget by 13.9% and
creating a leaner professional development center of excellence
focused on dynamic, collaborative learning.
66
Budget Wins
HR business processes have been enhanced by
leveraging technology for net efficiency gains:
• Paperless, self-service systems (e.g.: benefit elections,
retirement transactions)
• E-business processes now capture data at the source (e.g.:
self-service timekeeping)
• Online transactions improve efficiency and reduce process
time (e.g.: appointment changes)
67
FY10 and Long-term Challenges
•
•
•
•
•
•
•
•
E-Recruit
E-Verify, IPEDS, ADA Compliance
Health Benefits Dependent Eligibility Audit
Retiree Health Benefits
Return to Work
Changing Demographics
Employee Value Proposition
Building a Culture of Health
68
Q/A and Discussion
• Tim Slottow - EVPCFO
• Hank Baier – Facilities and Operations
• Erik Lundberg – Investments
• Rowan Miranda – Finance
• Laura Patterson – Information and Technology Services
• Laurita Thomas – University Human Resources
69