East Carolina University Final PACE Report
In the fall of 2006 President Bowles and the General Administration challenged each campus to conduct a comprehensive review of its internal funding priorities in order to seek efficiencies and economies that would represent better-faster-cheaper ways of conducting business. This challenge was presented as a means of a continuous improvement process and each campus was directed to find quantitative improvements which could re-direct dollars to core functions (teaching, research, public service) as well as qualitative improvements that would focus on improving those campus processes and operations that directly or indirectly enhance student, staff and faculty quality of life.
PACE-Phase I categorized where the preponderance of university funds were being spent at the respective UNC campuses. Prior to asking each individual campus to “scrub” its own budget functions, UNC-GA led by example in finding budget cuts that could be claimed as savings or could be re-invested in new initiatives. UNC-GA achieved both goals by identifying savings in excess of 10% which allowed UNC-GA to provide savings back to the legislature while also funding changes in the way business was done. Dr. Steve Ballard formally informed the ECU Chancellor’s cabinet on June 15, 2006 concerning the PACE process and added his strong support. Dr. Ballard also charged Mr. Kevin Seitz, Vice-Chancellor for Administration & Finance with executing ECU’s part of the PACE program.
This approach to savings and re-investment was championed by President Bowles in two additional Chancellor memoranda (August 9, 2006, and August 18, 2006) that encouraged UNC chancellors to keep the goals of the PACE initiative in the forefront as they analyzed and evaluated the cost drivers at their schools. President Bowles also established University-wide working groups to look for efficiency and economy opportunities that were applicable across all institutions. These groups completed their work and submitted recommendations. Many of these recommendations are in the process of being studied for broad implementation.
Dr. Ballard followed the Bowles’ memoranda with an August 30, 2006 note to his Cabinet whereby he reiterated his commitment to the PACE study. Dr. Ballard also explained his charge to the Chancellor’s Cabinet and directed them to seek savings in direct costs, through cost avoidance, or time saved by improving techniques or procedures.
With Dr. Ballard’s appointment as Chancellor and the selection of a new Vice Chancellor for Administration & Finance (Kevin Seitz) East Carolina University had already initiated some PACE-like initiatives which were aimed at improving the overall fiscal posture of some of its more important programs. The most serious effort was an analysis of the Brody School of Medicine (BSOM) where the initial focus was on improving the fiscal picture of the Medical Faculty Practice Plan.
East Carolina University informed Mr. James Smith, Associate Vice President-Finance at UNC-GA that our interim report (submitted on February 16, 2006) would center on the BSOM work since that was the major area where we needed to improve. In our interim report ECU submitted 3 PACE initiatives that dealt specifically with the BSOM and projected to save $5.94M in 2007-08 and $3.7M on average throughout 2011-12. This work was crucial to putting the BSOM Medical Faculty Practice Plan back into a healthy fiscal posture and allowed the re-investment of the funds into protecting plan solvency. Through application of the PACE principles this auxiliary operation dramatically improved its funding profile. This alone has guaranteed one crucial mission of East Carolina University and the BSOM (community service). The reporting of this success on the state PACE forms proved a bit difficult since the practice plan is operated as an auxiliary function and the funds that were generated as a new revenue stream fit neither category of savings or cost avoidance. However, the successful application of PACE principles needed to be part of ECU’s report and therefore it was determined that ECU would report these numbers as savings.
East Carolina University’s February interim report also presented information dealing with a shift in the way vacant positions will be reviewed in the future. In the interim report East Carolina University identified $995,000 in personnel savings and another $90,000 in cost avoidance for a personnel salary impact of over one million dollars. Since that time other school divisions have been looking at ways to combine jobs leading to less direct cost as well as reaping additional savings from benefits costs. The Vice Chancellor for Administration & Finance, the Interim Vice Chancellor for Health Affairs and the Vice Chancellor for Student Life have all gained long term savings from personnel consolidations. This approach to position review is now encouraged throughout the university as positions vacate and technology allows personnel to perform tasks more efficiently. The idea of adding tasks to existing jobs and harvesting the financial benefits of job consolidation is currently managed through ECU’s Human Resources Department.
Since the interim report was submitted East Carolina University has instituted a systematic approach to its current and future management of the PACE effort. East Carolina University is committed to inculcating a PACE mentality into the business of the campus ranging from funding ongoing work to carefully scrutinizing requests for funds for new work. East Carolina University is committed to ensuring that all university personnel seek ways to improve the efficiency and effectiveness of ongoing projects as well as present optimum operational scenarios for new funding requests. The adoption of this new way of doing business has come about due to repeated calls for better accountability of project management.
In June 2006 East Carolina University established its PACE working committee. This committee is made up of knowledgeable personnel representing every aspect of the university community. This committee met several times and was instrumental in paring a list of 139 university generated PACE study items by considering them for near term review (FY-07-08) or far term review (beyond FY 08). This review included input from the Chancellor’s Executive Council who was provided the study items and then asked to categorize them for near, or far term review. The total list of ideas provided to the Executive Council included items added from other university interim reports along with President Bowles’ March PACE update letter to the Chancellors. The Executive Council’s review provided the PACE working committee with a more manageable list of items for possible implementation during fiscal year 2007-2008. The Executive Council review also provided the PACE working committee with items needing longer term review. The long term review list also includes items that were moved to the out years by the PACE working committee after they decided certain topics would require more in depth study. At the PACE working committee May 14th in-process review (IPR) thirteen items were eliminated from further study.
The PACE working committee will continue to manage the PACE process in order to maximize the benefits derived from continuous review and improvement. We believe the approach of having annual items projected through CY08 and beyond will embed PACE thinking into business at East Carolina University well into the future.
All items from the interim report have been added to the final report spread sheet, as well as cross referenced on the saving re-allocation sheet. Since the original submission (ECU’s Interim Report, February 16, 2007) there has been a slight change in our format. Headings have shifted from reporting results under three titles (personnel, efficiency and economy in managing the Brody School of Medicine, and efficiency and economy involving reduced energy costs and other smaller activities) to a more inclusive series of headings (Analyzing and Streamlining Routine Institutional Processes, Energy Conversation, Elimination of Redundancy, Technical, and Other). The numbers on the UNC-GA spread sheets are directly related to these five categories and explained in detail on the Initiative Sheets.
In the future PACE initiatives will be considered at the beginning of each year’s budget process so that we collectively have insight into how the fiscal resources of the university have been managed and to what extent the PACE approach has helped departments and colleges assist in funding part of their own projects.
With the submission of this report East Carolina University recognizes that we are not finished with our PACE work. On the contrary we find ourselves at the beginning of a new way to examine ourselves each time we choose to spend the resources entrusted to us by the people of North Carolina.