by Joe Sullivan
Even as UT faces steep cuts in state funding, President John Shumaker is pushing ahead with plans to add high level positions that, viewed in isolation, will increase the university's administrative overhead.
In addition to the recent hiring of executive vice president Steve Leonard, who will be based in Nashville, Shumaker is looking to fill the following new posts: a vice president for international development, a Washington-based director of federal relations, and a vice president for information technology. Moreover, several positions are due to be added to the university's fund raising apparatus, and a new College of Public Health is being formed.
All this at a time when Gov. Phil Bredesen has mandated a 7.5 percent spending cut for most state agencies and programs to balance his budget for the fiscal year beginning July 1. Bredesen's finance commissioner, Dave Goetz, told the Tennessee Higher Education Commission late last week that higher ed will be subject to at least a 7.5 percent reduction or perhaps as much as 8.8 percent. He also called for 2.5 percent or more in budget cuts for the current fiscal year.
The obvious question becomes how can Shumaker justify expansionary plans at a time when retrenchment has become the order of the day. The answer, in almost every instance, is that Shumaker believes his new hires will contribute to revenue generation or administrative expense reduction well in excess of their salaries.
Take the executive vice president's position, for starters. While the post is not a new one in the UT scheme of things, Leonard's $225,000 salary raised eyebrows especially considering that he came from a $90,000 associate director's job in the state Department of Finance and Administration (though he'd made considerably more as a senior executive of American Airlines in the past). Another eyebrow raiser was the lease of new office space in Nashville to house Leonard and his aides and provide Shumaker with an office when his duties take him there. But Shumaker is insistent that Leonard and the Nashville presence will pay big dividends.
"Steve has a very good administrative sense. He will be able to work through the administrative processes, re-engineer them, and make them more efficient," Shumaker asserts. He sees "horrible problems" at present with everything from purchasing to data processing and predicts that a Leonard-led streamlining effort "is going to yield tremendous cost savings for us." He believes outsourcing some services may be part of the solution and says, "I've asked Steve to take this on as his first priority and to give me a report in 60 days." But he won't be pinned down as to where outsourcing might occur, and he downplays any notion that layoffs are imminent. "Our people are fine," he says with politesse. "So we're not talking reducing—necessarily—the number of people working for the university. We might do that eventually, but just by changing what people do and how we do it we can avoid a lot of cost and do things more efficiently."
Where adding a new vice president for international development is concerned, Shumaker insists that this position will also have a payoff. (A search process is expected to produce a recommended candidate for the position this week.) "The job is very specific: to create international opportunities that are revenue generating so they can not only pay for overhead but also generate a surplus that we can use for faculty and student travel," he says. A UT MBA program in Prague is already in the offing, and the planned high school in Beijing that UT would run jointly with Chinese authorities is also a profit-making venture, Shumaker claims. "Donors and private sources are paying for it, and the business plan we've seen suggests it could generate at least $2 million a year in profits after it gets started—probably in 2004," he says.
Similarly, hiring a Washington-based director of federal relations—which may be imminent—is also calculated to ring the register by way of helping UT get a bigger slice of the federal research pie. "We have one or two good people who go up there once or twice a month, but that's not enough. With the increased investment that the federal government is making in defense, health research, and various other critical fields, we need someone to help our congressional delegation help us," Shumaker contends.
Establishing a Memphis-based College of Public Health ties in with this effort. "We already have all the degrees in place and all the faculty in place, but they've been diffused throughout the organization. In order to tap into resources in Washington that are only growing, we've got to become organized and accredited as a School of Public Health....That's a license to print money, and it's going to pay back many times over," Shumaker boasts. UT's Board of Trustees is expected to approve formation of the college at its meeting next month.
The other source of revenues for which Shumaker plans to add more people to the quest is the private fund-raising campaign that's due to be launched next fall. The goal is to increase UT's endowment (now about $500 million) to $1 billion and beyond. "We need to add some key staff to gear us up for that campaign. That's investment that pays money."
The trouble is that a lot of these investments cost money in the short run. Yet the short run is when UT faces the most severe state funding crunch it's experienced at least since the recession of the early 1990's. A 7.5 percent state spending cut would shrink the UT system's budget by some $30 million, $12 million of it on the Knoxville campus.
To reconcile these cuts with putting UT on a path toward achieving Shumaker's ambitious Scorecard 2010 goals would be a challenge for Houdini. And for all the adroitness he's demonstrated since taking the UT helm last June, Shumaker isn't a magician.
One senses a stiff upper lip above his facile tongue when he asserts: "The principle is that you can still reduce expenses while moving ahead and investing in critical areas that are important to the university and the state...The scorecard is the template. If it doesn't contribute to the scorecard, then it's not off the table [in terms of cuts]. But anything that contributes to that scorecard in terms of better research, better students, and more effective academic administration we will keep supporting. And revenue generation will be very important—from the private sector, the federal government and entrepreneurial ventures."
UT is fortunate to have a president who can keep a stiff upper lip in these extraordinarily troubled times.
February 6, 2003 * Vol. 13, No. 6
© 2003 Metro Pulse
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