Cost-cutting programs could save millions more than initially estimated

If all pending and approved projects of a controversial UC Berkeley cost-cutting initiative meet their projected savings, the campus could save millions more than originally estimated.

The Operational Excellence initiative — which began in 2009 as an effort to combat budget cuts by decreasing administrative costs — has saved the campus $21 million so far, according to a report released Jan. 13 outlining the project’s goals for the 2012 year.

When the initiative was first announced, campus officials had set a goal to save $75 million annually starting in fiscal year 2016 through trimming budgets in information technology, student advising and human resources, among other areas.

But according to the report, the initiated projects, approved projects and projects pending approval should save a total of $112 million starting in fiscal year 2016 — over $30 million more than expected.

According to Bill Reichle, communications manager for the initiative’s program office, the original savings goal was set before the projects had been fully fleshed out.

“As projects have become approved and implemented, the savings projections have become more clear,” he said in an email.

However, the campus will borrow up to $50 million from the UC Office of the President in order to hire project teams, fund the program office and  pay a consulting firm to advise on the project. The campus plans to repay the office with the initiative’s savings.

According to the report, the campus has spent $11 million of the loan money thus far, and approved projects are projected to cost $42 million. The campus plans to spend $71 million total — within its original spending expectations of between $70 million and $75 million — throughout the initiative, with an additional $5 million annually thereafter to keep the projects running.

The initiative’s “implementation phase” will continue with a program to allow faculty and staff to buy departmental products through one system, which will become available online Feb. 21 and is expected to save the campus $45 million annually.

The initiative’s executive committee — composed of campus administrators including Chancellor Robert Birgeneau — has also delegated funding toward access to software, leading to deals with Adobe and Microsoft.

The approved projects are expected to save the campus $67 million annually, according to the report.

Although initiative leaders are not reviewing any proposals right now, Reichle said they are expecting to decide whether to fund a project that would group staff members from human resources, finance, research administration and information technology into one location beginning in March.

The initiative has been a source of controversy since 2009, when UC Berkeley hired a consulting company to identify ways to cut costs as a result of state budget cuts.

Backlash against the initiative stemmed primarily from its “unit restructuring” project, which involved laying off 125 staff members in June 2011 and saved the campus $21 million as a result.

According to an analysis of the layoffs conducted by Vice Chancellor for Equity and Inclusion Gibor Basri, Assistant Vice Chancellor of Human Resources Jeannine Raymond and faculty program head for Operational Excellence Andrew Szeri, the percentage of African American employees laid off exceeded that of other minorities.

Though the analysis states that the number of African American employees laid off did not rise to a level of a “legal disparate impact” because of the low number of employees involved, they were “disproportionately over-represented among more recent hires in job groups where layoffs occurred.”

Reactions to the impending layoffs were widespread, from an ASUC DeCal revolving around the initiative to the occupation of the fourth-story ledge of Wheeler Hall in March 2011.

Amruta Trivedi is the lead academics and administration reporter.

A previous version of this article incorrectly stated the projected savings for this year could run as high as $75 million. In fact, this figure represents the projected savings per year starting fiscal year 2016.