NATIONAL HARBOR, Md. — As enrollment and funding pressures have intensified in recent years, colleges are increasingly looking to share services with each other to help stabilize their own finances.
Most dramatically, that can entail a merger. But colleges are also collaborating more on backend services and operational functions to lower their costs and increase their bargaining power with suppliers.
In some cases, institutions working in the same system are looking at how they can share, combine and centralize services and operations to lower their costs. One recent example comes out of California State University, where campuses that have historically operated independently are trying to save costs by working together more on administrative operations.
Cal State leaders speaking at the National Association of College and University Business Officers annual conference just outside of Washington, D.C., offered their own experience as a lesson for others interested in partnering across institutions, whether they're part of a large public university system or not.
Robyn Pennington — Cal State’s chief of staff for business and finance — told a NACUBO panel on Sunday that in the past, the system’s campuses collaborated organically around common needs in what she described as a “coalition of the willing.”
David Beaver, the system’s chief procurement officer, noted those sorts of organic partnerships — two institutions looking for a common solution — can help guide colleges that are looking to find partners beyond their own campuses.
Leadership buy-in is also a key lesson the Cal State team said could benefit other colleges looking into shared services. While early ad hoc efforts bore some fruit and helped lay the groundwork for broader collaboration, Pennington said the latest push had backing from the entire system’s leaders.
“It was incredibly important for our chancellor and the presidents to say, ‘We are doing this,’” Pennington said.
Driving the push are many of the financial pressures familiar to higher education. Across the Cal State system, campuses are cutting their budgets as state funding declines and operating costs increase.
Starting in 2023, Cal State started looking seriously at how campuses could collaborate more closely and more systematically in their operations. Officials created a multi-campus steering committee to gather feedback from campus leaders, surveys and focus groups and to prioritize where to dig in on shared services.
Starting points
Those working on the project came up with 15 opportunities for creating shared services — and began with those they were most confident would succeed: procurement, cybersecurity and benefits management.
They avoided the more difficult areas for now, even if there was interest — such as in shared payroll management services, which Cal State finance departments were keen for — or if the initiative might yield more cost savings.
“Initiatives like that can fail. Then you don't have a chance to do the next one,” Beaver said.
The procurement initiative alone is expected to yield a one-time cost savings of $20.7 million and annual savings of $3 million, according to Pennington and Beaver’s presentation.
The effort revolves around getting every campus onto the same digital sourcing platform and, from there, creating a system where purchase requests from one campus can be processed anywhere in the system. That is especially helpful given understaffing on some of the larger campuses’ procurement teams, Beaver said.
Beaver also outlined the creation of three “centers of excellence,” or hubs within the system based on procurement knowledge.
Those centers can focus on specific procurement issues, namely insurance certificates, purchase order processing and public works such as construction, as Beaver explained. Public works procurement, for example, can be very complicated and take time to learn — but is not always needed on a given campus.
The goal of it all is to speed up the purchasing process, reduce repetitive work across campuses, and match knowledge and skills on Cal State’s campuses with their needs.
Campuses are also being grouped into regions for buying purposes when it comes to certain kinds of purchasing, such as janitorial services, where suppliers tend to be regional operators.
The creation of a systemwide cybersecurity center, meanwhile, is meant to fill a pressing need for Cal State while avoiding the costs of recreating a solution on each campus.
When it came to cybersecurity efforts, Beaver said, “our campuses were really hard-pressed to do this themselves.”
