Cash-Strapped University of California Spending Millions on Consultants

Berkeley paying $3 million for budget consultants

The University of California at Berkeley's top boss says you have to spend money to save money.

That’s why Chancellor Robert Birgenau is paying Bain & Company, a consulting firm based out of state, $3 million to analyze the university budget and determine how and where to cut costs.

This move is coming at a time when many employees have been laid off, salaries cut, courses reduced and workers furloughed. Employees and students at University of California campuses across the state staged a walkout last month, leaving their classes and workplaces in protest of increasing tuition fees and decreasing paychecks.

In a statement posted on Berkeley's website, Birgenau points out that the because of dramatically reduced funding from the state, the school now is now dealing with a deficit of $150 million for the 2009-2010 school year.He says the cuts that the university has made so far have only been “temporary, short-term actions” and school needs to find more permanent options.

“It is an unsustainable long-term financial strategy,” said Birgenau, who has served as the university’s chancellor for the last 5 years. “We are now planning for a future that relies less on volatile state funding. Though we continue our political advocacy, striving to convince Sacramento to reverse its disinvestment in higher education, we are also planning for what is likely to be even less state funding next year, particularly if the substantial federal stimulus funding that was included in this year’s budget is withdrawn.”

Birgenau says he has created “Operational Excellence,” a group of representatives from faculty, staff, students and alumni who will work alongside Boston-based Bain & Company “to build upon and expand the work that is already underway to reduce our costs and streamline operations.”

But members of University Professional and Technical Employees, a Berkeley union, are not happy with Birgenau’s decision.

When asked what she thought about the consulting company’s involvement with Berkeley's budget, Carolann Buckmaster, a spokesperson for the union, laughed bitterly.

“I was trying to think of how many jobs [the $3 million fee] might save,” Buckmaster said. “I’m disgusted. If people don’t see something wrong with that, then I can’t help them.”

“Berkeley doesn’t need to cut anymore and if they are creating a position to make more cuts, it should have been someone in-house,” Buckmaster said. “They shouldn't be spending money on an outside consulting firm.”
Berkeley, after all, has a top-ranked graduate school of business. Couldn't the budget become a student project?
Bain already has a history with the university system. The consultancy recommended a merger between UCSF and Stanford's hospital systems. Millions of dollars later, Buckmaster said, the school had to spend money on what she calls “a de-merger” because the idea turned out to be a financial catastrophe. With a resume like that, Buckmaster said it’s hard to believe the company was hired again.
But Birgenau says the budget analysis is not something that could have been performed internally.
“Undertaking a process of this scope and scale is a fulltime endeavor for a full team of professionals and experts,” Birgenau said. “We simply do not have the internal capacity to divert our faculty from their core academic mission to manage a program of this size.”
He also said “self-diagnosis is not always impartial” and “fresh ideas from outside the campus” could be one of the keys to making this process successful.
Bain & Company is working on similar financial analyses at the University of North Carolina and Cornell University.
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