The University of Texas at Austin (UT) pulled the plug on the most important component of its Shared Services experiment, a consolidation of support services that was supposed to save UT hundreds of millions of dollars but would have eliminated hundreds of jobs on the university’s campus.
In a message to staff, UT’s Senior Vice President and Chief Financial Officer Darrell Bazzell announced the phase out of the Central Business Office (CBO) pilot program.
The CBO pilot consolidated support services such as procurement, accounting, inventory, human resources, and payment and revenue collection for a select number colleges, schools, and support units at UT.
If the pilot had been successful, all support services at UT would have been transferred to the CBO.
When the Shared Services plan was first proposed three years ago, it was estimated that as many as 500 jobs would be eliminated.
The proposal sparked an organized opposition campaign of employees worried that they might lose their jobs, faculty concerned that centralizing services would interfere with their teaching and research, and students angry that a centralized distant bureaucracy would create a barrier to vital services.
Opponents of Shared Services argued that centralizing support services would destroy the sense of community cultivated for decades among staff, faculty, and students and that it was yet another step toward the corporatization and privatization of public higher education.
Bazzell said that CBO was being phased out because it “has not produced the savings and efficiencies initially anticipated when it was launched.”
Instead of saving money, the CBO was costing an additional $600,000 per year. According to a Frequently Asked Question page about the CBO phase out, “this lack of efficiency is the principal reason we are ending the pilot.”
CBO was one of the two main components of UT’s Shared Services plan. The other was the consolidation of information technology services, which has not changed.
Shared Services was the vision of a select group of business grandees appointed by then UT President William Powers. The group’s purpose was to recommend changes that would transform UT into a more businesslike operation.
The group was composed of eminences from private equity companies, consulting firms, energy corporations, and the furniture trade.
The chair of the group was a top executive for Accenture, a well-known outsourcing and consulting firm.
In 2004, Accenture was awarded an $899 million contract to privatize Texas’ health and human services.
The state Health and Human Services Commission in 2007 fired Accenture because it failed to produce the cost savings it promised and because service deteriorated quickly once the company began implementing its plan.
“It failed miserably to provide services or save money,” wrote state senator Eddie Lucio in a 2007 op ed piece for the Valley Morning Star.
That failure didn’t dissuade the Texas attorney general from hiring Accenture to redesign the state’s child support computer system. Nearly ten years after the project began, the new system, called T2, is still being developed and cost overruns have reached $200 million dollars.
At UT, the group of business leaders tasked with transforming the university was led by Steve Rohleder, one of Accenture’s top executives. The group issued a report in 2013 entitled “Smarter Systems for a Greater UT.”
The report estimates that by implementing the CBO and consolidating information technology services, UT would save between $150 million and $200 million over ten years.
The report also contained other recommendations for making UT greater such as increasing parking fees, privatizing UT’s dining facilities, and increasing student food costs.
“Smarter Systems for a Greater UT” alarmed a large segment of the UT community, who formed the Save Our Community Coalition (SOCC), a united front that included the Texas State Employees Union CWA Local 6186 and a number of student and community groups.
The coalition led a grassroots movement opposing Shared Services and other recommendations in the report.
SOCC succeeded in stopping the privatization of food services and got the university to scale back Shared Services to a pilot program.
Now that CBO is being phased out there is some concern about its employees.
Bazzell said that 30 positions in the CBO may be eliminated, but he added that the university would try to place them in other jobs on the UT campus.
Anne Lewis, a senior lecturer at UT, a documentary film maker, and an executive board member of the Texas State Employees Union, expressed concern for those whose jobs may be eliminated
On the union’s University Caucus Facebook page, Lewis urged the administration to place those facing layoffs “in departments within our community and with control over their work and creativity, a way that worked better for all.”
“So much for in sourcing and shared services — a lousy model for public universities,” she added.