doing business at penn: a view from the evp's office

Doing Business at Penn: A View from the EVP's Office

Association of Business Administrators Meeting

September 22, 2005

The EVP DivisionOffice of the

Executive Vice President

Office of Budget & Management

Analysis

Office of Auditand

Compliance

Division ofBusinessServices

Division ofHuman

Resources

InformationSystems andComputing

Office of Investments

Division ofPublic Safety

Division of Finance and

Treasury

EVP Support

Integration with the Penn Compact

EVP Division Serves as an Enabler

Engagement

IntegratedKnowledge

Access

FY 2005 Accomplishments

Priority Themes

* Resource Creation

* Transparency

* Collaboration

2005 Accomplishments

Resource Creation

• Benefit Contract Compliance yields $6 million• Driving Revenue Growth

– Total Bookstore retail sales up 12.6% – Inn at Penn revenue 14.5% over last year

• Penn becomes a loan consolidator• Refinancing of long term debt produces $11 million

of debt service savings

2005 Accomplishments

Transparency

• Total Compensation Statement developed and mailed to employees

• Rollout of U@Penn• Advanced recommendations of Ad-Hoc

Committee on Safety in a Diverse Environment

2005 Accomplishments

Collaboration

• Upgrades of Oracle general ledger, purchasing and Penn Marketplace systems

• Enhanced safety initiatives implemented in parking facilities

• Rollout of next phase of PennERA • Introduction of On-line Directory

Challenges Facing Higher Education

Projected Cost of Education

39,635

53,264

64,561

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2005 2014 2014

2005 2014 2014

Key Implications:•Ability to maintain “need blind” admissions•Willingness to make educational investment•Public perception

3% Growth/Year 5% Growth/Year

Sustained Federal Budget Deficits

Key Implications:•Poor environment for research funding•Likely to result in higher interest rates•Continued pressure on federal student aid programsSource: CBO, Washington Post

Rising Employee Benefit Costs

Growth in Penn Medical Costs*

13.224.2 33.3

57.4

124.7

020406080

100120140

1988 1993 1998 2004 2008P

Active Medical

*Active employees only; excludes retiree medical

Key Implications:•Ability to sustain competitive compensation levels•Ability to offer current set of benefits

Medical Expense Trends1988 - 2004

1988 1993 2004

Medical Expenses $ 13.2 M $ 24.3 M $ 57.4M

No. of enrollees 6,789 7,655 11,584

Cost per enrollee $1,944 $3,174 $4,953

During this period, the number of enrollees increased by 70%, but Penn has experienced a 154% increase in annual medical expenses.

Management/Administrative Costs

0.09 0.09

0.065

0.095

0.076

0.00

0.02

0.04

0.06

0.08

0.10

Penn 1999 Penn 2004 Duke 2004 Stanford2004

Yale 2004

Source: Audited Financial Statements

Management & General Expenses/Total Operating Expenses

Key Implications:•Limited economies of scale as Penn grows•Need to understand institutional differences and develop benchmarks

Emerging Challenges…

• Computer Security

• Management Issues

• Public Safety

FY 2006 GoalsRevised format for Goals and Strategies in ‘06

1. Initiatives to Support the EVP Goals

2. Individual Division Goals

3. Personal Development Goals

4. Stretch Goals (personal and/or divisional)

1. Initiatives to Support the EVP Goals

Create resources through effective, collaborative, and innovative approaches

Achieve productivity enhancements and cost avoidance and incremental resource generation equal to 5% of the aggregate cost of the EVP Division (approx. $5M)

Selected Examples:•Complete next milestones of the Advancement Project •Develop plan for Fixed Assets System •Complete review of revised retiree medical benefit plans•Pilot a “spend analysis” to identify cost savings

1. Initiatives to Support the EVP Goals

Recruit, retain, and develop a diverse workforce

80% of EVP division personnel will complete some form of professional development or training over next 12 months

Selected examples:•Develop comprehensive diversity recruitment program•Initiate a management orientation program •Deliver a Sponsored Projects Certification program

1. Initiatives to Support the EVP Goals

Enhance the quality of experiences for those who interact in the Penn community

Selected Examples:• Achieve the key milestones of PennERA / PennERS• Implement on-line Tuition Assistance application• Complete Student Borrowing Management System• Increase awareness about identity theft and privacy• Expand health and wellness programs and offerings• Reduce overall crime within Penn boundaries

2. Individual Division Goals

Execute FY06 Risk-based Audit Plans

Conduct ComplianceAssessments and

Risk MitigationInitiatives

Execute Privacy FY06 Work Plan

Implement NewBudgeting System

Transform the Budget Process

Improve DataAccuracy andTransparency

Campus Development

Reinitiate MDP

Facilitate Economic Impact Study

Control Costs ofCentral Administration

OACP OBMA EVP

2. Individual Division Goals

Online Tuition Assistance Application

Long-term careBenefit revisions

Labor negotiations

Family-friendlyPrograms / policies

Reduce Worker’s Comp Costs

Business ControlModel Implementation

TIF Policies

Increased training

Tuition DistributionReporting

Faculty Database

Enhance Security

Support BusinessContinuity

Human Resources Finance ISC

2. Individual Division Goals

ContinuousImplementation of Ad-hoc CommitteeRecommendations

Supervisory and PatrolZone Initiatives

EmergencyPreparedness

PurchaseSpend Analysis

Break-even Analysis ofCertain Business

Units

Evaluate Expansionof PCC

Marketing andBrand Promotions

Improve on Endowment’s 5 and 10 year performance

Diversification strategy

Continue toDevelop Investment

Office

Public Safety Business Services Investments

3. Personal Development

Check-Up On Yourself

1. Health (888) PENN-BEN

2. Financial (877) PENN-RET

3. Professional Development (215) 898-3400

Effective Management

Reasons cited for success:

•Employs entire team

•Plays to people’s strengths

•Manages around weaknesses

EVP

OGC FRES

President’sCenter

Provost’sOffice

Schools Centers

ThePenn

Compact

EVPDivision

The Long-Term Vision: A Truly Effective Organization

Questions and Discussion

1. What is working well?

2. What can be improved?

3. What’s on your mind?