1. Cost Savings Task Force Report Board of Trustees July 15, 2005

2. Background  Nearly $127 million recycled since 1992-93  Programs eliminated or merged as new ones added  Effective quality improvement programs 2

3. Cost Savings Task Force Results 2003-04 and 2004-05 3  $20,961,000 in annual savings and non- tuition income enhancements  Equivalent to $350 per student per year  Total amount of tuition increase avoided: 3.8 percent

4.  Cost Savings$ 2 443 000  Non-Tuition Income Enhancements 3 500 000  Task Force Target $ 5 943 000 Task Force Target for 2005-06 4

5. Cost Savings$ 3 451 000 Budget Recycling3 714 000 Non-Tuition Income Enhancements 3 500 000 Total$10 665 000 Equivalent to $180 per student per year Additional tuition increase avoided: 1.7 percent Task Force Results for 2005-06 5

6. Approach  Captured centrally: – Selected budget reductions – Non-tuition income enhancements – Budget recycling  Internal unit reallocations  Retained within operating units: – Savings – Cost avoidance – Operating efficiency 6

7. Budget Reductions and Income Enhancements Captured Centrally Budget Reductions: Employee Benefits$ 2 500 000 Outreach 561 000 Administrative Streamlining390 000 Non-Tuition Income Enhancements: F&A Recovery3 500 000 Budget Recycling: Budget Reductions From All Units3 281 000 Central Recycling433 000 Total$10 665 000 7

8. Cost Savings Summary  Cost Savings and Recycling 2003-04$ 11 561 000 2004-054 189 000 2005-067 165 000  Income Enhancements 2003-04$ 2 900 000 2004-052 311 000 2005-063 500 000 Tuition increases avoided – 5.5 percent 2003-06$31 626 000  Total

9. Internal Unit Reallocations  Moves funds from lower to higher priorities within units  Based on strategic plans  $3,281,000 internal reallocations for 2005-06 9

10. Savings, Cost Avoidance and Efficiency  An on-line bidding event where the buyer posts a requirement and suppliers “bid” on the opportunity to sell.  Penn State is an early adopter in higher education  Savings of $1,043,000 since July 2003 10 Reverse Auctions

11. Savings, Cost Avoidance and Efficiency 11 Electronic Purchasing  Penn State e-Buy pilot will be implemented Fall 2005  Expect annual savings of $1,380,000 per year

12. Savings, Cost Avoidance and Efficiency 12 Travel Costs  Electronic Reimbursement System (ERS) will pilot in October 2005  Expect savings from improved efficiency and improved contracts  Expanded use of teleconferencing/videoconferencing

13. Savings, Cost Avoidance and Efficiency Computer Purchases  ITS bundles equipment orders from multiple units (e.g. PC’s and software)  $500,000 saved this year on advanced computing hardware

14. Savings, Cost Avoidance and Efficiency  Copier Management Program $1 250 000  Master Maintenance Agreement 350 000  Print Management Program 250 000 14 Other Projects in Progress Expected Savings

15. Graduate Program Review  Three-year, comprehensive review of graduate programs  Reviewed 315 degree programs  Dropped 18 graduate degree programs and 47 graduate courses  Channeled resources to more viable programs 15

16. Cost Savings Summary  Completion of successful 3-year plan for cost savings  Continuing initiatives: – Energy savings – Electronic purchasing – Reverse auctions – Administrative streamlining – Reducing health care costs 16

17. Major Planning Initiatives  Evaluation by Middle States Commission on Higher Education  Penn State’s Strategic Planning Process

18. Penn State’s Planning Goals 1.Enhancing academic excellence 2.Enriching the educational experience of all Penn State students 3.Building a more considerate and civil University community 4.Serving society through teaching, research, and service 5.Developing new sources of income and reducing costs 18

19. Focus on Enriching the Educational Experience Goal 2: Enriched educational experience Middle States Self-Study Unit-Level Strategic Plans

20. Middle States Outcome  Comprehensive self-study completed  Successful Review Team visits  Penn State has been re-accredited for another 10-year period  Affirmed University’s compliance with all eligibility requirements 20

21. Integrated University Assessment Plan  First-Year Seminars  Out-of-class experiences  Student learning in General Education courses  Student Support Services 21 Committee will develop a plan to carry out assessments and use the data to improve programs and services with prospective focus on

22. Unit Strategic Plans  Plans submitted by all major budgetary units  Involvement by faculty, staff, and students  Excellent unit plans that dovetail with the University’s overarching goals  Contribute to the University’s composite Strategic Plan

23. Common Themes of Unit Strategic Plans  Focusing on the undergraduate experience  Enhancing international opportunities, internships, and undergraduate research  Building an eminent faculty in emerging academic fields

24. Common Themes of Unit Strategic Plans, continued  Expanding the use of technology in teaching and learning  Providing enhanced undergraduate scholarships and graduate support  Conducting regular program reviews  Increasing collaboration between University Park colleges and the other campuses

25. Next Steps  Maximize the use of resources  Enhance academic quality and student experience  Use strategic planning to guide our progress  Pursue greater University-wide assessment