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The Badger Herald

Independent Student Newspaper Since 1969

The Badger Herald

Independent Student Newspaper Since 1969

The Badger Herald

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Consulting firm a huge risk for UW with uncertain dividends

Budget cuts are flying around mercilessly these days. Madison is facing a 13-percent budget cut in Scott Walker’s proposed budget bill and needs to find ways to absorb those costs without just passing them on to students. Public authority status, included in the budget, is one proposal aiming to do just that, but Chancellor Biddy Martin is looking for other cost-reductions as well. This week, the administration announced a contract with Huron Consulting Group to look for ways to improve efficiency on campus and save the university money.

On one hand, it makes sense for the University to hire an outside, objective voice to look at expenditures and make recommendations for future spending. Anyone from the University who attempts to make such recommendations would necessarily be biased; the chemistry department would want to allocate more funds to chemistry and fewer to classics, while the classics department would have the opposite incentive structure. This is not to say representatives of the respective departments are unintelligent, fiscally irresponsible or disparaging of other fields, but simply to raise the point that individuals will look after their own interests. Likewise, alumni will be biased toward those programs that impacted them most profoundly during their time at Madison. An outside voice could provide the objectivity that will be necessary for the university to make the hard choices, and trim back on spending.

On the other hand, the university is probably going to spend about $3 million on this firm, which is a sizable chunk of money. The first question is whether this expenditure is necessary, or whether, even with inherent biases, the university could make the necessary cuts on its own. The second question is whether the firm that has been hired was really the best choice – it has been investigated by the Security Exchange Commission on charges of financial misrepresentation.

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Currently, the agreement only costs $100,000 for the University – that’s a special, flat fee that guarantees 2,560 hours of work. The sum is nothing to laugh at, but when looked at in the context of the university’s budget of $2.7 billion for the 2010-2011 academic year, it’s not quite as much. There are apparently going to be eight consultants. Assuming eight hour work days and a five day work week, that’s eight weeks of work. (But it would take one person working 16 months to put in the same time. Once those 2,560 hours are used up, the consultants will be paid on a differential scale ranging from $175 to $272 an hour. Now there’s a profession. While fully acknowledging my ignorance of the matter, it seems to me that if the university has to keep detailed financial records because of its status as a state institution (and just for purposes of being a solvent institution), then it shouldn’t take much longer than two months for eight people to go through all the paperwork and figure out what’s going on, and where changes should be made. I would think, probably naively, that if you’re good enough, areas in need of improvement should jump out at you upon close study. And if you’re getting paid that much per hour, you’d better be pretty good at what you’re doing.

There’s going to be a steering committee led by top administrators, including Martin, an advisory committee of university and private stakeholders, and, finally, Huron will work with faculty, students, staff and others to collect data. This agreement addresses the first concern I raised, about the objectivity that an outside firm would bring – the firm is answering directly to those very people during every step of the process. Instead of paying committee members overtime and paying the consultants, why not just pay the committee members to look for efficiency measures? UW has dealt with huge cuts before without hiring a consulting firm. Yes, these circumstances are unique, given the possibility of public authority status, the sheer magnitude of the cuts and the general political climate of the day, but we do boast some of the most intelligent and talented people of the day as faculty of this university. Surely they can adapt.

The second major issue with this contract is that Huron has been investigated by the SEC for improper financial disclosures, had to resubmit earnings in 2008 and 2009, and was under investigation again in February. If it is truly necessary to hire an outside consulting firm to look at efficiency measures for the school, shouldn’t we at least be sure we are contracting a reliable, trustworthy firm? UW-Milwaukee Vice Chancellor Darrell Bazzell defended the choice to hire Huron because they had worked with the university when it acquired a new computer payroll system, but that is a completely different area of expertise than making spending recommendations. If the university is looking for greater flexibility in all things financial, it definitely shouldn’t lock itself into a partnership with a firm of questionable repute.

There could be substantial benefits to hiring a consulting firm to look at university expenditures and make a few suggestions. Or, it could be a complete waste of hundreds of thousands – if not millions – of dollars, that, although not paid for with taxpayer dollars, would still set the university back quite a bit. When betting that much on something so questionable, I for one would not take on the additional risk of hiring a shady firm.

Elise Swanson ([email protected]) is a second-year majoring in political science and English.

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