When Boise State University President Bob Kustra addressed JFAC this morning, lawmakers asked him about the proposal for a higher education CEO. Kustra pulled no punches, saying BSU’s estimates of the savings of consolidating “back-office” services across Idaho’s public universities came in at $6 million, not the $43 million estimate that’s been floated. And he said it’s unclear to him what a CEO would do, and how that position would function – and that it makes sense to do the planned consultant’s study first, before deciding what staff positions should be added at the state Board of Education.
“Can you give us your take on this CEO concept that’s been floated for higher education?” Sen. Mark Nye, D-Pocatello, asked Kustra.
“I think the place to start is the reason for such a position,” Kustra responded. “And it seems to me that what I’ve heard in discussions, the reason is that we do feel that as universities and colleges spread across the state with our own missions and our own roles, is there a way that we can centralize some services that we all do – is there a more cost-effective way of offering those services? The ones that usually come to mind are HR, IT, purchasing … The question is, what can be centralized and what can’t? What is a back-office function, which is the terminology used to describe what we ought to take from each of the campuses and move up to some central level.”
“We have a significant difference of opinion on that with some of the people from outside of state government who have done this analysis,” Kustra told lawmakers. “There’s one analysis out there that says we’re going to save $43 million - $43 million dollars - by centralizing back-office functions. But if you look at their definition of back-office functions, it goes way beyond the definition I would suggest, and includes things like physical plant.”
Kustra told JFAC, “When I was discussing this with the governor yesterday, we both raised our eyebrows, like, ‘How could the physical plant be a back-office function, and how do you move that to some central resource, when you’re talking about somebody emptying wastebaskets on a campus?’ It just doesn’t make any sense.”
He said when Mark Heil, vice president for finance and administration at BSU and the former controller at Micron Technology, “put his green eyeshades on and took a look at these numbers, instead of $43 million, he said you’ll be lucky to get $6 million dollars in savings out of this. Because you just have to identify and define more carefully than was done in this original analysis what are back-office functions.”
“I do agree that having a consultant come in here, next fiscal year, and turn ‘em loose on the state’s universities and colleges, finding out what back-office functions should be elevated to some central office – if we can save money that way, then that’s something we should do. But I think it needs to start with the consultant’s study.”
Gov. Butch Otter is proposing $500,000 next year for the consultant’s study, and more than $250,000 for the new CEO, variously referred to as a “chief education officer” or an “executive officer,” who would be paid $200,000 a year and would become the highest-paid state employee, not counting university presidents and football and basketball coaches. The state Board of Education endorsed the idea last week.
“As far as the CEO position is concerned,” Kustra said, “I don’t know anything about how the responsibilities between the executive director of the state Board and the new person will be defined.” Kustra paraphrased a Bible quotation, from Matthew 6:24, saying, “No man can serve two masters without loving one and hating the other. Well, I don’t think we want to have that situation in any state Board of Education here in Idaho. So I think you’re going to figure out who’s going to be in charge. And I’m not so sure I can understand that. I don’t know that.”
He added, “More than anything else, let’s start with a consultant’s study, then figure out who else we need in the state Board office. We do need more expertise in the state Board office, the state Board office is small. It’s a small staff that’s doing a big job. … Especially now that we’re going to look at a whole new initiative here, there definitely needs to be more help.”
Kustra’s comments echoed those of Rep. Wendy Horman, R-Idaho Falls, during yesterday’s JFAC hearings, when she was questioning state board Executive Director Matt Freeman about the proposal.
After today’s hearing, Senate Education Chairman Dean Mortimer, R-Idaho Falls, said he didn’t believe Kustra had turned thumbs-down on the CEO. “He came around and said the board needs more expertise,” Mortimer said. “Yes, we need the evaluation piece, but we also need more expertise. I think we should do both, I do. I’ve worked hard on it the last two weeks, and I believe it is the right time and it’s important that we do both.”
JFAC Co-Chair Sen. Shawn Keough, R-Sandpoint, had a different take. She said she has “mixed feelings,” but may support the consultant’s study. “I’m a little hesitant about the CEO,” Keough said. “I think Dr. Kustra said it far more eloquently than I can.” Keough also pointed to Horman’s questions from a day earlier, wondering what the organizational chart will be once the CEO is added.
“I kind of thought that the executive director of the Office of the State Board of Education was the CEO,” Keough said. “So I’m not supportive of that at this point, because I just don’t see the need out there now.”
With the consultant’s study, she said, “We can take a look and see what the best way to go is. At this moment in Idaho’s history, our institutions – they’re independent. In the case of community colleges, they’re elected boards in those communities and the voters have a say in their governance.” She questioned whether the CEO proposal was a first step toward a chancellor system – a unified university system with multiple campuses, rather than separate and distinct universities. “If so, let’s be up-front about that, because that would be a significant change from where we are today,” she said.
Officials have pointed to Maine, which went through a similar process with a consultant’s study and consolidating back-office services, but that state went to a chancellor system, not separate universities with a CEO. The move freed up enough savings to freeze tuition for six years.