UC Office of the President Transform: CFO/COO Realignment and Carbon - - PowerPoint PPT Presentation

April 13th, 2015

UC Office of the President

Transform: CFO/COO Realignment and Carbon Neutrality Initiative

ABOG Annual Conference

Rachael Nava Executive Vice President, Chief Operating Officer

AGENDA

§ Initial impressions of UC operations § Overview of UCOP CFO/COO Realignment § President’s Strategic Initiatives: Becoming carbon neutral § Operating Efficiency

• I. Initial Impressions of UC

Operations

First, a little bit about me…

§ Started Feb 9th, 2015 § Alumna of UCSC § Operations executive § Background is in healthcare

• Public, non-profit health plan
• $1B budget, 320K members

§ Other experience: community clinics, non-profits, biotech § Motivated by complex problem solving

My first few weeks…drinking from the firehose

What am I focused on?

§ Goal 1: Learning/understanding as much as I can § Building relationships § Campus visits § Assessing processes and structures § Implementing final phases of CFO/COO Realignment

What am I learning?

§ Strong commitment to mission across the system § Shared governance is important, but not always easy § System and campus cultures can be different § Leverage existing programs for efficiency

• Working Smarter
• Campus-based efficiency programs
• UCOP-specific programs: Efficiency Review and Strategic

Operations Review

§ Opportunities to partner for more scalable, flexible

• perations

• I. CFO/COO Realignment

CFO/COO Realignment background

§ With CFO transition in 2014, opportunity to look at org design

“…we will undertake a full review of Business Operations and the Office of the Chief Financial Officer to determine the best structure for both divisions to ensure maximum effectiveness, efficiency, and support for the goals of the Office of the President.”

• President Napolitano

§ OP staff and campus representatives participated in review process

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CFO/COO Alignment Schedule

PHASE ALIGNMENT COMPONENTS TIMEFRAME

1 Alignment Review April – June, 2014 2 Transition/Communication Plan July - August 2014 3 Alignment Implementation August ‘14 – March ‘15 4 Optimization Post Implementation

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§ Two divisions: COO & CFO § A “one-stop” service model § Opportunities to streamline processes § Consolidate Operational units under COO § Realign Local OP services to focus

• n needs of UCOP-based clients

§ Energy & Sustainability merged and elevated § UCPath Center moves to COO § Program Management Office created § Consolidate Financial units under CFO § Budget moved under CFO § Capital Markets Finance and Capital Resources Management merged under CFO § Realign and consolidate some functions for synergies § Central Travel moved to Procurement; § Banking & Treasury Services moved to OCIO

Key Realignment Decisions

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Realignment for Organizational Optimization

Office ¡of ¡the ¡Chief ¡ Investment ¡Officer ¡ ¡Jagdeep ¡Bachher

COO

Rachael ¡Nava IT ¡Services Tom ¡Andriola Energy ¡& ¡ Sustainability

• D. ¡Obley ¡(Interim)

Program ¡ Management ¡Office

• Z. ¡Nelson ¡(Interim)

Human ¡Resources Dwaine ¡Duckett UC ¡Path ¡Center Jim ¡Leedy

CFO

¡Nathan ¡Brostrom Capital ¡Asset ¡ Strategies ¡& ¡Finance ¡ ¡ Sandra ¡Kim Risk ¡Services Cheryl ¡Lloyd Budget ¡Analysis ¡ & ¡Planning (Operating ¡Budget) ¡ Debbie ¡Obley Financial ¡ Accounting (Controller) ¡Peggy ¡Arrivas UCOP ¡Administrative ¡ Services Vacant ¡ Financial ¡Services ¡ & ¡Controls Dan ¡Sampson Procurement ¡ Services ¡Bill ¡Cooper CFO ¡Immediate ¡ Office

Zoanne ¡Nelson Cathy ¡O’Sullivan ¡

UC ¡Path ¡PMO ¡Mark ¡Cianca COO ¡Immediate ¡ Office

Cathy ¡O’Sullivan ¡(Interim) Red ¡box ¡denotes ¡unit ¡that ¡is ¡new ¡or ¡was ¡ moved ¡or ¡significantly ¡reorganized. ¡

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Long-term Financial Stability

• Long-term Budget Model – The University is committed to developing a multi-year,

sustainable financial plan which addresses long-term needs and priorities

• Reducing our Cost Structure – Made significant strides in reducing our cost structure through

Working Smarter and other efficiency efforts, like UC Care

• Revenue Generation – Renewed systemwide effort to generate new long-term sources of

revenue, such as through new online strategies and technology commercialization

• Tuition Policy – Committed to developing a tuition model which offers students stable and

predictable tuition increases Optimization of Day-to-Day Operations

• Efficiency Review – A grassroots effort to encourage UCOP staff to identify opportunities to

reduce costs, streamline processes, eliminate duplication, increase transparency and improve the quality of services. Campuses are also being encouraged to conduct similar efficiency projects Focusing renewed effort on:

We are committed to a long-term fiscal plan which supports our core mission

• II. Presidential Initiatives:

Becoming Carbon Neutral

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The University has introduced a series of initiatives that reinforce its mission and commitment to honoring its social contract. These initiatives generate financial and social returns, conveying UC’s public value in a highly visible way.

Presidential Initiatives Summary

• A. Sustainability
• Carbon Neutrality
• Global Food
• B. Global Impact
• Mexico
• President’s Challenge Grant
• Technology Commercialization
• C. Tuition Policy
• Tuition Stability
• D. Academic

Pipeline

• Graduate Students
• President’s Post-doctoral Fellowship

Program

• E. Equity
• Undocumented Students
• F. Transfer Students
• Community College Pipeline

Through Presidential Initiatives, UC is actively demonstrating its public value

The Carbon Neutrality Initiative seeks to make UC the first carbon-neutral major research university

Carbon Neutral by 2025

On-Campus Energy Efficiency and Renewables

Develop Biomethane Add Off-Campus Electrical Supply Reduce On- Campus Demand

Transition from natural gas to biomethane to fuel UC’s efficient electrical plant facilities Invest in energy efficiency and renewable generation to reduce campus load Enter the wholesale electrical market to control our supply 16 ¡

Carbon Neutrality Initiative Highlights

§ Launched wholesale electricity program § Procured largest solar installation by any university in the country § Convened Global Climate Leadership Council § Established student fellowship program § Organized carbon neutrality research workshop

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Cost Avoidance through Energy Efficiency

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Onsite Renewable Energy

March ¡2015 ¡

Cumulative LEED Certifications

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March ¡2015 ¡

Food

§ Global Food Initiative launched § 5 campuses and 3 medical centers exceeded 2020 goal to purchase 20% sustainable food

March ¡ 2015 ¡

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Transportation

§ Davis is one of the only two Bicycle Friendly University Platinum-rated campuses in the country § UCSF recognized as “best university in the country” for commuters § Nearly 200 electric vehicle charging stations systemwide

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Waste Reduction

§ UC Irvine diverts 93% of waste from landfill

• This amounts to only 100 pounds of waste per capita annually

§ Zero Waste Sporting Events

• UC Berkeley #1 in RecycleMania “Game Day” competition

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• IV. Operating Efficiency

UC is actively employing diverse operational and financial strategies

To address financial challenges, UC is implementing both short and long-term reforms that will cut costs and generate new revenues

• Working Capital/Liquidity

Strategies generated over $300 MM in additional income and distributions during FY 2013-14 – The University moved an additional $2 B from STIP into TRIP (for a total of $4.5 B) in FY 2013-14 § TRIP earned a 14.63%* annual rate of return § STIP annual rate of return was 1.58%*

• Procurement

– P200 Strategic Procurement is designed to save $200 MM each year

• Health and Welfare Benefit

Savings ¡ – New medical plan structure saves an estimated $92 MM (CY2014); UC Care agreement projected to save $12 MM in first year and potentially more in future

• Captive Insurance Fiat Lux
• Enrollment

– Additional non-resident students

• Financial Aid

¡ – Opportunities to minimize future return-to- aid costs: Middle-class scholarship program Operational Reforms and Financial Strategies Balance Sheet Business and Financial Enrollment, Tuition, and Financial Aid

* As of June 30, 2014

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The Working Smarter Initiative has achieved over $660 MM in financial gain in just 4 years*

• Working Smarter is a portfolio of over 30

projects aiming to reduce administrative costs, improve operational efficiency, and find new sources of revenue across the University

• The most significant cost savings
• pportunity is having common, integrated

systems which will replace individual campus systems such as those in fund accounting and procurement, and other larger scale administrative systems The initiative, which was designed to streamline operations and develop a more sustainable financial model is well on its way to exceed its goal of $500 MM in 5 years

$426 MM Cost Savings $237 ¡MM ¡ Revenue ¡ Genera/on ¡ $663.7 MM Fiscal Impact

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* ¡Source: ¡Working ¡Smarter ¡website: ¡h@p://workingsmarter.universityofcalifornia.edu/ ¡

P200 seeks to redirect $200 MM to teaching, research, and public service

P200 Program will recapture $200 MM annually currently lost through sub-optimal purchasing contracts and practices through innovate procurement practices ¡

$100 $120 $140 $165 $200

$128

FY12-13 (baseline) FY13-14 (est. & actual) FY14-15 (est.) FY15-16 (est.) FY16-17 (est.) Results and Projected Benefits

All numbers in $ MM

Benefits Actual Estimated FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 System-Wide $60 $75 $97 $111 $130 Local Campus $40 $53 $43 $54 $70 Total Benefits $100 $128 $140 $165 $200

$ MM

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• UC continues to play a vital role as the nation’s, and arguably the

world’s, leading public research university system

• Under the leadership President Napolitano, UC has introduced a series
• f initiatives that demonstrate the value that it offers the nation, not
• nly for the populace it educates, but also through transformative

elements of public education and research that ultimately serve the public good.

• The University continues to strive to meet its pillars of excellence –

Quality, Access, and Affordability

• UC is committed to a long-term fiscal plan that supports our core

mission, while simultaneously addressing continuing challenges related to post-retirement benefits, federal research funding, and healthcare reform

Concluding Remarks

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Thank You

Rachael Nava Executive Vice President, Chief Operating Officer University of California Office of the President rachael.nava@ucop.edu 510-987-0500