U. eschews hiring outside financial consultants

Despite the growing trend among colleges of hiring outside management consultants to help trim their budgets, the University has no plans to take that action for financial counsel, University spokeswoman Cass Cliatt ’96 said in an interview with The Daily Princetonian.

“It’s not something that Princeton would do," Cliatt said of hiring outside consultants. "The simple reason is that we have a very capable staff … who are in the best position to make these decisions."

Cliatt said that while the University does discuss financial matters from outside financial counselors and constultants on a regular basis, they are not paid for their services.

"Good ideas come from many different sources, and we would never turn away a good idea," she said.

Several universities — including Cornell, UC Berkeley and University of North Carolina at Chapel Hill (UNC) — have recently hired consulting firm Bain & Company for its specialized advice on effective cost cutting.

Bain’s 107-page report for UNC, for instance, identified inefficiencies at the university and made recommendations for fields such as procurement operations and information technology, projecting potential savings of more than $150 million per year.

“They turned in their report to us in July … and our job is to take what the consultants provided and implement the ideas that we think are worthwhile,” UNC chemistry professor Joe Templeton told the ‘Prince.’ Templeton leads the Carolina Counts program at UNC that will put Bain’s advice into action.

Cliatt noted, though, that sometimes outside consultants are not as attuned to the inner workings of a university as the institution itself.

“Our administrators understand the culture of Princeton financially, academically and administratively,” she explained. “It would be very difficult for an outside consultant to grasp.”

Cliatt added that the University’s administrators “already have been and continue to be successful in helping us to navigate the new economic realities” through their proposals for $170 million in spending reductions over the next two years.

But Templeton said Bain’s outside perspective was beneficial to UNC’s cost-cutting measures because the company viewed the university as a corporation first and made recommendations accordingly.

“[Bain] looked at our university and said, ‘Here are things you do that every corporate business undertakes: You hire people, you build buildings, you buy materials, you connect to the world through IT operations,’ ” Templeton noted, adding that none of Bain’s recommendations encroached upon academic issues like tenure and courseloads.

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UNC, a public university, receives significant state support and is thus especially vulnerable in tough economic times to budget cuts. The state’s budget proposal for 2009-11, for example, would give the university $168 million less than its chancellors had been expecting.

But as a private institution, Princeton does not depend on state funding for operating costs. Furthermore, Cliatt explained, the University’s endowment acts as a “buffer against hard economic times” by protecting the University from the consequences of changes in state and federal funding.

“Every institution is going to do what’s best for their unique culture and financial circumstances,” Cliatt explained. “We recognize that there are various firms with expertise, but we feel that we have that expertise in-house.”

Editor's Note

This article has been revised from its original form to reflect the fact that the University does accept counsel on financial matters from outside financial counselors and constultants on a regular basis, but does not pay those institutions for their services.