Doing Business at Penn: A View from the EVP's Office

1. Doing Business at Penn: A View from the EVP's Office Association of Business Administrators Meeting September 22, 2005

2. The EVP Division Office of the Executive Vice President EVP Support Office of Budget & Management Analysis Office of Audit and Compliance Division of Business Services Division of Human Resources Information Systems and Computing Office of Investments Division of Public Safety Division of Finance and Treasury

3. Integration with the Penn Compact Access Integrated Knowledge Engagement EVP Division Serves as an Enabler

4. FY 2005 Accomplishments Priority Themes * Resource Creation * Transparency * Collaboration

5. 2005 AccomplishmentsResource Creation • Benefit Contract Compliance yields $6 million • Driving Revenue Growth • Total Bookstore retail sales up 12.6% • Inn at Penn revenue 14.5% over last year • Penn becomes a loan consolidator • Refinancing of long term debt produces $11 million of debt service savings

6. 2005 AccomplishmentsTransparency • Total Compensation Statement developed and mailed to employees • Rollout of U@Penn • Advanced recommendations of Ad-Hoc Committee on Safety in a Diverse Environment

7. 2005 AccomplishmentsCollaboration • Upgrades of Oracle general ledger, purchasing and Penn Marketplace systems • Enhanced safety initiatives implemented in parking facilities • Rollout of next phase of PennERA • Introduction of On-line Directory

8. Challenges Facing Higher Education

9. Projected Cost of Education 3% Growth/Year 5% Growth/Year • Key Implications: • Ability to maintain “need blind” admissions • Willingness to make educational investment • Public perception

10. Sustained Federal Budget Deficits • Key Implications: • Poor environment for research funding • Likely to result in higher interest rates • Continued pressure on federal student aid programs Source: CBO, Washington Post

11. Rising Employee Benefit Costs • Key Implications: • Ability to sustain competitive compensation levels • Ability to offer current set of benefits *Active employees only; excludes retiree medical

12. Medical Expense Trends1988 - 2004 198819932004 Medical Expenses $ 13.2 M $ 24.3 M $ 57.4M No. of enrollees 6,789 7,655 11,584 Cost per enrollee $1,944 $3,174 $4,953 During this period, the number of enrollees increased by 70%, but Penn has experienced a 154% increase in annual medical expenses.

13. Management/Administrative Costs Management & General Expenses/Total Operating Expenses • Key Implications: • Limited economies of scale as Penn grows • Need to understand institutional differences and develop benchmarks Source: Audited Financial Statements

14. Emerging Challenges… • Computer Security • Management Issues • Public Safety

15. FY 2006 Goals Revised format for Goals and Strategies in ‘06 • Initiatives to Support the EVP Goals • Individual Division Goals • Personal Development Goals • Stretch Goals (personal and/or divisional)

16. 1. Initiatives to Support the EVP Goals Create resources through effective, collaborative, and innovative approaches Achieve productivity enhancements and cost avoidance and incremental resource generation equal to 5% of the aggregate cost of the EVP Division (approx. $5M) Selected Examples: • Complete next milestones of the Advancement Project • Develop plan for Fixed Assets System • Complete review of revised retiree medical benefit plans • Pilot a “spend analysis” to identify cost savings

17. 1. Initiatives to Support the EVP Goals Recruit, retain, and develop a diverse workforce 80% of EVP division personnel will complete some form of professional development or training over next 12 months Selected examples: • Develop comprehensive diversity recruitment program • Initiate a management orientation program • Deliver a Sponsored Projects Certification program

18. 1. Initiatives to Support the EVP Goals Enhance the quality of experiences for those who interact in the Penn community Selected Examples: • Achieve the key milestones of PennERA / PennERS • Implement on-line Tuition Assistance application • Complete Student Borrowing Management System • Increase awareness about identity theft and privacy • Expand health and wellness programs and offerings • Reduce overall crime within Penn boundaries

19. 2. Individual Division Goals Execute FY06 Risk-based Audit Plans Conduct Compliance Assessments and Risk Mitigation Initiatives Execute Privacy FY06 Work Plan Implement New Budgeting System Transform the Budget Process Improve Data Accuracy and Transparency Campus Development Reinitiate MDP Facilitate Economic Impact Study Control Costs of Central Administration OACP OBMA EVP

20. 2. Individual Division Goals Online Tuition Assistance Application Long-term care Benefit revisions Labor negotiations Family-friendly Programs / policies Reduce Worker’s Comp Costs Business Control Model Implementation TIF Policies Increased training Tuition Distribution Reporting Faculty Database Enhance Security Support Business Continuity Human Resources Finance ISC

21. 2. Individual Division Goals Continuous Implementation of Ad-hoc Committee Recommendations Supervisory and Patrol Zone Initiatives Emergency Preparedness Purchase Spend Analysis Break-even Analysis of Certain Business Units Evaluate Expansion of PCC Marketing and Brand Promotions Improve on Endowment’s 5 and 10 year performance Diversification strategy Continue to Develop Investment Office Public Safety Business Services Investments

22. 3. Personal Development Check-Up On Yourself • Health (888) PENN-BEN • Financial (877) PENN-RET • Professional Development (215) 898-3400

23. Effective Management • Reasons cited for success: • Employs entire team • Plays to people’s strengths • Manages around weaknesses

24. The Long-Term Vision: A Truly Effective Organization The Penn Compact EVP EVP Division Provost’s Office President’s Center Schools Centers FRES OGC

25. Questions and Discussion What is working well? What can be improved? What’s on your mind?