Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, July 28, 1995 TAG: 9507280092
SECTION: VIRGINIA PAGE: B-1 EDITION: METRO
SOURCE: ALLISON BLAKE STAFF WRITER
DATELINE: BLACKSBURG LENGTH: Long
When Virginia Tech's newly renovated Shultz Dining Hall reopens this fall, some of the new furniture will be missing.
That's because the university has to follow strict state regulations when it goes shopping. It can't fire its state-mandated supplier: the Department of Corrections.
"Part of the state procurement act requires Virginia corrections [have] first right of refusal on all furnishing bids [for state agencies]. They're frankly very unreliable in terms of delivery," said Ed Spencer, who runs Tech's dining and dorm operations.
"If we were with a private vendor and they performed like that, they'd be stricken from the list of eligible vendors," he said.
Over at the University Bookstore, it's different. They've operated for 30 years as part of a nonprofit corporation exempt from cumbersome state regulations. They buy the business way -from the supplier with the best quality for the best price.
By fall, Tech administrators expect to know if they'll form a second nonprofit corporation, this one an umbrella to run services such as parking, dining halls and dorms. Known as "auxiliary services," these operations, worth $72 million last year, are essentially small businesses to support campus life.
It's also possible the school will create a local authority or commission, in part to protect benefits for state employees, said Minnis Ridenour, Tech's executive vice president.
In either case, the option is under study this summer. The idea is to tighten up administration and plow the money back into the university, which in turn will keep student fees down. Last year, for instance, the bookstore operation returned $700,000 to the school.
Layoffs are not expected. Tech already has watched its work force shrink substantially this summer after the state-offered buyout, the Workforce Transition Act.
"It might eliminate office management kinds of positions in the long run, but 39 residential and dining [workers] took the WTA. We have asked at this point to restore only seven of 39," said Ed Spencer, who runs the university's dorm and dining services.
In other words, the "fat" has already been trimmed from the university payroll.
To make the move - and there's no assurance that the university will - the new management body will have to clear at least $3.8 million a year, the current return for auxiliaries, said Ridenour.
He stresses that the move is not "privatizing" in the sense that services will be contracted to outsiders to run.
"I don't even like to use the word 'privatizing,''' he said.
Tech's study comes as universities around the state struggle with vastly decreased finances and work forces trimmed by the buyout. Meantime, enrollments are showing signs of rising.
This fall, Radford University students will return to find a new health clinic, now operated by a private health-care provider. Last year, the university turned its bookstore operation over to Barnes & Noble, the national bookseller. The university's chief financial officer, Charles King, said the school gets $200,000 annually from the book giant, and benefits from its volume buying.
"We were at best breaking even, and we felt like Barnes & Noble could bring in volume buying and discounts we could not get close to getting, because we were restricted on [state] bids," he said.
The health-care center was turned over amid campus controversy on the pros and cons, but student complaints had reached the point where the school had to do something. Collegiate Health Services this summer has spent $150,000 to renovate the clinic - something the state university couldn't afford to do.
Radford has not considered the corporate idea, which is unusual in the state. If Tech goes ahead with its corporation, it does so at a time when George Mason University in Fairfax is launching perhaps the state's boldest move in such a direction. Mason already contracts out more than 50 services; its nonprofit corporation would be set up to administer those contracts. Annual savings are estimated at 10 percent to 15 percent for each service. The $1.5 million mail service, for instance, would save $150,000 to $175,000.
But urban George Mason "is located in an area where there are a lot of very capable firms and individuals who can provide the services we need," said Maurice Scherrins, the university's vice president for finance and planning. "For any service, there's always competition and a high number of proposals and offers that come to the table. The situation is healthy for the university.
"If this was Radford or Longwood in Farmville, then you've got to deal with the cards you've been given."
Tech services now being considered as possible candidates for the new corporation include the university golf course, housing and dining, parking, transportation and the university motor pool, telecommunications operations and the Donaldson-Brown Continuing Education Center. Dining and housing alone were $28 million enterprises last year.
by CNB