UU strategic financial choices

Memo from Director Loren J. Rullman to Division of Student Affairs

June 10, 2004

Dear Division of Student Affairs Colleagues:

I am writing to inform you of a decision made by UU senior leadership to close the Michigan League Buffet and to reduce by one position the staffing in the Pierpont Commons Cafe. We all know this is a challenging budget time at the U-M, and the budget challenges we face in UU make these decisions more pressing. Even so, these decisions are predicated principally upon the desire to better serve the needs of students and others in our campus community. The decision to close the ML Buffet will allow UU to open a different, more mission-focused, operation.

In the fall term we intend to open a different format of food service in the ML Buffet space which will offer a different, high quality, and more limited menu (e.g. coffee & sandwiches), and which will be open longer hours for student studying and wireless computer use. You may already be aware that the ML Buffet has shown a net financial loss for many years (losing well over $100,000 annually) and operates only during weekday lunch hours. With this change we believe we will eliminate operating losses while simultaneously providing better service (e.g., food service, studying/community space, wireless computer access) for students and others we serve. Thus, this decision not only reduces large operating losses at a critical financial time, but also creates entirely new strategic offerings that are not currently available and which better meet campus needs. The position of Pierpont Commons Assistant Food Service Worker is being eliminated because of continued operating losses, and because the current production level does not suggest a need for this position

UU is a financial auxiliary that must generate its own revenues to fund operating costs; these sources of revenue are often those that are cut by campus departments during budget reduction decisions. Because of the combination of mandated budget cuts and a decline in revenues, we have had to make budget reductions of over $400,000 for FY05, as well as make a second withdrawal from operating reserves of $100,000. From FY03 to FY05, UU has reduced its budget by approximately $1.6 million. All of these decisions have been very difficult.

An unfortunate outcome of these decisions is that eight (8) positions are subject to reduction-in-force (RIF):

• The position of Manager of Michigan League Buffet
• The positions of Kitchen Cleaner, Cook, Foodservice Worker (2), Stockkeeper, and Service Clerk - all in the Michigan League Buffet
• The position of Assistant Food Service Worker in the Pierpont Commons Cafe All individuals will have Human Resources services available to them pursuant to applicable SPG policies or AFSCME contract terms.

With the FY05 financial forecasts we have at this time, we do not envision further reductions-in-force or elimination of organizational areas. The increases in fixed costs, combined with the reduction in GF allocation and purchased UU services, are hampering UU in meeting its mission. As an auxiliary enterprise we must, however, continue to be vigilant in maximizing our operational efficiencies to reduce pressure to make further financial modifications while concurrently seeking new ways to serve students and others.

Although this is a difficult time of tough decisions, I am confident that the choices we now make will make UU a stronger organization which is even better able to serve students, faculty and staff. Our current obligation is one of shifting financial resources to areas of greatest mission priority, allowing us to clearly demonstrate our values through the programs and services of UU. This is a difficult time for many of us. Any member of the UU Senior Leadership team can be helpful if you have further questions. We will miss these colleagues.

Thank you for your support of UU staff during a very difficult time.

Loren Rullman
Director, University Unions
University of Michigan