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UTK Chancellor announces decision to opt out of campus outsourcing plan

Chancellor Beverly Davenport announced Tuesday her decision to opt out of the proposed plan to outsource facilities management jobs on campus.

After months of protests from students, staff and faculty calling for leaders to "opt-out" of Governor Bill Haslam's outsourcing plan, UT-Knoxville's chancellor has answered their call.

Chancellor Beverly Davenport announced Tuesday her decision to opt out of the proposed plan to outsource facilities management jobs on campus.

"This decision was reached after considerable analysis of proposed savings and a close examination of our current and future operations," Davenport said in a letter to the campus. "I am deeply indebted to our staff, led by Senior Vice Chancellor for Finance and Administration Chris Cimino, who has worked diligently since 2015 to evaluate outsourcing on the Knoxville campus."

Davenport said the goal of the proposed plan was to improve efficiencies on campus, but decided to opt out because of the complexities behind the work done in research centers and the campus' commitment to East Tennessee's economy and workforce.

Gov. Haslam responded shortly after, saying he will continue to support the concept of establishing a statewide outsourcing contract and that the goal of working with services provider Jones Lang LaSalle was to equip state universities with "tools to manage budgetary needs" and aid keeping statewide tuition and fees down.

"Using the expertise of the private sector is not a new concept to the state; outsourcing has been used to supply a variety of quality services for many years," Haslam said. "This most recent professional contract is no different and it’s already proven to provide excellent service at a low cost to taxpayers."

The United Campus Workers group criticized what they call Haslam's "outsourcing frenzy" for targeting benefits-paying jobs at public colleges and universities.

But at the time of the plan's proposal, Haslam's outsourcing advisers and consultants said it would save $28 million on campuses each year, while protecting the jobs of all currently employed campus maintenance workers who are deemed to be "qualified and productive." Many state universities have opted out, though, saying it did not provide a substantial reduction in costs.

Haslam agreed in February 2016 to hold an outside review of the privatization plan before having Tennessee's higher education systems decide whether to participate.

Eventually, outcry led to the state reconsidering the plan, and in August 2017 the Tennessee General Assembly heard a bill to introduce oversight in the outsourcing plans. Were the university were to "opt-in", United Campus Workers believed as many as 10,000 facilities jobs, including hundreds in Knoxville, would be outsourced.

Those who opposed the plan feared it will result in job loss, loss of oversight and accountability, reduced services and negative consequences for local businesses which provide services to campuses.

In a taping of Inside Tennessee earlier this summer, Haslam said workers were protected under his plan.

"We've put the protection in there. It's clear. They won't lose seniority, benefits or salary and we put protection of quality of service. Now, every institution gets to go back and choose for themselves," Haslam said.

Twenty-two local businesses contracted with the university sent a letter to UTK's Chancellor Beverly Davenport in August urging her to opt-out.

Davenport said she received "volumes of mail" and attended dozens of meetings on the issue.

Other state campuses have also decided to opt out of the plan, saying it does not provide a significant financial benefit. UT Chattanooga said it could not identify cost reduction opportunities with the Jones Lang LaSalle proposal.

UT Martin saw similar results, saying the savings were not significant with the proposal. A comparison between the JLL budget and the budget revised by the campus found the JLL option would have saved less than $14,000 out of the more than $5.5 million total budget, a mere quarter of a percent.

According to the UT Martin report, the cost of maintaining facility services for its basic infrastructure on its campus would have actually increased by $28,000 under the JLL option due to various contracting fees and the addition of a governance cost. To offset the costs of those fees -- custodial, HVAC, and grounds maintenance budgets within plant and housing services departments would have been slashed by as much as 28 percent in some funds.

UT's Health Science Center in Memphis released a report saying it did not believe there was a need to consider outsourcing all its facility jobs as the savings were derived from leveraged procurement and sourcing, however, it did determine it would receive substantial savings through outsourcing its mechanical services area specifically through JLL. Those services had previously been outsource before that, though.

On the Knoxville campus Tuesday, United Campus Workers, a group that's been vocal against outsourcing, gathered on campus to celebrate the Chancellor's decision.

"This is a victory not only for our facilities services workers, but it's a victory for our community, for our local businesses who would have lost out on contracts," United Campus Workers President Diana Moyer said. "It's also a victory for taxpayers in the state of Tennessee, who rely on oversight and transparency with contracts."

Campus leaders also weighed in on the decision. UT Student Government Organization tweeted in support of the decision. UT Faculty Senate President and Professor Beauvais Lyons said they are happy the Chancellor heard them.

"We've been looking at this through the Faculty Senate, our budget and planning process, and we want to make sure the University made a data-informed decision and we very much agree with Chancellor Davenport," Lyons said.

State Finance and Administration Commissioner Larry Martin also released a statement disagreeing with, but respecting the universities' decisions.

“President DiPietro has been very open and helpful as we have considered the merits of Facilities Management Outsourcing on the various University of Tennessee campuses," the statement reads. "This administration fully believes there are significant cost savings to be gained through our contract with JLL for facilities management, particularly on the University of Tennessee-Knoxville campus. Nonetheless, and even as obvious as the savings are to us, we respect the independent decision each campus has made or will make in the coming days. It is equally appropriate and right for the administration to review and understand the analyses on which each of the universities respective decisions are being made. Our initial review has raised several questions that we look forward to discussing with the appropriate people.”