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Despite a record $130 billion in appropriations for public higher education in 2025, per-student spending decreased for the first time since 2012. The State Higher Education Executive Offices Association (SHEEO) reports that student tuition and fees as a percentage of budgets decreased to 38.4%, but still make up more than 50% of total revenues across 18 states.
“The first reduction in per student funding in more than a decade suggests we are moving into a period of increased volatility,” said SHEEO President Rob Anderson.
That volatility includes uncertain enrollment and continuing threats to state funding, research grants, and other government funding. In fact, the latest federal budget proposal calls for university budget cuts of $4.5 billion for the next budget cycle.
Finance and procurement leaders will need to sharpen their pencils ever more to find creative ways to bridge funding gaps and stabilize finances. Even with college and university budget cuts, procurement teams are still expected to maintain the steady pipeline of goods and services required to fulfill institutional missions. This means an even more intense focus on procurement cost savings and efficiency.
Procurement is often misunderstood, which can create challenges when communicating value to leadership. It’s often classified as a cost center that handles transactions. This overlooks the strategic role procurement plays in cost management. Not all procurement cost reductions show up on budget lines. With the rising cost of goods and services, a negotiated saving may just show up as flat spending. Procurement teams may work hard to avoid costs that would otherwise hit the bottom line.
Cost savings may deliver immediate budget relief, while procurement cost reduction creates long-term financial sustainability. If you’re not tracking both, you’re not seeing the full picture across direct and indirect costs. Hard costs are easy to show, but indirect costs include:
While harder to quantify, these benefits contribute significantly to overall performance.
An effective procurement cost savings strategy requires clear spend visibility. If you don’t have a handle on where money is spent, it’s nearly impossible to identify areas of improvement.
Still, this is a challenge in many institutions as spend data is often fragmented across departments, systems, and categories. Decentralized purchasing makes it difficult to consolidate this information into a single, reliable view. That’s one reason why 41% of Chief Procurement Officers identified digital transformation and the orchestration of spend as their “primary value driver” for the 2026 fiscal year.
An integrated system that provides spend visibility across campuses is critical to identifying patterns and finding the inefficiencies that prevent procurement cost savings.
Too often, decisions are made about the initial expense, yet this can lead to higher long-term costs that prevent realizing future procurement cost reductions. Total cost of ownership provides a more comprehensive view of procurement decisions, factoring in maintenance, lifecycle costs, replacement frequency, and operational impact.
For years now, academic institutions have been forced to make tradeoffs, cutting spending in critical areas to hit budget projections. Yet, these costs add up over time and can cause significant liabilities. Colleges and universities have collectively put off more than a trillion dollars’ worth of capital projects due to budget concerns, but the bill is now coming due. By pushing costs downstream, these projects are now significantly more expensive than when most were first proposed.
By evaluating spend through the lens of total cost of ownership, procurement leaders can avoid decisions that are cost-effective in the short term but result in higher expenses over time. This approach supports better budgeting and more sustainable financial outcomes.
Here’s how TCO compares to just evaluating the upfront costs of any spending.
Cost OF GOOD OR SERVICES | Upfront Cost EVALUATION | Total Cost of Ownership | Impact on Procurement Decisions |
Purchase Price | ✔ Included | ✔ Included | Baseline comparison |
Maintenance & Support | ✘ Excluded | ✔ Included | Affects long-term budgets |
Replacement Cycle | ✘ Excluded | ✔ Included | Impacts lifecycle planning |
Operational Efficiency | ✘ Excluded | ✔ Included | Influences productivity |
Energy / Usage Costs | ✘ Excluded | ✔ Included | Adds hidden long-term expense |
Just as important is understanding the total economic benefit you get from purchasing decisions. E&I Cooperative Services helps you quantify total economic benefit with the E&I Economic Benefit ModelTM that identifies cost reduction, cost avoidance, incentives, and revenue in every cooperative contract.
Strategic sourcing is one of the most effective ways to achieve consistent procurement cost savings. Rather than approaching purchases individually, institutions are adopting more structured and data-driven sourcing strategies.
Category management groups similar purchases together, allowing procurement teams to develop targeted strategies to maximize value. Among other advantages, this provides:
Often, this highlights ways to consolidate suppliers. Reducing the number of suppliers simplifies management, reducing the administrative burden, and can also produce greater volume discounts or favorable contract terms. Strategic sourcing also helps you optimize contracts by standardizing agreements to make sure you’re getting the best possible value.
Together, these strategies create a more disciplined and effective approach to procurement cost reduction.
Strategy | Description | Impact on Procurement Cost Savings |
Category Management | Grouping spend into strategic categories | Improves prioritization |
Supplier Consolidation | Reducing number of suppliers | Increases negotiating leverage |
Contract Optimization | Improving pricing and terms | Reduces total spend |
Standardization | Aligning purchasing across departments | Eliminates duplication |
If you feel that your procurement team’s workload has increased recently, you’re not alone. It’s estimated that procurement workloads increased by 10% in 2025, while procurement budgets only increase by 1% on average. This creates a significant gap and requires efficiency improvements just to keep pace.
In 2026, 49% of campuses report increased tech investments in 2026 specifically to manage budget pressures across a wide variety of categories. While most academic institutions have embraced eProcurement platforms, contract management solutions, and digital payment systems, automation and analytics are having the biggest impact.
By streamlining workflows and reducing manual tasks, procurement teams can spend less time on manual processes. Procurement tools that provide real-time insight into spending and contract utilization and identify opportunities for improvement also provide greater spend visibility to maintain control.
E&I Cooperative Services can help here, too. E&I members have access to no-cost Strategic Spend Assessments (SSAs). SSAs are structured, repeatable evaluations to review and analyze your spend data, looking for ways to:
Some institutions are turning to managed procurement services to extend their capabilities, augmenting internal resources with specific expertise. Managed procurement services can support a wide range of activities, from sourcing and contract negotiation to data analysis and reporting. This allows institutions to address complex challenges more effectively.
Procurement consulting firms may also provide value, particularly for large or specialized initiatives. Their experience across multiple institutions enables them to identify best practices and implement strategies quickly.
For many institutions, E&I Cooperative Services plays the part of a procurement consulting firm. E&I is made up of procurement professionals, of whom many have come directly from higher education procurement leadership. Category specialists, procurement experts, dedicated account reps, and data analysts can help you improve your procurement outcomes. The EdPro Hub, powered by E&I, brings together procurement professionals to share knowledge and collaborate.
When departments buy from suppliers outside of approved agreements, institutions can lose up to 16% of the negotiated savings. Using that figure, you can see how fast this rogue spending adds up.
INSTITUTION | BUDGET RANGE | MAVERICK SPENDING |
sMALL LIBERAL ARTS COLLEGE | $150 million to 400 million | $24 million to $64 million |
MID-SIZE REGIONAL UNIVERSITY | $400 million to $1 billion | $64 million to $160 million |
LARGE PUBLIC FOUR-YEAR UNIVERSITY | $1 billion to $5 billion+ | $160 million to $800 million+ |
Rarely are these purchases deliberate acts of defiance. In most cases, they are a result of poor processes or a lack of the right procurement tools. One study of maverick spending shows that 75% of procurement professionals said the lack of self-service or guided buying tools was one of the biggest causes of off-contract spend.
Simply providing departments with the right platform with easy access to approved suppliers under contract and simplifying workflows can significantly reduce maverick spending. The more spend under management, the more savings you can produce.
Cooperative purchasing provides a proven pathway to procurement cost savings in higher education. By leveraging competitively solicited contracts, institutions can access pricing and terms that would be difficult to achieve independently.
For example, E&I Cooperative Services leverages the combined purchasing power of more than 6,500 member institutions to produce significant volume discounts and more favorable terms. This often includes exclusive incentives or rebates.
Cooperative contracts also eliminate the need for lengthy sourcing processes, reducing the cycle time and administrative costs associated with RFPs. Because E&I is the only member-owned nonprofit sourcing cooperative that works exclusively in the education sector, cooperative agreements are built for compliance.
Currently, E&I Cooperative Services has more than 260 cooperative agreements with top-tier suppliers, many of which you may already be doing business with. In that case, you can compare prices and see where you can achieve immediate procurement cost savings.
You may also be able to apply these cooperative agreements across multiple categories, allowing you to consolidate purchasing to achieve greater volume discounts.
Procurement leaders are increasingly required to demonstrate procurement cost savings and procurement cost reductions in a measurable way.
This requires aligning procurement reporting with finance teams, sharing definitions and metrics to ensure savings are calculated consistently. Key metrics include:
Key Metrics | What It Measures | Why It Matters to Leadership |
Spend Under Management | % of spend on contracts | Indicates procurement influence |
Contract Utilization | Use of negotiated agreements | Shows realized savings |
Realized Savings | Actual budget impact | Direct financial performance |
Cost Avoidance | Prevented future cost increases | Long-term value creation |
These metrics help quantify the effectiveness of procurement strategies.
E&I provides access to competitively solicited contracts that help drive procurement cost savings while ensuring compliance. However, members also benefit from:
What are procurement cost savings in higher education?
Procurement cost savings are the measurable financial improvements achieved through sourcing, negotiation, and process optimization across campuses.
How does the total cost of ownership impact procurement decisions?
Total cost of ownership provides a complete view of costs over time, helping institutions avoid short-term decisions that lead to higher long-term expenses.
What are the most important procurement tools for cost savings?
Key procurement tools include eProcurement platforms, spend analytics systems, and contract management solutions that improve visibility and efficiency.
How does spend visibility improve procurement cost reduction?
Spend visibility allows institutions to identify inefficiencies, prioritize sourcing opportunities, and make data-driven decisions that support cost savings.
How much does it cost to become an E&I member?
There is no cost to become a member and no minimum purchasing requirements. In fact, members can share in patronage refunds based on participation and generate non-directed revenue.
Explore how E&I Cooperative Services can help your institution drive procurement cost savings and strengthen financial performance across higher education spending. View our portfolio of ready-to-use cooperative contracts.