July 15, 2009

UC Regents Consider Salary/Furlough Proposal to Help Close Budget Shortfall

UC Regents today will discuss a plan that features a graduated scheme of salary reductions ranging from 4 percent to 10 percent, incorporates furlough days and exempts certain categories of employees from the pay cut.

UC President Mark Yudof is recommending that UC Regents adopt the revised plan, which protects retirement benefits despite salary reductions and furloughs. The plan, which Yudof shared in a letter to the UC community last Friday, would be in effect from Sept. 1, 2009, until Aug. 31, 2010, but subject to renewal by further action of the Regents.

UC currently faces an unprecedented $813 million deficit in state funding. The proposed plan is part of a broad UC strategy to cope with this shortfall in state support and is expected to yield about $184 million in general fund savings. The plan, which was shaped by the feedback of many employees throughout the 10-campus system, is intended to lessen the need for involuntary layoffs. For more information, see this fact sheet [PDF] about the plan.

Sam Hawgood, MB, BS, interim dean of the UCSF School of Medicine, said he is acutely aware of the level of anxiety as employees await the outcome of the Regents’ vote on July 16.

In a message to the campus community on Tuesday, Hawgood said he welcomes input on how the medical school can weather the financial storm created in part by the state’s ongoing budget deficit. Read Hawgood’s entire message on the medical school website.

“As a return of state support seems unlikely in the near future, it is imperative that we define and implement long-term sustainable solutions to this change in our funding,” he wrote. “Working collaboratively with our partners on the campus, at the medical center, and in the other schools, we have enormous opportunities for both revenue enhancement and expense reduction. This work has already begun, and I am confident that working together we can not only protect but enhance our ability to advance our missions.”

Mark Laret, chief executive officer of UCSF Medical Center, also said he is open to new ideas on how to solve the budget shortfall, as long as the quality of patient care is protected.

“The reduction in state support to the University is unprecedented in scale and pace and has placed an enormous challenge on every corner of the University to address,” Laret said in a message on July 10.

“While the UC medical centers are self-supporting businesses that operate in a different environment than the academic campuses do, the medical centers are part of the University and our success is linked – in particular – to the success of our schools of medicine. As such, we must and will do our part to contribute to any solution – but at the same time, we will not compromise patient care, our accreditation or licensure, or our ability to operate our business in a competitive manner. I appreciated that President Yudof’s letter to the UC community recognized the special circumstances of the medical centers in the budget situation,” Laret said.

Hawgood pointed out that even after the Regents’ ruling, many details of the furlough plan and its consequences will require further analysis before the full impact on each school and on programs can be fully gauged.

“As we work to implement the Regents’ decision, we must, where flexibility is allowed, look to our core values as a community and determine how best to protect our mission as a great public university dedicated to healing, teaching, research, and service, while minimizing personal hardship for our dedicated employees,” he wrote.

Hawgood added, “Flexibility in implementing the President’s proposal will be essential to preserving revenue coming into the school and minimizing the financial hardships we collectively face. It also imposes real challenges in the fair sharing of the burden. To address these challenges, we are immediately modeling the impact of the President’s proposal on salary savings and productivity. The SOM Budget Workgroup will review this data later this month and advise the chairs and directors on appropriate policy for the school in implementing the Regents’ decisions by the September 1 deadline.”

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