July 27, 2009

Chancellor Bishop Outlines Impact of Budget Cuts at UCSF

Chancellor Mike Bishop, MD, testified before the UC Regents at their meeting on July 15 giving an overview of the devastating impact of declining state support at UCSF.

During his final appearance before the Regents as chancellor, Bishop said that he fears that “UCSF could soon become a place where good people will no longer want to work.”

His remarks are posted below.

First, a brief moment on context.

UCSF is built on soft money: 92 percent of our operating budget and 82 percent of our payroll are non-state funds.

At first glance, this might seem a cushion against cuts in state funds.
But that is not the case: It can be difficult, impossible, or even sometimes illegal to redirect non-state funds from their original purpose.

Consequently, UCSF is exquisitely sensitive to cuts in state funds: We are among the largest biomedical research enterprises in the country, presently second in the nation in NIH funding, but supported by a central administration that is disproportionately lean and disproportionately reliant upon state funds.

So state cuts really hurt.

UCSF has been allocated a 25 percent cut in its state funds for FY 2009-2010. We are using every device available to us to absorb that cut.

First, force reduction: By the end of FY 2010, the campus will have eliminated at least 620 staff by layoffs, elimination of empty positions, and deferred hiring.

Over the same period of time, we will have diminished the number of our faculty by at least 335. That is a 14 percent reduction for faculty.

Second, we are making widespread adjustments in academic programs and facilities. For example:

Our School of Medicine has shelved 46 major faculty recruitments; delayed or reduced funding of 10 academic programs, including an approved and long-anticipated PhD in epidemiology, a molecular imaging center, an Institute for Molecular Medicine, a biostatistics consulting unit, our Center for Health and Community, our Program in Human Genetics, and our AIDS Research Institute. [Total savings to date: $23 million.]
The School of Nursing has combined two departments into one; eliminated several specialty training programs, including two that grant advanced degrees; and closed a family clinic that provided care to 1,720 patients over the past year, 40 percent of them Hispanic.
The School of Dentistry has eliminated: a two-year dental hygiene program and one-half day a week of teaching clinics.
Our Schools of Medicine and Pharmacy have formed a joint department of Bioengineering and Therapeutic Sciences, the first inter-school department in the history of the campus, permitting a single administrative staff where once there were two, and the sharing of expenses between two major cost centers.
Our library has abbreviated its operating hours and deferred construction of a learning center with facilities that will soon be mandatory for accreditation of our professional schools.

And of great concern, there have been deleterious adjustments in our graduate programs. As financial aid for graduate students has lagged over the past four years, all but two of our 11 major graduate programs have reduced their enrollments, with decreases by now ranging from 11 [percent] to 52 percent.

This is a truly ominous trend. Graduate education has long been a crown jewel at UCSF, and it is valuable currency—a hallmark of great research universities, among the principal attractions in recruitment of new faculty, and an important provider for the work force of the knowledge economy in California.

Third, we are short-changing our infrastructure in the interest of cost savings, by deferring: improvements in our IT network; centralization of the campus data base; improvements in grants management; further expansion of child care; and rehabilitation of long-neglected facilities at our Parnassus Heights campus.

Fourth, we have taken numerous administrative measures. As examples, we have pruned our units for community affairs, public and governmental relations, and communications; utilized strategic sourcing and other improvements in financial management: one set of initiatives in our facilities unit should save 46 million dollars by FY 2012-2012; expanded use of electronic transactions, reducing material costs and transferring labor to clients; re-bid diverse contracts; restricted travel; and reduced custodial services: when I return full-time to the faculty, I will be dusting my own office—which will amuse my wife to no end.

These and other measures will save money. But they will also diminish quality of various services across the campus and medical center and compromise our efforts to improve compliance with a broad array of regulatory requirements.

A few words about our medical center: First, please understand that academic medical centers are not cash cows for the remainder of the university. They are free-standing and low margin financial enterprises, tubs on their own bottoms. We chew our fingernails annually over whether we will maintain reserves sufficient to meet university and industry standards for days of cash on hand. Yes, our medical center transfers funds to the schools of medicine, pharmacy and dentistry for services rendered. But that is a business arrangement and negotiated as such. The UCSF Medical Center is among the last places that I would want to turn for spare money.

As a free-standing entity, our medical center receives little direct support from the state. But it faces immense financial challenges of its own, so it has an austerity program of its own.

In the past fiscal year, the medical center has eliminated 130 staff and imposed a hiring freeze for non-clinical staff. But the nursing staff has not been cut.

The medical center has saved money by consolidating administrative positions: for example, by eliminating the position of chief quality officer and incorporating the responsibilities of that position into the portfolio of the chief medical officer; cooperating with other UC medical centers in purchasing and laboratory services; reducing costs of workers compensation by creating a safer work environment; improving inventory controls, standardizing product use; and deferring a number of capital projects, including replacement of our cramped and outmoded inpatient pharmacy, and renovation of the un-airconditioned kitchen for the hospital (The only major facility for food preparation at the Parnassus campus).

Mark Laret assures me that the measures taken to date have not degraded patient safety or the quality of patient care. But there will be delays in efforts to further improve these two vital parameters.

Where does all of this leave us? Here are some of the cardinal potential consequences:

Loss of stature: we know the metrics used by USNWR, the NRC, and other rating agencies, and we can clearly predict adverse impacts on those metrics from the stringencies we have adopted.
Impaired recruitment of top flight faculty, students and staff.
A high risk of losing premier faculty. The burgeoning stars on our younger faculty are particularly vulnerable, because they have little or no financial cushion in the face of reduced salaries and a local cost of living that is among the highest in the nation. Our faculty leadership is in anguish over this risk.
Threats to accreditation of our professional schools, unimaginable just a year or two ago. For example, the inability of our School of Pharmacy to pay competitive wages to clinical faculty is impairing its ability to meet a newly established accreditation standard. And the delay in constructing a new learning center casts a cloud over accreditation of all our professional schools.

And last, so that it will linger in your memories: impediments to further diversification of our campus community. As one example, our inability to subsidize students in a competitive manner has already had a deleterious impact on the intake of underrepresented minorities to our School of Medicine. Painstakingly built to more than 30 percent of the entering class over the past five years, the number has slipped to approximately 22 percent in the entering class. We have sound data that we are losing underrepresented students to peer institutions that can provide better support.

UCSF has resolutely embraced the responsibility to educate a student body that looks like California. It is agonizing to watch the ability to fulfill this responsibility slip from our grasp. Hanging in the balance, then, is our ability to preserve accessibility and quality; to sustain our world class instruction, research and health care; to meet our obligations to community service; and to remain a humane and gratifying place to work.

It is particularly distressing for those of us in leadership to know that morale is declining, as work loads increase, pay cuts loom, and a sense of being abandoned by the state spreads. Morale affects attitude, and attitude affects performance.

I fear that UCSF could soon become a place where good people will no longer want to work.

The damage from that would be hard to reverse. And the people of San Francisco and California would be much the worse for it.

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