UCSF to Focus on Mission to Adjust to New Fiscal Realities, Chancellor Says (video)

As UCSF begins the budgeting process for next fiscal year, Chancellor Sue Desmond-Hellmann, MD, MPH, is focusing on ways to overcome the financial challenges that face the University.

In a videotaped message titled, “UCSF 2011: A Focus on Operational Excellence,” to the UCSF community that was released today, the chancellor addresses the fiscal realities that are confronting UCSF, how the campus is addressing these issues and what the campus community can expect from the chancellor and her leadership team in the coming months.

The campus is invited to submit ideas for how UCSF can realize cost savings through improvements in its administrative functions or its operations by sending an email to [email protected]. To help build understanding of the importance of investing in higher education to advance scientific research, patient care and economic recovery, visit the UCSF Advocates website.

UCSF 2011: A Focus on Operational Excellence

Read a transcript of the chancellor’s message.

Questions & Answers

Q. What are the fiscal challenges facing UCSF?

A. UCSF faces three major fiscal challenges, any one of which would be significant. UCSF must address all three challenges simultaneously.

• Continued cuts in state funding: UCSF is preparing to take another $28 million cut in state funding next fiscal year, on top of a $49 million reduction in the current year: Over the last 15 years, UCSF’s state funding has been reduced by more than $90 million.
• Increases in health care costs: UCSF faces significant increases in the cost of providing health care to its employees and retirees. Health care costs across all funding sources are estimated to increase 11 percent next year – or nearly $17 million – and, by fiscal 2013, by a total of $52 million.
• New and significant retirement costs: This spring, for the first time in 20 years, both UCSF and its employees will make contributions to retirement. UCSF projects its employer contribution – across all funding sources – at more than $53 million next fiscal year, nearly double the hit the campus expects from additional state budget cuts. By fiscal year 2013, this cost is projected to be $110 million a year.

Q. How is the campus addressing its financial challenges?

A. To meet its financial challenges, including the challenge of ending the furlough of employees by August 2010, UCSF must reduce costs. To identify options that significantly reduce costs, the chancellor has appointed an Administrative and Operating Efficiencies Work Group.

Q. What is the charge of the Administrative and Operating Efficiencies Work Group?

A. The charge of the work group is to examine the administrative and operational side of UCSF and to identify how the campus can realize $28 million to $40 million in cost reductions. To meet its charge, the work group is examining best practices throughout the country in private and public enterprise. It is also meeting with groups across the campus, seeking input and suggestions.

Q. Why is the work group charged with finding savings between $28 million and $40 million?

A. The $28 million to $40 million range is the campus’ best thinking on the amount needed to end the furloughs and make up for projected additional state budget reductions. The dollar amount is only an estimate because UCSF will not know its final budget until a state budget is adopted, perhaps not until mid to late summer.

Q. Why is it important to realize savings from the administrative and operational side of the campus?

A. It is important that UCSF be a well-run institution and that it utilizes every dollar it can to further its mission of patient care, discovery and education. It is important that the campus community can confidently tell donors, faculty, staff, patients, students and trainees that UCSF is well run.

Q. Will administrative and operational cost savings result in the layoff of employees?

A. Regretfully, layoffs are a possibility. Nearly 90 percent of UCSF’s estimated administrative and operational expenses is tied to salaries and benefits. The chancellor has stressed that the campus will be fair, responsible and thoughtful about any decisions that impact UCSF employees.

Q. When will the campus know whether additional layoffs will result from the work group’s recommendations?

A. The work group is to submit its recommendations to the chancellor by March 31. The chancellor said she will report to the campus on the work group’s recommendations, and the decisions she makes as a result of those recommendations, a short time later.

Q. What will happen if UCSF does not cut its administrative and operational costs?

A. UCSF must do all it can to invest in its mission – patient care, discovery and education. The fiscal reality is that UCSF must reduce its costs to compensate for additional cuts in state funding, pay for increases in health care costs, and fund retirement, among other needs. Failure to reduce administrative and operational costs would harm UCSF’s ability to invest in its mission.

Q. Will UCSF’s effort to find cost savings end when the work group submits its recommendations?

A. No. Improving and reducing the cost of doing business must become a part of what UCSF does every day.

Q. How can I submit cost-savings suggestions for the work group to consider?

A. Suggestions should be sent in an email to [email protected].