UAMS planning $9 million in cuts | Arkansas Blog

Friday, January 24, 2014

UAMS planning $9 million in cuts

Posted By on Fri, Jan 24, 2014 at 4:12 PM

click to enlarge Amount of reimbursement for patient care UAMS could receive under the private option.
  • Amount of reimbursement for patient care UAMS could receive under the private option.

UAMS Chancellor Dan Rahn told the University of Arkansas Board of Trustees today that the university’s “goal is to avoid layoffs” in the face of a $29 million deficit for the fiscal year, and made his case again for continuation of the private option healthcare plan enacted by the legislature last session. Rahn also said that UAMS will “almost certainly require assistance with the state’s appropriation in the future.”

The reduction is due in part to federal sequestration and cuts in the National Institutes of Health budget ($10 million total) and the loss of $20 million in one-time funding, some of it stimulus grants, from 2013. 

Though cutting the private option would take health insurance away from thousands of Arkansans — 85,000 at last count — who have not been able to afford insurance until this year, the legislature is nevertheless considering it. Grandstanding or no, it is a serious issue for UAMS, one the university is getting ahead of by planning in advance for cuts of $9 million, less than 1 percent of UAMS entire budget, over the second half of the fiscal year.

In an email sent today to clinic chairs and administrators, assistant executive dean Susan B. Leon writes, in part:

Dear clinical chairs and administrators, campus leadership has determined that in order to reduce a currently-projected deficit for this fiscal year of ~$30M, immediate steps to cut costs must be taken. The amount of the target for the cuts is $9M and the College of Medicine’s portion is $3.1M.

In order to reach our target, every department in the COM, including the dean’s office, will have to cut its spending by 3% in the second half of the fiscal year as compared to the first half. Here are the COM guidelines:
• Freeze hiring for all positions, unless absolutely mission-critical. Faculty exceptions to the freeze will be considered by Dean Smith through the JFR process. Staff exceptions to the freeze will be handled by the COM Workforce Management Committee. Be advised that the bar has risen for both faculty and staff.
• Cut or suspend e-funds, to the extent possible. Travel is always a sensitive area for the campus and with the public. Ideally, the only out-of-state travel that should occur for the remainder of the fiscal year is for faculty or residents when they are presenting at a conference or when the costs are 100% covered by another legal entity.Grant-funded travel is permissible also.
• Suspend the use of overtime with classified staff.
• Delay or cancel equipment purchases.
• Stop providing food at meetings, if you haven’t already, but do it judiciously, especially when residents are involved.
• In larger departments, consider administrative restructuring to gain efficiencies and reduce costs. ...

If the financial picture improves before the end of the fiscal year, some of these provisions may be relaxed.

Thank you for your help and leadership in turning the situation around.


Rahn made the assurances about layoffs after the publication this morning in the Arkansas Democrat-Gazette of his statement to a reporter that a reduction in $29 million dollars would translate to 500 layoffs.

Though the university’s 2014 annual budget forecasts that it will have revenues of $16 million more than expenses, when depreciation and other changes in other assets of $45 million is factored in, the budget will show a $28.9 million deficit in net assets, which Rahn told the board was a significant problem. The projected deficit in 2015 would be $40.6 million. 

Should the legislature not roll back the private option and should 75 percent of eligible Arkansans enroll, UAMS could reap $13.9 million this year. That is an optimistic estimate, however; today Rahn said it was more likely the total would be around $8 million or $9 million.

Other budget woes: The $67 million in uncompensated care the hospital has to shoulder; delays in billing thanks to snags in implementing the EPIC electronic record, a loss of $11.4 million in state revenues from 2013 to 2015, thanks to a cut in Gov. Mike Beebe’s budget, and, according to a draft of a statement by Rahn provided the Times, compensation costs that are running 4 percent to 5 percent higher than expected.

Proposed cuts to reach the $9 million goal, according to a UAMS budget sheet, would include a $9,371 cut in the chancellor's budget (now $1.3 million), a $3.9 million from clinical programs (now budgeted at $562 million), and a $3.1 million cut in the College of Medicine (now budgeted at $437 million).

UAMS officials are talking with legislators about the possibility of presenting UAMS' situation to a committee during the legislative session that starts in February. A line item appropriation that would include emergency funds, only to be tapped if UAMS needed the money, is one idea being thrown out.

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