May 27, 2009
Dartmouth Medical School (DMS) today announced a budget-reconciliation plan to increase revenues and decrease the portion of its $237 million operating budget that is paid for by central funding sources. By also tapping reserves, the plan will fund the school's $25 million budgetary gap between now and 2011.
The DMS plans are part of Dartmouth’s overall budget-reconciliation plan, which calls for reductions to the institution’s $700 million operating budget by $72 million over the next two years. The institution-wide plan was endorsed by the Board of Trustees and announced February 9. At that time, DMS Dean William Green wrote that the medical school would complete its plan this Spring, following consultations with the DMS community including faculty, staff and students and a thorough review by chairs of departments and centers. The College’s Board of Trustees has endorsed the DMS plan.
In a letter to the community today, Dr. Green announced that the plan preserves DMS’s core mission focused on educational and research endeavors, and that leaders worked very hard to minimize the impact on staff.
Twelve staff members face layoffs through position eliminations. An additional 40 staff members will be asked to take a reduction in hours ranging from 5 to 50 percent, most effective July 1, 2009. The medical school employs more than 1,160 people.
“Although the School has eliminated a substantial amount of non-compensation expenses, over half of our central costs are compensation-related, so making some personnel-related reductions is inescapable,” Green wrote. Cuts to compensation, including holding most salaries flat in fiscal year 2010 and leaving most vacant positions unfilled, will save more than $5 million in the year starting July 1. In addition, facilities costs, including a slowdown in planned renovations, will save $2 million, while reductions to other parts of the DMS budget (travel, supplies, etc.) are projected to save more than $4.5 million. DMS will gain new revenue of $4.1 million through increased tuition and fees and financial support from Dartmouth-Hitchcock Medical Center. DMS at this time is unable to estimate incremental revenues that it may realize through the American Recovery and Reinvestment Act, but Dr. Green is optimistic that new funding from these grants will decrease the amount that DMS intends to draw on reserves to balance its budget.
Green explained the cuts in today’s letter: “Planning for the FY10 budget (July 2009-June 2010) began more than a year ago in the context of a continued decline in federal research funding and since last fall has been constrained by the added pressure of the global financial contraction. While research funding might pick up, and the global financial situation may stabilize, we must make strategic reductions that will be sustainable for years to come.”
The DMS layoff package is the same as the one offered to College employees earlier this year, and includes two weeks of pay for each consecutive year worked at Dartmouth, with a minimum of four weeks and a maximum of 52, plus a lump sum payment towards the full cost of maintaining health benefits for three months, career counseling, and consideration as internal candidates for open positions through the calendar year.
As previously announced, in February, DMS tuition for the 2009-2010 academic year will be $42,525 per year, a 6 percent increase. The DMS student services fee also will rise, resulting in an 8.9 percent increase in tuition and fees combined. The financial aid budget will help students meet the cost of their education.
DMS generates funding sources that are distinct within the overall operation of the College and is financially separate from Dartmouth-Hitchcock Medical Center and the Veterans Affairs Medical Center. However, as with any leading academic medical center, the educational, research, and clinical operations among these organizations are intertwined. Direct patient care will not be affected by the DMS budget cuts.
The worldwide economic downturn has resulted in sharp declines in endowments for colleges and universities. Dartmouth relies on its endowment to fund about 35 percent of its College-only operating budget. In the six months ending Dec. 31, 2008, investment returns dropped 18 percent, leading to a $700 million drop in Dartmouth’s endowment value to $3 billion.
