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January 28, 2002

Benefits could change in light of recession

By Michael Terrazas


Due to rapidly increasing costs for benefits services and a slowdown in revenue growth, the University is considering several changes to its employee benefits packages.

Speaking to a meeting of the Emory College faculty last week, President Bill Chace made it clear that no final decisions have been made about any changes in benefits, but he also acknowledged that the current economic situation—not just for the University but for the entire country—has resulted in a “dangerous erosion” of revenue and budget growth.

“This is a serious problem everywhere,” Chace said. “Employers all over the country are looking at rising benefit costs.”

John Temple, executive vice president and chief operating officer, said surveys of peer institutions have revealed that Emory’s fringe benefits packages are more generous than many similar institutions, and therefore more costly.

“The current examination,” Temple said, “is directed at what our costs are in comparison to our peer institutions, at how those costs might fairly be adjusted in light of both that comparison and the recession which the nation faces, and how we maintain our trust with all who work at Emory.”

The entire range of benefits, from health care to courtesy scholarships to retirement, will be on the table for discussion, according to Chace and Temple. Both acknowledged that any reduction in benefits is likely to be unpopular among University employees, but given the current economic situation, they recognize that some difficult choices may have to made.

Emory’s ability to fund new programs, new facilities, salaries, benefits and other costs has been driven largely by growth in endowment income, Temple said, but endowment growth has been “trending down” for at least two years. According to his office’s budget projections, endowment income in direct support of the operating budget is expected to decline from a projected $67 million in FY2002–03 to $62 million in FY2005–06. Overall income is expected to grow by $50 million during that same period, but current trends indicate cost increases will outstrip that growth. Health insurance costs are expected to rise on the order of 10–20 percent in the coming years, Temple said.

“The University will need to examine closely the options available with the overriding objective of sustaining the quality of University programs,” Temple said. “Since affordable health insurance is seen to be an essential part of the benefits Emory believes should be provided to its employees, we are carefully analyzing other fringe benefits that could be reduced to help address this funding issue.”

Chace said he plans to discuss available options with administrative councils and campus groups, such as the University Senate and Employee Council, before any final decisions are made.

“I want to emphasize that the overall strength of the University remains strong,” Chace said. “The issue being addressed is how we can most effectively use our resources to sustain the long-run vitality and quality of all our programs.”