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March 18, 2002

Chace on possible benefits changes

Emory Report Managing Editor Michael Terrazas sat down with President Bill Chace to discuss proposed changes to employee health benefits and the Universitywide discussion prompted by the proposal


Emory Report: Did the recent town hall meetings go as the administration expected?
Bill Chace: I don’t think we had any very sharp picture in our minds about how they’d work out. We did feel that we had a real responsibility to air these matters, to listen to people, to hear the expressions that people wanted to make. I’m not surprised that there was some anger or some confusion at the meetings—these are important matters.
Do you think the meetings might have started with the wrong questions? That, instead of presenting the choice of which benefits to cut, they should have been considering job cuts, departmental budget cuts, etc.? I don’t think so, but I can see why logic would make that at least a not impossible scenario. We are talking about things that are much less stringent, much less serious than programmatic cuts, dismissing people. If we were to say to folks today, ‘Well, we are thinking about either fringe benefits or you all losing your jobs,’ I think that would have put things in a very bad footing, because I don’t think the question is that serious.

We are a very strong institution, and we’ve got a lot of muscle behind us. We’ve got money behind us. We’re doing very, very well. But what we are looking at are cuts or reductions or changes that would trim the system the way you trim an airplane for a landing.

Some people seem to think these other choices, program cuts and even job cuts, might be preferable to the benefits cuts. Perhaps people are just frustrated because they think the administration has not explored other options?
Well, the reason we haven’t explored them is because we think, as a surgeon would think when operating on a body, that those “incisions” would be much too deep and we don’t need to make them. When you start dismissing people, you’re doing one of the most serious things you can do in an institution. The reverberations would be deep and broad.

Two years ago, departments were asked to voluntarily find ways to trim their budgets by 3 percent, and some said they found it a useful exercise. Is it possible to do that again?
Again, I think another 3 percent budget-cut exercise would be more serious and beyond what we feel are the needs of trimming the institution at the present time.

You’ve said that, if the University does nothing and maintains status quo, by 2004 we will have $248,000 in discretionary income. What if people say So what?
That is simply too tiny, too narrow a margin in which to work. In our total budget of $1.7 billion, $248,000 is insufficient—that’s not a margin of error in which you would wish to cooperate. If I said you are going to have to park your car in this space, and mind you, you’ve got one millimeter on this side and one millimeter on that side, you would want to park your car somewhere else—that margin would be too tight for you. With a lot of planning, you could probably get your car in there, but if I gave you a millimeter leeway on either side of your car, you would really think that you would have a big scratch.

What do you say to people who think that the option to cut benefits came too quickly, and that this was a first resort rather than a last resort?
What other resorts would people themselves produce out of their thinking about the institution? We’ve looked at things that we think are appropriate changes given the nature of the situation, which is not an emergency situation. In an emergency situation, we would talk about much larger entities. We’d say we can’t afford to have certain programs or sets of people anymore. Or we would say the easiest way to solve the problem is to increase the total number of students and derive the resultant tuition income. We don’t think that’s right to do, [though] that’s what many institutions do. The reason we’re not doing that tells you two things: one, we really do prize the pedagogical excellence that we practice; and two, we think we can correct our situation by looking at something less grand than that.

There is a chance the federal government might adopt some kind of prescription drug coverage for Medicare.
Let’s hope so. But it’s not going to happen next month, nor a couple of months from now. No one knows whether it will really happen, and we’ve learned not to presume governmental action in a finite period of time. We cannot create our budgetary planning on the basis of a hope that the federal government will act in certain way. It’s just too uncertain.

Should it happen, though, would that give Emory an opportunity to reexamine its benefits package?
Yes, and one thing I should say is I’m hopeful that, whatever changes we would make, after a significant period of time had elapsed and once we had looked at the economy again, we could go back and revisit some of these things. Here I perhaps differ from John Temple, who has said he thinks this is largely a road we cannot traverse backward. I would hope we can, but I think John is absolutely right in thinking that the rise in health care costs in this country is not going to go away. And keep in mind that the bulk of the fringe benefits costs is connected to just those costs.

Has the University made the decision to change benefits?
We have to do something, but it is not firmly established what we will do. Alice Miller and John Temple believe we must do something, and I believe they’re right.

What sort of moral obligation does Emory have to its employees?
I think there are extensive moral obligations expressed in many ways and some unexpressed. Often when I talk to people about why they’ve come here to work, they’ve come to work not just at a place, but on a campus, and I think a campus denotes something special. First of all, it is a place where there are a lot of young people, where the only real imperative is to search for the truth—this is not a profit-making institution—where there is a good deal of time given over to reflection, where you have a library and a big green sward, and people conversing.

So it’s a different kind of place to work, and I think you have to preserve that ambiance. The moment people feel very sharply or strongly that they are just here to work eight hours and then go home, we’ve lost something of that ambiance. Many people enjoy working on a campus because they know it is an unusual place where people are being educated, where there is learning, and where there are young people maturing. We have a considerable obligation to keep that spirit alive, but more specifically I think we have an obligation to provide good benefits and good income. From our own measurements—against other institutions, both profit and nonprofit—I think we’ve done a good job. Whether or not we’ve done a great job, I don’t know, but I think we’ve done a good job.

That moment, of people realizing they’re just here to work and go home—are you worried it may come soon for a lot of people?
It can come for some people, and I certainly heard [in the town hall meetings] people [who were] disappointed, but my basic belief is that the University, no matter how much it would like to separate itself and be an ivory tower or a haven in a heartless world, is still in a world where it has to face its responsibility, to cope with reality around and beyond the University, and that is what we’re trying to do. Keep in mind we’re in a recession, and we are looking at spiraling health care costs. We have to do something about that; we can’t pretend those changes don’t exist. We are in strong contact and connection with the world that surrounds us.

This is the first time in a long time that a significant financial decision has been discussed this openly before it’s been made.
That’s probably true, but I would also say that we haven’t had to discuss unpleasant financial decisions for quite some time at Emory. We now have to deal with unpleasant realities. We will do so, and we will come out of this all right.

Speaking of the 'boom years,' do you think Emory reached too far too fast?
No, I’m very proud of all of the advances we’ve made, and I think we are secure with them, and I think they will last. I’m very happy about the buildings we’ve built, and I don’t look back and say, ‘We shouldn’t have done this, we shouldn’t have done that.’ This is a strong country; this a strong institution. I believe that, looking back 10 years from now, people will be very happy that we continued on the course we did. I can’t even cite anything we should not have done—the buildings we’ve built, the people we’ve hired, the growth of our programs.

Look at what we’ve done at Yerkes: When I arrived here, it was almost entirely a primatology center. Now it’s one of the world centers for an AIDS vaccine. That took hiring, it took emotion, it took strong leadership. It might be the place where we will have created an AIDS vaccine. If we had decided, ‘Oh no, better not do that, better not enlarge that, better not hire those people,’ what a big mistake that would have been. We’ve built a stronger institution.

Why should people believe that if the University cuts benefits this year, it won’t do it again?
There are absolutely no ways to envision where Emory will be in two years. There are all sorts of things that could happen. I believe the economy of the country is fundamentally strong. Today’s New York Times said that investor confidence has gone up, and it made a big surge in the stock market. I’ve talked to a number of people who believe that we will pull out of this recession. I listen to and read some economists, so I am confident that Emory will be in good shape. But I have no crystal ball to say that terrible things won’t happen. It would be really irresponsible of me to say, ‘From now on, as far as I can see, everything is going to be just great.’

What do you see in the near future?
This is a strong institution; it will continue with strength; it will continue to be vital; it will continue to be interesting; it will continue to employ good people; it will continue to attract good students, faculty and staff people—of that I am sure. Because whatever is happening is happening also at other institutions, so we don’t have any gross comparative disadvantages with them. Our faculty recruitment is going well, our fund raising is going well. I cited the figure yesterday: $81 million [in fund raising] and we’re halfway through the year. That’s a good year for Emory; that’s a good year for any school. We are raising money, and we will raise more.

What happens next?
We will continue to talk to people in the President’s Cabinet and others about what we do. We will talk to the finance committee of the Board of Trustees; we will talk to the fringe benefits committee of the University Senate; we will talk to the executive committee of the Board of Trustees on March 14, and we will have to reach a decision pretty soon.