I. Economic Climate Change
We began the last academic year with a growing awareness that the world economy was melting around us, and before we were far into the fall semester, we knew that we would have to take dramatic steps to correct for a loss in the market value of our endowment and the spending income from it, on which we rely.
President's State of the University Address
"...As a community, we have been at our best..."
By January 2009 it was clear that we were experiencing a long-term economic contraction, not just a brief downturn—climate change, not just a passing storm. Our community worked diligently to fulfill the University’s strategic priorities in light of new economic realities. We have made every step of the process transparent, engaging in discussion and communication through town halls, letters, and ongoing articles in University publications—all captured in a website, Emory and the Economy.
In the downturn, our endowment value decreased about 21 percent. Other leading universities had the misfortune of outpacing us here. Nonetheless, the drop from $5.4 billion to $4.3 billion between June 30, 2008, and June 30, 2009, as well as reductions in other investment income, was a substantial jolt. It means that, going forward, Emory will need to operate from an annual revenue base that is approximately $60 million less every year than we had budgeted for the future.
a sound approach to the endowment
Emory did not contract overnight by immediately cutting programs and jobs to close the expected reduction in endowment and investment income; nor, on the other hand, were we able to fill that gap completely with new revenue. We did take immediate steps to reduce expenditures in the current year—on the order of $10 million. Even more important, we engaged academic and administrative leaders across the campus to adjust to the new economy by developing plans to pursue excellence within the revised resource envelope, which called for additional adjustments on the order of $30 million for FY2010 and another $20 million for FY2011. This approach enabled a carefully selected set of activities to be reduced or eliminated throughout the institution rather than making across-the-board reductions, which are usually less thoughtful. While adjusting to having $60 million less in endowment and investment income each year than we previously assumed, we need to meet new and significant expenses stemming from our commitment to satisfy the growing need for student financial aid at all levels. In still another blow to our resources, we need to adjust to a new mix in the way patients pay (or, increasingly, don’t pay) for the health care services we provide, even as we wait for and try to influence possible health care reform. (For more on how Emory communicators have informed the health care debate, see Emory Health Magazine and Emory Magazine.)
Our tack has been to make adjustments to our budget permanent in as short a period as possible. Some universities have decided to make their own transitions during a period as long as five years. Their path likely will mean both deeper reductions in their own endowments and the likelihood of continuing on-campus austerity, even after world economic indicators begin to rise. At Emory, we hope to get back on an even keel in the space of only two to three budget years.
the (very) human side of resource constraint
It has been gratifying to see faculty and staff rally to the cause of resizing our programs and budgets. But steadfastness will continue to be necessary. Without it, we would be tempted to ask people to do more with less. Such a path is neither ethical nor financially viable for the long term.
Emory’s Response to the Health Care Crisis
Georgia has the sixth-highest number of residents without health insurance in the United States: 1.7 million people, including one in five working-age Georgians, half in families headed by someone who works for a small business. Other Georgians are part of the 25 million Americans, up 60 percent in recent years, with inadequate health insurance to cover their medical expenses. A growing number of others don’t know they are underinsured until they suddenly find that their health insurance has been depleted or that life-saving treatments they need are not covered. These people are not faceless statistics to Emory clinicians. The people behind these numbers arrive daily at Emory emergency rooms, clinics, and hospitals. Once here, they find doctors determined to provide the best and most compassionate care possible, regardless of these patients’ ability to pay.
"Health Care Reform Must Provide a Basic Level of Care for All"
One of America's leading emergency physicians and a nationally recognized advocate for public health, Arthur Kellermann is professor of emergency medicine and public health as well as associate dean for health policy at Emory. He discusses health care reform, patient "dumping," the soaring cost of health care, and the role of Emorys academic medical center in leading the charge to transform American medicine.
The ethics of this situation and our natural compassion as human beings occupy our minds and hearts as much as the economic considerations keep our calculators in steady use. In the final analysis, Emory is an organization and community called to serve society. In spite of the change in the economic climate, we come to that task with great gifts. Emory—an institution to which much has been given—has the responsibility to use those gifts for the purpose of advancing civilization, not for our own comfortable survival. Mere attention to our own institutional survival does not fulfill our obligation to lead and serve society as we must through teaching, research, scholarship, health care, and social action.
The right response to our current constraints is not to do more with less, but to do less with less—to do fewer things that are core to our mission, but to do them exceedingly well. We must identify those things that are essential for us to be a scholarly community grounded in the liberal arts, driven by inquiry, and preparing engaged scholars through undergraduate, professional, and graduate education. Beyond that, we must agree to commit our remaining resources only to those endeavors in which we already exhibit eminence or can grow from excellence to eminence, even if that means letting other universities lead in certain academic or professional arenas.
This process of identification and commitment is well under way; unfortunately, such refocusing has in some cases led to the elimination of positions, which has brought a natural and understandable degree of sorrow and anxiety into our shared community. We would not be a caring and humane community if the departure of colleagues did not prompt in us concern about their welfare and, equally, scrutiny of our implied commitment to them.
Retention Strategies
Finding ways of achieving momentum in this “new normal” means having effective retention strategies. To good effect, we have increased creativity in this realm while decreasing expense. Our vice president for human resources, Peter Barnes, has kept Emory managers on their toes by reminding them of the importance of:
- supporting career development by encouraging further education/training
- offering mentoring or shadowing opportunities
- allowing employees to tackle projects or assignments outside their usual role
- using cross-training and skill sharing; building team depth
- asking what rewards appeal to employees
- encouraging the creation of a plan for work-life balance
- participating as a work team in volunteer opportunities
- providing time to attend financial planning, stress management, or career-planning programs
"What I Love about Working for Emory"
Hear staff describe what they love about working for Emory, recently ranked as one of the "Great Colleges to Work For" by the Chronicle of Higher Education.
Since the economic downturn began in fall 2008 and through December 2009, Emory has closed or cancelled more than 250 vacant staff positions and eliminated 211 staff positions that were filled, including several that were eliminated due to lack of grant funding. Of the 211 filled positions that were eliminated, 134 were eliminated in FY2009 and 77 were eliminated since September 1, the start of FY2010. Emory Healthcare’s workforce of more than 11,000 has lost some 250 positions. To help take some of the pain out of these individuals’ transitions, our Human Resources leaders have worked hard to develop appropriately generous and consistent severance packages and, in some cases, retirement options. Moreover, our Human Resources staff worked with great diligence and compassion to facilitate counseling and placement referrals, benefits information, and coping assistance to those affected by these reductions. Some colleagues whose positions were eliminated have found employment in other parts of the University. For those who have had to leave our community, we are grateful for their service and wish them well.
The Example of Campus Services
One division hit hard by the economy was Campus Services, which has the University’s largest administrative workforce with eight hundred positions. Between cuts made in April 2009 and then again in December, the division eliminated fifty-nine positions. Our Campus Services vice president, Bob Hascall, demonstrated simultaneous rigor and compassion in the way he approached the difficult task of reducing his workforce. Hascall oversees a workforce diverse in its job functions, which include custodians, mechanics, landscapers, police, and parking/transportation staff, among others. It is a division that works twenty-four hours a day. Hascall took the time to meet personally with the night crews during their shifts, as well as the larger group who work during traditional business hours. He also established a staff-review board to help guide him through budget reductions. One of the ideas that bubbled up through that board was that the organization needed to be flatter. Hascall made it so. He did the hard work of preparing a defensible list of positions to be cut and then worked with Human Resources on severance policies to help provide a financial bridge for affected employees. He turned, with equal care, to the question of those remaining, encouraging employees to speak freely, even if that meant expressing grief and anger. Hascall finds it hard—or, at the least, paradoxical—to receive praise for excelling at such challenging tasks, but he has earned the praise justifiably, both from the ranks above and from those below. As he notes, “Campus Services is a caring organization, and although this was a difficult challenge for me and my leadership team, we accomplished the budget cutbacks in the most humane manner possible.”