Dear FAS Community,
While the magnitude of the financial impact of the COVID 19 pandemic is not fully understood, many key revenue streams across UCSF are significantly impacted. In addition to clinical and research revenues being slowed or stopped, many of our support services have also suffered as public orders required us to shut down or minimize all on non-essential functions. While I am thankful UCSF is in the process of gradually and safely reopening, I know we will continue to face uncertain revenue going forward. As a follow-up to the Chancellor’s letter addressing Recovery and Resiliency Actions, I want to share with you what FAS has done so far to address budget shortfalls and some principles for moving forward to plan for further reduction scenarios. I am dedicated to transparency and keeping you informed.
What we have done
Through budget revisions taken so far, FAS has reduced planned expenses by 2% for FY21; at the same time, we have a substantial projected loss in revenue. This will result in a planned operating loss in FY21 which will use up about half of our reserves. Thus far, our revised FY21 plan comprises:
- A 12% decrease in non-payroll expenses through a reduction in non-essential projects, contractors and consultants, travel and events.
- An 8% increase in payroll, including projected savings from the hiring freeze and salary freeze for policy covered staff, offset by fixed increases in payroll and mandated insourcing.
- Investments limited to past commitments made to fund insourcing, new building operations, mandated carbon reduction targets, as well as to fund the Anchor Institution Initiative advancing our public mission.
Our challenge
Given revenue uncertainty, all UCSF entities have been asked to plan for further reduction scenarios. Within FAS, I have two goals:
- Find immediate expense reductions to offset a core revenue reduction of 10%. Recharge units and auxiliary units will need to find expense savings to match any anticipated recharge revenue shortfalls.
- Recharge units and auxiliary units will need to find expense savings to match any anticipated revenue shortfalls.
- Harness what we have learned during these past three months to re-think service delivery, focusing on activities that maintain the excellence of UCSF’s core mission while creating an ongoing savings of 10%.
Principles for moving forward
As we implement measures to maintain operational and financial health, it’s important that we keep the UCSF mission, PRIDE Values and Our People at the center of our decisions. In considering our options, I ask that we be guided by the following principles:
- Strategically cover vacancies with existing staffing: We must leverage attrition for savings whenever possible, looking for ways to redistribute work while retraining and redeploying staff where we can with focus on those services that are most critical to the continuity of the UCSF public mission.
- Focus on process improvement and reducing non-payroll expenses: Take another look at stopping non-essential projects, services, subscriptions and expenses. Prioritize savings through driving out inefficiencies, using Lean principles to realign activities and reduce waste wherever possible. Consider the timing of your return to onsite workspaces and leverage remote work to help reduce expenses.
- Rethink our long-term service model: Ask where we can reevaluate physical assets, or restructure service delivery to lower operating costs. To this end, two new task forces have been created to harness new thinking of this moment to identify improved ways to operate in the future: Future of Telework and Managing Remote Teams and Future of Administrative Space.
Next steps
I ask my executive team, unit leaders and our Finance Service Center to work together closely to consider options to meet this challenge. We must all accept the reality that every unit will need to make tough decisions. I ask all of our staff to be supportive and share your ideas of what work can be eliminated, transformed or redeployed to others.
The Finance Service Center is working with Budget Resource Management to develop specific budget targets as well as tools and resources to support this difficult work. More information is coming soon with an aim to meet the following timing:
· Budget proposals submitted by Wednesday, June 24 for review in advance of the Chancellor’s July 1 submission deadline.
· The FAS Finance Collaboration group will hold a Q&A session with Mike Clune, currently scheduled on Monday, June 8 from 2-3pm.
Many of you may have heard that my additional role as Interim Executive Vice President - Chief Financial Officer at UCOP will end in August. I am looking forward to devoting 100% of my energy into helping us navigate this difficult time. I cannot tell you how thankful I am for your support and goodwill in these challenging times. We are navigating unchartered waters together, and I continue to marvel at how you’ve represented our PRIDE Values through everything you have done to support UCSF and each other. Thank you!
Sincerely,
Paul Jenny
Senior Vice Chancellor
Finance and Administration