WILLOWBROOK — Officials at Charles Drew University of Medicine and Sciences unveiled a major restructuring plan last week that will eliminate $10 million in annual expenses.

The measures will affect every department — including finance, human resources, administration, research, medicine, science and health — and consist of “a 10 percent reduction in executive salaries and a 5 percent reduction in employees earning more than $42,000,” according to a statement.

“In addition, consolidation and realignment will result in the elimination of 10 percent of the faculty and staff — or about 35 to 40 positions. The university [also] suspended retirement contributions and moved to severely curtail overtime, travel, consultants and other expenses.”

The decision, made by the board of trustees and executive council, came after the university saw a significant loss in revenues attributed to a reduction in contributions, a drop in federal and state grants and less returns from investments.

“We’ve been looking at our mission and our focus for some time and we were in good shape at the end of June last year in terms of our plans going forward as well as our likely sources of revenue. But then everybody got caught in the same hurricane,” said CEO and President Susan Kelly. “We made the decision to make these cutbacks, really in the last two to three weeks and then we’ve been working through what that would look like and how could we minimize the number of jobs lost and what cuts and things could we do that didn’t affect jobs. But in the end jobs had to be cut in the mix, because the bulk of the university’s costs are in its people.”

There are two different budgets that the university runs on: one is restricted and the other is unrestricted. The restricted budget consists of grants and contracts designated for a particular purpose, such as cancer research, infrastructure and feasibility studies. That area, according to Kelly, is fine.

The unrestricted budget comes from tuition as well as some grants and donations and can be used to expand the institution and pay for employees not covered by grants or contracts.

“That’s the area that took a great hit as a result of the collapse in the stock market which affects us in two very big ways,” Kelly said. “One is that you lose money on your own earnings, your own reserves. The other one is that people who used to give you unrestricted funds for a development of some kind, they lost in some cases 40 percent of the value of their holdings in the stock market so they’re not just giving grants anymore. They are holding off for maybe a year or two they are telling us.”

She added: “The federal government has got about seven times as many applicants for half as many dollars as they used to have. It’s about seven times what it used to be. So, all sorts of areas have taken a terrible nose dive since September.”

As a result, several positions have been cut as have benefits. One such benefit is the 7 percent contribution the university made to its retirement program. By eliminating those contributions, the university will save well over one million dollars a year and will it save jobs that would otherwise be in danger.

According to Kelly, Drew University will try to ease the transition by providing separation packages and comprehensive outplacement services.

The major goal in all of this is to “make sure that our accreditation is not threatened and the quality of our programs are not in danger,” said Henry Foster, first vice chair on the Board of Trustees.

However, Burt Williams, chairman of the board of trustees, sees it as inevitable.
“For example, in the College of Science and Health, there are going to be some reductions in support. It’s harder to the job of teaching folks, it’s harder if you make the cuts in the College of Medicine, it’s hard if you make cuts for the infrastructure support for research as well,” he said. “I think every area will be impacted. What we’re trying to ensure though is that the critical components of the university are still up and functioning.”

One more recent project has been the Charles Drew University Urgent Care Clinic that opened last year to provide support to the Watts/Willowbrook area which lost critical medical services after the closure of Martin Luther King-Harbor Hospital.

The clinic as well as others “are in some difficulty,” said Foster. “But we are going to sustain those even in the face of loss.”