President Owen's Message
on the Fiscal Year 2009 Budget
William F. Owen, Jr., MD
President, University of Medicine and Dentistry of New Jersey
This year we engaged in a robust and inclusive process
to build the budget for Fiscal Year 2009. In
the face of decreasing direct state appropriations,
less revenue and reimbursement for health care services
from both public and private sources, and reduced
investment in biomedical research, we reduced our
projected spending for FY 09. However, in doing
so, we must strive to preserve the same level of
excellent service in education, health care and research. Our
students, patients, employees and community partners
deserve and have come to expect no less from UMDNJ.
Specifically, our state appropriation this year
was reduced by $22.4 million, a 10 percent cut of
our operating state appropriation. In addition,
we face $3 million in increased energy costs and
$4 million in higher interest payments on our debt
service. In total, due to all the revenue decreases
and cost increases for next year, we’ve had
to overcome a $49 million structural deficit in next
year’s budget.
We met this challenge by undertaking a bottom-up,
enterprise-wide approach to budgeting. The
enterprise-based budget adopted Tuesday by the Board
of Trustees included input and feedback from all
the schools and central administration departments. We
looked carefully at every aspect of our institution
and identified mandatory functions and services to
protect.
Our decisions were made with deliberate consideration
of their impact on our team members. For example,
cost reductions are achieved by eliminating unfilled
vacant positions wherever possible. We have
identified at least 78 positions that are currently
vacant. Despite this approach, filled positions
will be eliminated. Of these positions, 95
are from central administration and 35 from the schools. University
Hospital will be reviewing approximately 185 positions
over the course of the year as it makes operational
and process improvements. For our approximately
15,000 team member workforce, this is a reduction
of less than two percent.
Our enterprise budgeting process underscored the
need for near future revenue enhancement and diversification,
e.g. a mandate to invest in several key areas to
improve services and grow our revenue base. Toward
meeting this condition, we are investing in a new
Clinical Research Organization that will bring in
revenue from clinical trials and soon turn a profit. In
addition, we must invest in our Information Services & Technology
infrastructure to modernize our information management
and capture more earned revenue.
In FY 09, we must do more mission-based budgeting
with less resources. We face many diverse challenges
at this wonderful university every day. It
means that we will have to revisit some fine ideas
and initiatives at a later date. It also means
that priorities must be reset to minimize any future
fiscal vulnerability. The leaders of this University
have balanced these difficult needs in a manner that
will allow us to accelerate our future success.
William F. Owen, Jr., M.D.
President
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