LITTLE ROCK, Ark. — The University of Arkansas System is monitoring the financial status of its academic medical center after recently laying off more than 250 employees to reduce a deficit.
The University of Arkansas for Medical Sciences announced earlier this month it was cutting 600 positions as a way to help trim what administrators anticipated would be a $72.3 million deficit, almost twice what they originally expected. Nearly 260 of those positions were cut at the time of the Jan. 8 announcement, the Arkansas Democrat-Gazette reported .
Administrators said the layoffs were necessary when the majority of the school’s $1.5 billion budget is made up of personnel costs. They expect the layoffs to save $18 million in the fiscal year ending June 30.
System auditors are meeting biweekly with UAMS administrators to monitor the effects of the budget reductions. Auditors are also focusing on the campus’ unrestricted cash, days cash on hand and days in accounts receivable, said Jacob Flournoy, the system’s chief audit executive.
The school has dipped into its unrestricted net assets three of the past four years. Had the medical center continued, it would have had only $5 million in unrestricted net assets by June 30, and the school does not want its unrestricted assets to be below zero, Flournoy told trustees on Wednesday.
The medical center planned for deficit budgets for at least the past five years, said Bill Bowes, the school’s senior vice chancellor for finance and administration and chief financial officer.
“Part of that is the challenge that we have in trying to support our academic programs, our research and our clinical activity with a heavy, heavy reliance on our clinical revenues,” he said. “But you know, we did that, and we also realized at some point, we’re going to have to make a correction, which is what we’re doing this year.”
Information from: Arkansas Democrat-Gazette, http://www.arkansasonline.com