As you may have read in the newspaper or heard on news reports, the finances for the state of South Carolina continue to face challenges. Understandably, many of you are concerned about how these budget challenges are affecting the Medical University and, in turn, the thousands of dedicated people who work here. My purpose in writing now is to give you an overview of where we are at present and an idea of what lies ahead.
Let me start with the good news. The hospital is full to overflowing with patients and this is reflected in a financial performance that is well above budget. All of the faculty and staff in the clinical enterprise deserve our congratulations for providing the outstanding care that is attracting patients in record numbers and providing that care with skill, efficiency and compassion. On the university side, we are also ahead of our budget plan, even after the mid-year budget cuts that removed an additional 9% of our state funding. These results were achieved without any layoffs or furloughs this year.
How have we been able to manage so well in spite of the loss of about a third of our state funding during the past 18 months? The answer again is in the hard work of our faculty and staff. On the research side, our funding is up, even before one considers the additional one-time infusion of support from the NIH stimulus funding. Our current operating margin is largely attributable to our educational stimulus funds, and we are managing those funds to make sure that we have the flexibility needed to face challenges that may lie ahead.
The magnitude of future challenges remains unclear in South Carolina, and the nation overall. While there are signs of recent economic growth, they are modest, and in general, state budgets tend to recover a year or more after the end of a recession. Given the slowness of the recovery, the federal government is considering additional support to state budgets in areas such as Medicaid match money. Until these commitments are made, the budget writers in Columbia must work with the existing resources. Not surprisingly, therefore, the initial plans coming out of the House Ways and Means Committee include substantial further reductions in funding to all state agencies, including the Medical University.
It is important to remember that it is still very early in the budget process. We will have a much better sense of next year’s state appropriation to the Medical University in a couple of months. Nevertheless, we cannot wait until then to begin our internal budget planning process. We are moving forward, hoping for the best, and preparing to deal with the cuts that would be required under the same assumptions that the budget writers in Columbia are using.
This is a daunting task, but no more so than dealing with cuts we have received during the past year and a half.
I would argue that we are in a better position today because we won’t be blind-sided by cuts the way we were at the beginning of the recession; we know that cuts are coming and we have some time to plan for them. My commitment to you is that we will manage our current resources with care in order to help us get through the challenges ahead. Moreover, as I learn more about the budget situation in Columbia and our own plans to deal with it, I will keep you posted.
Again, I wish to thank each and every one of you for all that you are doing to help us continue to meet our many obligations in education, research and patient care. You are doing a remarkable job under difficult circumstances, and through your efforts we are doing more with less. Together, we will get through the remaining years of this recession and build a platform for even greater success in the years beyond.
With grateful appreciation,
Ray Greenberg, M.D., Ph.D.