Though most College employees will receive a 1.5 percent increase in base pay for the next fiscal year, Geisel Medical School faculty and staff will only receive a one-time bonus, executive vice president and chief financial officer Rick Mills said. Geisel’s deficit, which is estimated to be about $20 million per year for the next five years, has put a strain on the medical school’s finances, chair of the faculty council and Geisel professor Harold Swartz said.
In an email sent to Geisel employees last week, interim Dean of Geisel Duane Compton cited “unusually difficult financial circumstances” to explain the departure from the normal annual pay raise. For the 2014 fiscal year, Geisel posted a $5.5 million deficit.
Geisel professor Lee Witters said that the usual annual wage increase is up to two percent of base pay, and additional raises can usually be awarded based on recommendations and departmental reviews.
For the coming fiscal year, Geisel will create two financial pools — one for faculty and one for staff — equal to one percent of this fiscal year’s total base pay, then these funds will be distributed as bonuses instead of wage raises for all employees. Department heads will award faculty and staff bonuses of anywhere from zero to four percent of an employee’s base pay.
Geisel administrators decided to change their wage increase plan based on financial uncertainties in the medical field, including a downward trend in public funding for medical schools, Swartz said. He added that this move is not unprecedented — there have been times before when Geisel employees did not receive salary raises, and other academic institutions have made similar decisions in times of financial distress. He noted that Dartmouth-Hitchcock Medical Center recently went through a period of several years with decreased salary wage raises due to financial concerns.
Mills said that the 1.5 pay raise for the rest of College employees is “the new normal” in a time of low inflation. He said he is interested in redistributing increases to be higher for those with lower wages.
“I certainly aspire to do better than this,” he said. “At the lower end of the pay scale, it’s a lot harder if you get that small of an increase. I want to have conversations to think about a scale of increase that nets at the same cost.”
Swartz said that from informal conversations and emails that he has received, the reaction from the faculty has been a reluctant acceptance, though some are upset.
“I wouldn’t anticipate a revolution,” he said. “It’s not something that will lead to confrontation. It may lead to a lot of grousing, but it’s something that the dean and his advisors feel is necessary.”
As chair of the faculty council, Swartz serves on the dean’s advisory board, which discussed alternatives but did not make the final decision not to raise wages this year. The final decision was made by the dean’s office.
Witters said the general faculty was not consulted. He added that he was not surprised that Geisel administrators chose a different wage plan, as a one-time bonus is a way to recognize the work of employees without committing to a long-term pay increase.
Swartz said that Geisel’s deficit stems partly from more limited external funding resources. He said that much of faculty compensation in the medical school comes from grants from organizations such as the National Institutes of Health. He noted that the NIH budget has decreased significantly, which places a “tremendous amount of pressure” on Geisel.
The structure of the medical school needs to change as well, as the current model of hiring faculty that have already obtained significant external funding has not been as effective, Swartz said.
He said that Compton has been working to reduce the deficit and trim excess expenses.
“Closing the school is not an option, but subsidizing massive deficit is also not an option,” Swartz said. “Over the next year, we’re going to have to very substantially change the nature of the medical school.”
Compton did not respond to requests for comment.
Swartz said that throughout the restructuring process, the expectation is that faculty will be heavily involved in assessing strategies and will vote, and administrators will ultimately make decisions informed by those votes.
“The goal is to come up with a financial, organization, academic and research model that lets the medical school do those things for which it is extremely well-qualified and well-recognized,” he said. “We have to do it in a financially sustainable manner.”
Salaried Geisel employees will receive their bonuses on Aug. 1, while the salary increase for all other College employees will take effect on July 1, the first day of the new fiscal year.
