A wage freeze - retroactive for some employees - that will save about $3 million a year was announced Tuesday for the University of Arkansas for Medical Sciences Medical Center in Little Rock.
UAMS spokeswoman Leslie Welch Taylor said about 3,300 hospital employees - about a third of all UAMS employees - will be directly affected by hospital administrator Richard Pierson's announcement that "merit adjustments" would be discontinued for the current fiscal year.
"We regret having to take this measure, but we feel it is the best solution in the interest of our employees and our patients," Pierson wrote in a letter to UAMS Medical Center employees. "This reduction in merit adjustment produces a cost reduction equivalent to 50 jobs."
While most UAMS employees receive raises at the start of the fiscal year on July 1, Taylor said Medical Center employees receive their raises on their anniversary dates. Therefore, employees who had hire dates in July, August, September or October will have to give up the raises they already received. They will not, however, have to pay back the extra pay they have already collected, she said.
Doctors are not included in the policy change as they are employees of the UAMS medical school rather than the hospital. Some 1,700 "classified employees" - typically lower-paid employees whose are paid on a pay schedule set by state government - also are not affected, Taylor said.
The pay freeze came 10 days into the tenure of UAMS's new chancellor, Dr. Daniel Rahn. In an e-mail titled "Financial update" sent to all UAMS employees on Tuesday, Rahn said UAMS ran an "operational budget deficit" in the first quarter of its current fiscal year. "The majority of this is attributable to hospital expenses outstripping revenues," he wrote.
Many of the factors are related to the economic recession, he said, "exacerbated by UAMS' $2.2 million state budget reduction and the possibility of more cuts if state revenues continue to decline."
The wage freeze is not the first cost-cutting measure at UAMS. In September, Rahn's predecessor, Dr. I. Dodd Wilson, issued a memo outlining guidelines requiring justifications for all hiring requests. Overtime has also been strictly limited, and Taylor said some of the institutions other operating units didn't give raises at all this year.
Here is the complete text of Rahn's e-mail:
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