Originally created 07/01/00

MCG faces fund costs, layoffs

Medical College of Georgia is investigating why its early retirement program will cost millions more than originally projected.

The school also is cutting 21 positions and projecting 13 people will be laid off after September 30, although it still is working to find other positions for the employees.

The early retirement program was offered as part of a strategy to address a $22 million budget deficit at MCG. Of the 804 eligible, 712 or 88 percent took advantage of the program, representing about $47.4 million in salary and benefits, said J. Michael Ash, senior vice president for fiscal affairs and planning. The school must set aside about 30 percent of that to fund the program, which amounts to $16.5 million a year. The original analysis from William M. Mercer in Atlanta put the cost at $13.1 million a year, more than a $3 million a year difference, Dr. Ash said.

"If you fund it over 10 years, it would be (a) $30 million (difference)," Dr. Ash said.

The disparity stems from the unexpected popularity of the program and the ability of employees to add years of service to their total that they spent working for the state in another capacity, among other things, said Gary Elias, a principal with Mercer.

"A lot more folks took it than expected, and a lot of them purchased additional service," Mr. Elias said.

MCG President Francis J. Tedesco ordered a review of the program and Mercer's analysis by another Atlanta firm, Buck and Associates, in May. That report is expected by the end of this month, Dr. Ash said.

Dr. Tedesco said he would review the final report to see "whether or not we can go back to them and see if they're going to bear some of the responsibility" for the deficit.

Mercer is confident in the numbers it provided and its analysis, Mr. Elias said.

"I'd be surprised if anything legal came out of this," Mr. Elias said. MCG also has checked the numbers it provided for the analysis and found them to be accurate, Dr. Ash said.

MCG and MCG Health Inc., which officially takes over the operations of the hospital and clinics today, still will have $10.8 million in savings left over for reinvestment, Dr. Ash said. MCG is hoping income from its $5.3 million share will help ease the situation, Dr. Ash said. The cost difference was not to blame for the positions that were cut, Dr. Ash said.

The University System of Georgia took a $50 million operating cut this year, and MCG's share of that was $1.1 million, Dr. Ash said. The positions eliminated were across the board and ranged from auto mechanic to attorney, Dr. Ash said.

A few weeks ago, Dr. Tedesco said he did not anticipate any layoffs. But with the transition to MCG Health, some positions no longer were funded by the hospital, and in the past few weeks the school could not find funding for them either, Dr. Tedesco said.

"I didn't think that was going to happen," he said. Because of early retirement, however, the layoff is far less, "and I think we're doing better than most people could anticipate," he said.

Reach Tom Corwin at (706) 823-3213.


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