Tallman Trask III discusses Duke's budget shortfall during Tuesday's Primetime session. Looking on are Hof Milam and Kyle Cavanaugh. Provost Peter Lange also spoke. Photo credit: Jon Gardiner

Durham, NC - Nearly 500 faculty and staff turned out for the Primetime employee forum on Tuesday to hear plans for how Duke was dealing with the recession, which has left a $125 million hole in its budget.

Tallman Trask, executive vice president, was one of four administrators who helped describe the plans that had been made to date.

"I think the most important thing to say here is that we are trying to do this carefully and deliberately -- in large part because Duke values its employees, and we're trying to do the best we can to protect those employees," he said.

Hof Milam, vice president of finance, said that Duke had secured additional debt that would allow for a more thoughtful and deliberate approach to the budget issues.

"The good news is that the trustees have given us time to work through this over a three-year period, so we don't have to take action without having ample time to give it careful consideration" he said.

Kyle Cavanaugh, vice president for human resources, explained some of the plans that had been implemented to date and other major steps that were being taken to save on labor costs, which comprise 60 percent of the operating budget.

He noted the compensation freeze for employees earning more than $50,000, the vacancy management process where more scrutiny will be given to filling new positions, and the administrative reform committee that is looking into cost-saving ideas such as administrative staffing and the eliminating of paper paystubs for those using direct deposit.

Cavanaugh also announced the latest measure: a voluntary retirement incentive for University employees who are participating in the Employee's Retirement Plan, a traditional pension plan for biweekly-paid staff.

"We will be making this voluntary offer to six or seven hundred employees, but it is impossible to predict how many individuals will elect to participate ," he said.

The retirement incentive program will offer enhanced retirement benefits to people in eligible positions who also are age 50 or older with at least 10 years of credited service in the Employee's Retirement Plan. A separate plan for monthly-paid faculty and staff who participate in the 403(b) retirement plan is still being considered.

Cavanaugh said the hope was that voluntary retirements and attrition could mitigate the potential for involuntary layoffs later.

"As much as I would like to say that workforce reduction is not a possibility, we are not ready to say that yet," Trask said. "But we can say it will be one of the very last possibilities."

Provost Peter Lange noted that Duke will remain committed to faculty excellence and the quality of the undergraduate and graduate student experience and programs. But, he said, Duke will need to be careful with new commitments.

"We need to slow the pace of some of the things we are doing and have been doing for many years," Lange said. "We are slowing the number of searches for faculty, slowing the creation of new programs. And we have a moratorium on all new construction for at least the next two years. Administrative costs, from paper clips to publications, from repainting offices to replacing computers, all of these things have been slowed down."

Lange said that the economy may also create some opportunities that Duke will consider.

"In a down economy, there are faculty available that wouldn't be available, that you might lose to some competitors, so we're able to take a little bit of advantage with that," he said.

All four administrators noted that although many steps have already been taken, there is much that is still unknown, including the depth of the recession and how much money will be saved by the various programs being implemented.

"While this is all dealing with uncertainty, I don't think next year will be any better" Trask said. "If I had to guess, it may be a little worse. Because of the way the money flows, we have not seen the full impact of some of the reductions yet."

Milam asked employees to continue to forward ideas. "For us to have answers, we need to depend on everyone," he said. "The best ideas often come from the people closest to the action."

Cavanaugh added that while a comprehensive plan is being developed, "there are several chapters yet to unfold."