General Article
June 19, 2003
Fred Hutchinson prepares to weather temporary economic storm by slightly increasing prices while maintaining services
By BARBARA BERG
Few businesses have escaped the pressures of the sluggish economy, and among the challenged are nonprofit organizations— including the center—that rely on donations, investment income and government funding to support their operational expenses.
“This year has been especially challenging for budget planning,” said Myra Tanita, executive vice president and chief operating officer. “Although donations and investment income don’t constitute a major portion of our budget, both of these revenue sources are down, and the National Institutes of Health has scaled back their own budget increases, which affects the size and number of grants that are awarded to the center.”
Fred Hutchinson has fared better than many nonprofits in overall fund raising during the last 12 months and will even slightly surpass last year’s revenue. However, investment interest and unrestricted donations—those not earmarked by a donor for a particular program—are below projections, resulting in a shortfall of about $10 million. While this represents only about 4 percent of the total budget, it constitutes a significant portion of the center’s discretionary income.
Minimizing burden on staff
To offset these losses for the coming fiscal year, Tanita has asked departmental managers to identify portions of their budgets that can be trimmed without sacrificing services that are critical to Fred Hutchinson’s mission or placing undue burden on staff.
Still, she noted, staff can expect to see some of the effects of the budget cuts over the next several months in the form of cost increases to employees for several center-subsidized services.
In addition, some operations will be scaled back to conserve costs. For example, janitorial services will continue, but offices will be vacuumed less frequently.
“Most of the services we make available to employees, such as parking, the cafeteria and child care, are not break-even operations for the center and won’t be even with increasing the costs to staff,” Tanita said. “But we’ve tried to implement these increases as fairly as possible and are still providing staff with costs that are below or at market price.
“Our top priority is to ensure that the center remains a world-class cancer-research institution.”
Despite an uncertain economic forecast, Tanita remains optimistic that the center’s continued accomplishments in innovative research, combined with efforts to keep a careful eye on expenses and to explore creative options for fund raising, will enable Fred Hutchinson to weather its budget constraints.
“We are working closely with Development to create a strategic plan for fund raising that will include highlighting some exciting new research initiatives at the center,” she said.
“Although the economic climate is stormy, it is a temporary condition. Our scientists have continued to be successful in growing our research base, bringing in more grants and contracts each year. We have exceptional researchers and creative staff, and together, we are committed to finding viable solutions in this challenging time.”
Services impacted by the budget include the following:
Transportation and parking
Beginning July 1, staff will see modest increases in parking fees and reductions in the center’s contributions to vanpool and public transportation subsidies.
Parking rates will remain competitive with those of lots in the South Lake Union Neighborhood, said Shelly DaRonche, manger of Transportation and Parking.
“Costs for parking in the neighborhood average about $70 per month, with some lots charging more than $100 per month,” she said. “Employees may not realize that the state Commute Trip Reduction Act and our Transportation Management Plan with the city require that we charge for parking, and that the center subsidizes parking fees for employees.”
The new parking fees are:
Postdoctoral fellows, research associates and graduate students pay 50 percent of the covered or uncovered rate, whichever applies.
DaRonche said the center remains committed to supporting commuting alternatives and will continue to subsidize vanpools and public transportation use, but at reduced rates.
Previously, the center paid 100 percent of vanpool expenses. As of July 1, vanpool subsidies will cap at $60 per month per employee. Although monthly vanpool costs vary depending on number of riders and distance traveled, DaRonche said that because most vanpool riders incur average monthly expenses of $20, many staff would be unaffected by the change.
Transportation and Parking will work with Metro to notify vanpool riders of these changes. Ferry pass subsidies, which previously covered 100 percent of costs, will be capped at $60 per month. The actual cost of monthly pass rates for Washington State Ferries used by center staff are:
When Hutch Passes for Metro bus service are reissued next March, employees who wish to receive a pass will be asked to pay $20 per month toward the cost. Previously, Hutch Passes have been 100 percent subsidized by the center. (By comparison, the actual cost of a monthly one-zone pass is $66.)
Cafeterias and coffee stands
Jan Oliver, manager of Food Services, plans to implement budgetary measures that will reduce the center’s subsidy of her department’s administrative costs. However, raising food prices is only one strategy she will use to achieve this goal.
“We are working with our vendors to decrease costs wherever possible,” she said. “We’ve had some very productive meetings with many vendors who are willing to work with us on this.”
Still, patrons of the center’s cafeterias and espresso bars can expect to see some modest increases in food and beverage prices that will be phased in over the next few months.
“There are some meals, such as our salmon or halibut entrees, that we have consistently lost money on,” Oliver said. “For these kinds of high-cost items, we’ll begin to raise prices now. We’d like to continue to offer staff healthy food choices and this will enable us to do that.”
Despite the increased prices, Oliver noted that the center’s eateries still offer meals that are typically about 20 percent below that of comparable items at nearby restaurants.
Hutch Kids day care
Parents whose children are enrolled in the center’s day-care facility have received notices of a tuition increase of $60 per month per child, said Nancy Myles, director of Hutch Kids. In addition, parents now will be charged for diapers, and staff-to-child ratios have increased slightly.
“More than 90 percent of our expenses go toward salaries,” she said. “That left us few options for trimming costs, and even with these changes, Hutch Kids will still not be a break-even operation.”
Myles said that she remains confident that Hutch Kids can still provide high-quality service and that the center remains committed to providing on-site childcare.
“We have an excellent staff that is very dedicated to providing excellent care for children enrolled in our facility,” she said.
