Fringe benefits killing UConn Health on grants
The coronavirus pandemic caused the legislature to end its 2020 session and allow Governor Ned Lamont to govern under far-reaching emergency powers. It was a prudent decision that left many issues festering. Our state’s premier public university is falling behind in research grants. State leaders can no longer ignore the consequences.
Dr. Andrew Agwunobi, Chief Executive Officer of UConn Health, explained in candid testimony last February one urgent problem that demands attention: UConn’s high employee costs are laying waste to its doctors’ and researchers’ ability to win grants.
UConn Health, part of the higher education network that has made itself into an unofficial and powerful fourth branch of government, has long been a drain on state finances. It includes a medical school, hospital and research institution. In his testimony before the legislature’s budget committee, Dr. Agwunobi explained that although the hospital has seen an increase in patients, it continues to need more aid from the taxpayers.
The state’s generous fringe benefits for employees are a drain on UConn Heath’s finances. Public and private grant administrators have also noticed the high cost. Research grants are intended to fund the advancement of knowledge and solving of medical mysteries. Donors are not interested in making contributions to Connecticut’s vast unfunded liabilities or our generous benefits. According to Dr. Agwunobi, an employee with an annual salary of $100,000 costs an additional $98,000 in benefits. That number may vary a bit depending on the health insurance plan the employee selects. It includes, according to UConn Health’s calculations, $31,000 in unfunded pension liability costs.
The numbers at the Storrs UConn campus and regional campuses are even higher than UConn Health’s. In a survey of dozens of universities, including eight peer institutions, almost none exceeded UConn’s fringe benefits costs. Full marks to Dr. Agwunobi for laying out the problem in unambiguous terms.
UConn faculty members are leaving and taking their grants to other universities. Dr. Agwunobi revealed that $17 million in grants were transferred when faculty members left. Those who left won grant awards of more than $20 million from their new university positions. That’s almost $40 million in fleeing grants.
A grant reviewer from the National Institute of Health wrote of a UConn proposal that “fringe for some positions (nearly 70% of salaries) seems inordinately high….” A UConn faculty member abandoned a proposal to the Robert Wood Johnson Foundation after seeing UConn’s high fringe rate made the grant budget unworkable.
One reason Governor Dannel P. Malloy spent almost $1 billion on a new hospital for UConn Health and a building for Jackson Labs in Farmington was to make central Connecticut a hub for biomedicine. Politicians rarely have the sort of experience and insights that allow them to transform expensive hunches into blossoming certainties. Malloy hindered the chances for success when he negotiated terrible labor contracts with state employee unions. These lost grants are the practical consequences of those bad decisions.
UConn Health has been engaged in a futile search for a large hospital to buy or operate its medium-size hospital. Demands on state funds have increased in the last year. It will be difficult to continue to subsidize UConn more than we usually do.
We live in a remarkable age of medical research and innovation. The Pfizer vaccine, a miracle for our times, was developed in part in Connecticut. This is a land of brilliant minds. UConn should be attracting more researchers, not chasing them away. This is what a mess looks like. A point of pride has become a crumbling embarrassment. It requires Governor Lamont’s attention and a determined search for solutions.
There’s no requirement that the state’s Republicans remain spectators in this alarming trend. They should not launch taunts as a substitute for ideas. This would be a moment to offer practical solutions that do not include tuition increases.
The flight of medical research grants from UConn and its persistent parlous finances provide an unexpected cautionary tale for legislators and the Lamont administration. Our state government hankers to create its own unregulated health insurance enterprise. But it has not even been able to make UConn Health work after decades of trying and billions in subsidies. If it continues to indulge itself in that wrecking ball of a “public option” fantasy, those fleeing medical researchers will be joined by thousands of talented health insurance workers in the exodus from Connecticut.
The annual average subsidy of $128 million, the highest Medicaid reimbursement rate in the state, and a no-bid contract for prison health services have not been enough. UConn’s top administrators have long preferred negotiating ill-advised employee contracts to risking offending union-friendly legislators. The day of reckoning for those decisions has arrived. Gov. Lamont needs to expend some political capital to open the contracts and renegotiate them. The four-year ban on layoffs for state employees ends July 1st. Lamont should make clear that he understands the stark choices UConn faces and he will negotiate them or make them on his own.