Stagnant Economy Forces Workforce Reduction
The University of New Mexico enjoyed a boom in capital projects over the last four or five years, receiving an average of $100 million for capital projects annually. Money came from the state and federal governments and from bonds as the university worked to catch up with ballooning demands for square footage.
To accommodate the volume of work, the Office of Capital Projects expanded its operation in staffing and contractual partnerships. With the downturn in the economy, capital funding is a shadow of its former volume, so OCP is forced to downsize and will see a reduction in workforce.
OCP operates under a model for fees-based project management that was created to accommodate its revenue needs. Currently, it collects an average of 4 percent in fees off of the total project amount. In fiscal year 2011-12, the capital project funding to UNM is estimated around $40 million – a 60 percent reduction. Due to this drop, OCP is projecting an approximate budget deficit of $800,000.
"As an enterprise operation, OCP must be self-supporting," said Steve Beffort, vice president, Institutional Support Services. "There are fewer projects to manage, so OCP cannot generate the funds to support itself." Beffort predicts that capital projects funding will trend down for the next 3 –5 years, so a sustainable business model has to be adopted.
OCP held six positions vacant during the current fiscal year and these positions will be eliminated. In addition, OCP analyzed its current organizational structure to evaluate critical positions, based on the new model of sustainability, and six additional positions will be eliminated, with the employees being placed on layoff status. Three positions are senior project/construction managers. Per university policy, the layoffs are based on lowest-level seniority within the department and within the specific job title. Additionally, an employee on annual contract was notified the contract will not be renewed.
Per policy, the affected staff must be provided a minimum 30 days' notice of the layoff. In this case, notice has been extended to 90 days and all efforts will be made to help the individuals secure other positions within or outside the university.
Analysis indicated the downsizing should have occurred in November 2009, but emergency funds were identified to sustain operation through the end of the fiscal year.
"These are good employees," Beffort said. "We hate to see them go, but capital money has just gone away." Beffort said the severance tax bond money approved by the legislature and the upcoming general obligation bond election are vital to sustaining the reduced level of work.
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