Fiscal Crisis Forces Salary Cuts, Layoffs at Medical School

A financial crisis at the Charles Drew University of Medicine and Science in South-Central Los Angeles has prompted the layoff of 70 clerical workers as well as salary reductions for all physicians and about two dozen top administrators, it was disclosed Tuesday.

Board Chairman Dr. W. Benton Boone said an intense internal review and audit of the school’s finances has recently “turned up some surprises that are a little bit troublesome . . . errors in accounting that are difficult to rectify.”

He called the situation a “crisis” and said that “the survival of the institution” is at stake. However, Lewis King, dean and vice president for academic affairs, said the current cutbacks would have little immediate impact on the university’s 200 students.

Meanwhile, the medical school’s former president, Dr. M. Alfred Haynes, filed a slander lawsuit Monday against a local television station, alleging that it falsely reported that he had offered to pay “hush money” to a former employee if the employee would “keep quiet” about the alleged waste of thousands of dollars and favoritism and conflicts of interest at the university.

Haynes left Drew about a year ago and his successor, Walter Leavell, said that when he took over shortly afterward, he discovered “room for improvement” in its financial operation. But Leavell insisted that the main reason for the school’s current financial squeeze is the reduction in revenue from research grants and contracts.

The university has a $28-million annual budget. If spending were to continue at the current rate, he said, the school would end the fiscal year in July with a $3.5-million deficit.

Boone said the trustees last month approved layoffs and other drastic measures because, “we couldn’t possibly continue the way we were. We’re still struggling to try to find out how this came about.”

He said it now appears from a close scrutiny of the books that money was “counted twice in some places” and that the monitoring “wasn’t sufficient.”

Founded in 1966 as a private, nonprofit institution, the university is the “only predominantly minority medical school and medical institution west of the Mississippi,” Leavell said. The school is affiliated with the Martin Luther King Jr. Medical Center, a county hospital across the street from Drew.

Drew sponsors about 50 community-based educational programs off campus, including a Head Start program with 1,100 children, Leavell said. On campus, about half the 200 students are enrolled in Drew’s School of Allied Health, which trains physician assistants and medical technicians. The rest are studying to be doctors and split their time between Drew and the UCLA Medical School.

The institution runs mainly on government grants, which have fallen off recently, Leavell said, but he could not say by how much. At the same time, Leavell said, expenses have been climbing due to inflation.

Payroll costs will soon be reduced by laying off 70 of the institution’s 670 support personnel, Leavell said. Notices were sent out last week.

The 170 physicians who teach at the school, and who also are on staff at King Medical Center, will lose between 25% to 35% of their Drew stipends, but their hospital paychecks will not be affected. Additionally, the university will suspend payments into the doctors’ retirement system for five months.

The salaries of two dozen top administrators, including Leavell, will be cut by as much as 15%.

In a slander lawsuit filed in Superior Court, Haynes stated that he was falsely accused by in a KCBS Channel 2 news report last January of knowing as early as 1983 of allegations of conflict of interest, favoritism, violations of bidding procedures and the waste of thousands of dollars in the office of procurement. The suit names as defendants KCBS, CBS, the network that owns the station, reporter Michael Singer and Glen Hobbs, a former Drew employee.