Tobacco Documents Online

BETH ISRAEL HOSPITAL ~ NUTCNILL T. FlABK1N, IYk 0. Generall Director 330 Blrooklihe Avenue 9BoatomMaaeachueetta 02216 e April 12„ 1978 C FROM: Gary L. Huber„ M'.D.. Robert G. Uris SUBJECT: PHASEOUT COSTS'OF TOBACCO CRANT I have enclosed, as you requested, an estimate of the phaseout costs involved in termination of the tobacco grant on June 30, 1978, You will notice that the assumptions involved in each,figure are id'entified. Because of the difficulty of'making several of the assumptions, the total estimate of $515,732 shouldbe taken only as the Hospital's best forecast of the actual costs that would relate to termination of the grant. The $10,000 contingency amount that is listed!may,,in fact, not cover all costs whichare not currently identifiable., It should be understood, of'course,,th:at the Hospital does not accept financial responsibility for any costs beyond the $515 ,732. RGU/jp enclosure cc: Mitchell T: Rabkin,, M.0. David Dolins Henry C. Meadow- Franklin N. Epstein,, PS.D'.. Barbara Coulman Gene Wallace Bill Kneeland

TOBACCO GRANT ESTIMATEDiTERM'INATION COSTS'. C AMOUNT ASSUMPTIONS Professional - Salaries $321,000 (1) - Fringes 61,632 (2) Nan-professional - Salaries 16,,000 (3). - Fringes 1,,000 (4) Total Personnel: 399,632 R'ent 62,100 (5) Cost to return Charlesgate to its original state 5',,00'0 (6))' Taxes on Charlesgate is'„00'0 (7) Maintenance on Charl'esgate 5,,000 (8)' Unemployment Costs 19,,000' (9) Contingency 1a,000' (10) Total Estimated Termination Costs: 515,732' ASSUMPTION There is a contractual liability to pay the professional Harvardlappoi~ntees through the remaining,term of their Harvardiappointments, Most of these appointments run through 6/30/80 or 6/30/78'., It was assumed that no alternate support would be found for these individual's - thus.the tobacco industry woul'd be required'to continue their present support through the end of these appointments. The $321,000 projection does not include any costs related to term appointments of Harvard School of Public Health faculty members working on the tobacco project. 2) Fringe benefits were assumed at 19.2%. 3) All non-professional individual~s would be given 4 weeks pay upon termination (G. Huber''s suggestion)i., In addition, these indivi:dualsd would bepaid!for all their unused!accrued vacation. (hospital policy)' as of their termination - at 6/30/78. 4)' Fringe benefits,(60) were assumed to:include only employer FICA applied too the non-professional termination pay. Assuming, nio settlement could,be made onithe present Charlesgate lease, the (Z . , hospital would be required'to pay rent through,the remaining lease period' CJ (5/31/80'). Assuming,that other grants and contracts making use of this -I" building could not besustainedf if the tobacco grant ended, the total rent p on the building ($30, 600 for 1978-79 and $35, 500,for 1979-8'0 would' have ~ to be paid., ~0

-2- ` Q Estimate~provid'edl by Dr., Melvin First, Harvard School of~~Public Health., 7)~ Lease agreement on Charlesgate has a tax escalation clause. Assumed the total' tax overage ($6,5:8'2' per yr.) would be paid through the end of the current lease. Assumed that a further tax increase would bring the tax exposure up.to the $15,000 that is forecast. 8) Assuming that Charlesgate would be leased through 5/'31/80, there wouldd be a need of ongoing uti:lity, general maintenance and building security costs. These costs were assumed to be $5„000' per annum. 9)~ The hospital is on a specific reimbursement basis for unemployment costs. It was assumed that unemployment benefits for the~terminatedd non-professional individuals would be paid'for a period of'15'- 16 w~eek~s(average.experiencefor Comm. ofM'ass.)' 10) 1"he contingency factor has been added to cover hidden costs that can"t be identified at this point in time. ~