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University of Michigan students walk through the Diag on Tuesday, Oct. 15.

(Melanie Maxwell)

The University of Michigan is cutting administrative staff positions— and faculty and staff aren't happy with the way the downsizing is being handled.

The school is cutting about 50 human resources and financial services staff positions and relocating the remaining 275 positions to a new office on the edge of Ann Arbor, called a shared services center.

The 325 affected staff members will have to reapply for their jobs, most of which will be reconfigured with new duties and new salaries.

Staff members who aren't rehired could be laid off.

Faculty members think the downsizing has been a poorly communicated, top-down process that lacks transparency, according to a letter signed by 19 department chairs at the College of Literature, Science and Arts and sent to university administrators.

Yet one of the most concerning aspects of the process, several faculty members said, was how department chairs were informed of the downsizing in September but apparently told by administrators that they weren't allowed to discuss it with other faculty or staff until the official rollout in late October.

"The chairs of LSA were subject to a gag order that was quite unprecedented," said Kathleen Canning, a department chairwoman in the liberal arts college. Canning spoke of "highly demoralized staff" when explaining the process to the faculty senate advisory committee on university affairs Monday.

"It's a bit confusing when you're a public university professor and you're told you're not allowed to speak [about the changes]," she said.

Charles Koopmann, a medical professor, said faculty on committees looking at changes to health care, retirement and disability offerings have similarly been told not to talk about the process. Koopmann said that when changes are discussed in secret, employees don't have an adequate voice in the process.

"I was troubled to hear that there was a gag order, particularly in light of our ongoing concern in faculty government about transparency," said faculty senate chairwoman Karen Staller, a social work professor.

The letter asserted that faculty should have been consulted early and frequently in the process; that the project has been surrounded by an air of secrecy, leading to rumors that have increased staff and faculty anxiety; and that the process amounts to a dehumanization of the workplace.

Out of that letter came a meeting between department chairs and university administrators in which faculty asked the university to avoid layoffs when transitioning to the shared services center and slow down the downsizing process.

"They heard us and they realized that it was very painful," Canning said.

In an interview Thursday, U-M Chief Financial Officer Tim Slottow said the initiative —which is anticipated to save between $5 million and $6 million a year once fully implemented — is part of a decade-long cost savings effort at the university.

The school has already streamlined its purchasing, its space usage and other efforts that don't directly impact staffing levels — cuts Slottow called low-hanging fruit — and now top administrators are looking to make the more difficult cuts, including changes to retirement benefits, health care offerings and staffing.

Slottow called the process "heart-wrenching."

The school has brought in a consulting firm to assist with creating the new shared services center and outlining the positions there.

Canning said the downsizing is creating an inhospitable working environment and an "erosion of trust" at U-M, which is regularly ranked among the best colleges to work for.

"The staff don't know if they can trust the faculty, the faculty don't know if they trust the administration," Canning said. "It's led to an atmosphere where many people who were not targeted felt that they would be next."

She continued: "There is a huge simmering anger out there in the rank-and-file faculty and graduate students."

The new center will be located on Victors Way near Interstate 94 and South State Street, meaning that many staff will have to leave the schools and departments they've worked in for much of their careers.

Other schools, such as the University of California at Berkley and Yale University, have developed similar models, concentrating roles that were once decentralized.

Affected positions include those handling accounting, billing, financial accounts for units, expense reimbursement, benefit administration, data management, and employee time tracking for the roughly 44,000 employees working at U-M's Ann Arbor campus.

The transition is set to occur in three phases, beginning in April 2014 and ending in October 2014.

"We understand that transitions like this require flexibility and time to adapt," U-M administrators wrote in an Oct. 31 email to staff. "We understand that this is a significant change. In our collective experience with other large process changes on campus, there will be benefits we will all share, but also some challenges we will face."

U-M spokesman Rick Fitzgerald said supervisors are meeting with affected employees this week. He said that because of attrition and the fact that some administrative positions are currently filled with temporary staff, the school thinks layoffs will be minimal.

"As planning for U-M’s new Shared Service Center moves forward, we’re increasingly confident that there will be little, if any, need for a reduction in force," he wrote in an email. "The latest analysis shows that the current salaries for the affected employees are within the salary ranges for the new center. We don’t anticipate a need to reduce the pay of employees who move to the new center."

Kellie Woodhouse covers higher education for the Ann Arbor News. Reach her at kelliewoodhouse@mlive.com or 734-623-4602 and follow her on twitter.