Raises for nurses, increased waste-disposal costs and a required new blood test left the local American Red Cross unit with a $519,100 deficit at the end of the year.
In its recently released annual report for 1988-89, the American Red Cross Greater Buffalo Chapter and Blood Services Buffalo Region reported combined revenues of $14.57 million and expenses of $15.09 million.
Officials said the agency is in no jeopardy, and measures have been taken to make up the loss.
"It would become a concern if it persisted into another year," said Dr. Reginald M. Lambert, director of blood services. "We're a fairly marginal operation. So, if unexpected things happen, we can end up with a deficit. It's not common, but it happens."
The Red Cross fiscal year runs July 1 through June 30. It ended 1987-88 with a $490,458 surplus, said Deborah Williams, a Red Cross spokeswoman.
Red Cross finances are divided between its two divisions:
Community Services, funded mainly by the United Way and fees.
Blood Services, funded by collecting, processing and selling blood products to hospitals.
The budgets of the divisions are separate.
Community Services reported a $97,631 deficit. Ms. Williams said most of this was attributed to a $94,159 reduction in the amount of money the agency received from the United Way of Buffalo and Erie County -- $1.45 million in 1988-89 compared with $1.54 million in 1987-88.
The local Red Cross sends a portion of the funds it receives from the United Way -- it also receives about $100,000 annually from other United Ways -- to the national Red Cross. That "national fair share" increased from $552,171 to $579,251.
Blood Services suffered the most -- a $421,469 deficit -- and mainly for three reasons, according to officials:
The agency's 185 nurses received a 22 percent
it of $519,100
salary increase, while officials of Blood Services had planned the year's budget according to anticipated increases for nurses' salaries of only 4 or 5 percent.
"This was the single most important unexpected thing that affected the budget," Lambert said.
He added that it accounted for $330,000 of the deficit.
The cost for disposal of medical waste increased from $5,000 to $80,000.
"We had new state regulations regarding medical waste, new concerns among the public about its hazards and some waste haulers who no longer would handle it," Lambert said.
The extra cost of instituting a new screening test on donated blood for a rare but deadly virus, HTLV-1, or human T-cell leukemia virus, which causes a form of adult leukemia and a nervous disorder associated with paralysis and muscle spasticity.
The new test is one of six the Red Cross performs on blood. Other tests include ones to detect hepatitis, syphilis and the presence of AIDS antibodies.
To make up for the losses, Blood Services placed an overall 5 percent price increase on its blood products, compared with a 4 percent increase last year and no increase the year before.
The current price of red cells is $55 a unit, Ms. Williams said. Nationwide, the average price is $50, although it ranges from $32 to $87. Eighty percent of the nation's chapters charge around $50, according to the national American Red Cross.
"We feel justified because our price increases have not kept up with inflation," Lambert said. "We've
tried to be responsible citizens. But to do this, we've operated financially right on the edge."
Blood Services also cut operating costs in its 1989-90 budget, according to officials.
Although officials at American Red Cross headquarters in Washington, D.C., declined to discuss the specific financial status of individual chapters, they said some local chapters experience financial problems every year.
"We're subject to conditions that often are out of our control -- decreased donations, increased costs and required new blood tests," said Pat Davis, a Red Cross spokeswoman.
The amount of blood collected locally during the year did not play a part in the deficit. The Red Cross set 142,000 units of blood as its goal and ended the year very close with 141,344 units.
For 1989-90, the agency originally set a goal of 145,000 units. But for budgetary purposes, it is projecting a more conservative estimate of about 135,000 units, Lambert said. So far, it has collected about 70,000 units.