LITTLE ROCK, Ark. (KTHV) — More than 600 positions including 258 current staff are being laid off or eliminated at the University of Arkansas for Medical Studies, the state's largest public health care system.

Administrators broke the news Monday morning and said a $39-million budget shortfall is looming over the system, leading to the decision to trim personnel.

“You know they're losing their jobs, so obviously that's going to be stressful for them,” said State Rep. David Meeks (R-Conway) who sits on the House Public Health Committee and heard the news of the layoff during meetings Monday morning.

UAMS described the cuts as across the board and affecting every department. They did not release specifics on the restructuring but said most of the cuts are positions currently open that won't be filled. The remaining 258 are layoffs.

As the state's largest public employer, lawmakers like Meeks had immediate questions.

“We've got to take a look at that,” he said. “As a legislator, why were they spending obviously more and having to pull out of the reserves and was there a way to avoid that maybe sooner.”

“We need to 'right-size' our operation,” said Leslie Taylor, vice chancellor of Communications and Marketing.

Taylor noted that, unlike larger states, UAMS doesn't get a lot of money directly from state government, with $86-million earmarked in this year's budget. The total budget is $1.5-billion.

The hospital is the money-maker, generating most of the revenue that comes in. The biggest expense is the payroll. With accountants warning that the system is coming up short halfway through the fiscal year, every department got a call to make cuts.

Taylor said in a statement that administrators have in the past used reserve funds to cover shortfalls. This year the UAMS board precluded that.

Lawmakers may now take a closer look, especially with bigger health care changes on the horizon.

“The state portion of it is just very, very small,” said Rep. Meeks. “Again, I think that's something that we need to take a look at. Is there something that the state needs to be doing more of?”

Governor Asa Hutchinson will present his budget outline to lawmakers Tuesday ahead of next month's fiscal session. Lobbyists and legislators expect this new health care concern to crop up.

“I'm kind of shocked that they made these layoffs now,” said Mike Rose, an independent mental illness advocate from North Little Rock following Monday meetings at the Capitol. “It's going to hurt as far as help for the mentally ill are concerned, but we'll see what happens during the budget hearings to see what the joint budgets are going to be.”

Vice Chancellor Taylor stressed that the job cuts had nothing to do with individual performance and said the HR department is working with the newly unemployed to find new jobs. She added that the restructuring will likely open new job opportunities at UAMS down the line, and the people cut Monday would get first dibs at those jobs.