JACKSON (AP) — The University of Mississippi Medical Center said Thursday it would cut jobs and impose temporary salary cuts to help close a $32.7 million budget shortfall.

UMMC leaders said that 195 employees will be laid off and 85 vacant positions will be eliminated, saving $1.5 million. The hospital complex reduced the salaries of 439 faculty members until June 30, saving $1.9 million. The hospital also worked to cut supply chain and lab costs, and restructure departments to consolidate similar positions.

The $32.7 million deficit comes from a combined $24.5 million cut in Medicaid funding and $8.2 million cut in state funding, said spokesman Marc Rolph.

With more than 10,000 employees and a $1.7 billion budget, the medical center includes hospitals, plus medical, dental and health-related schools. It is Mississippi’s only teaching hospital.

Dr. LouAnn Woodward, who heads the medical center, said he cuts will have little impact on patient care.

UMMC still plans a children’s hospital expansion at a price tag of $180 million. But Woodward warned that the medical center will likely still need to make more cuts to deal with the budget.

“The people who lost their jobs are good, hard-working people who will be missed as team members, and we appreciate their service,” Woodward said in a press release.