The JCF, which had 110 employees before the layoffs, serves Sonoma, Marin, San Mateo counties and part of Santa Clara County as well as San Francisco.

Salkin described the downsizing as an "absolute" last resort. The layoffs, he believes, are the first for the S.F-based JCF in nearly a decade, and the most employees ever dismissed at a single time.

"We looked at other options. We basically looked at options that combined two factors: increasing revenue and reduction of expenses," said Salkin, calling the measure part of a "million-dollar improvement in our operating budget."

Salkin declined to reveal the names of the laid off employees, characterizing them as primarily support staff. Most employees were notified of their termination yesterday, though some may not be told until Monday or later.

He also declined to go into detail on the terms of the employees' departure other than describing the severance package as "fair, humane and respectful," and noting it will be "uniformly applied" to every dismissed employee. Salkin added that he is working with the Jewish Vocational Service and other firms to locate jobs for outgoing employees, characterizing them as "productive workers."

The possibility of layoffs has been "general knowledge" at the JCF for some time, according to Salkin. In fact, a year ago he hosted a staff meeting in which he stressed the need for a balanced budget, explaining to JCF employees that he intended to "raise the bridge or lower the water."

When Salkin took over as CEO in November 2000, the federation was already saddled with a $645,000 deficit. In the last year, that deficit grew to $740,000.

Salkin said the rationale behind the federation's cash flow problem is threefold:

*A volatile stock market led to reduced investment income, which was coupled with an "overall shortfall in revenue from outside sources."

*The JCF was still burdened with the high salaries it paid out in the "go-go days of the dot-com economy" in order to "attract and retain quality employees."

*Finally, in recent years the federation simply over-allocated to local beneficiaries.

The layoffs, however, will not guarantee additional allocations to JCF beneficiaries. The money saved from the eliminated positions is not transferred into the allocations pool but is directly applied to ameliorating the deficit, Salkin said.

"There are no entitlements," Salkin said of beneficiary agencies. "That's independent of our budget process. It's completely dependent on our annual fund-raising results."

Among federations that generate comparable revenues, the S.F.-based JCF ranks toward the middle in staff expenditures. However, because the JCF covers the largest geographical area of any federation in the nation — and because the local cost of living is so high — Salkin faces budget headaches other federation directors do not.

In addition to its San Francisco headquarters, the JCF maintains offices in San Rafael, Belmont, Palo Alto, Santa Rosa and Israel. This is a financial drain, but Salkin maintains it is imperative "that federation be where the community is," stressing that the JCF's long-term objective is to staff offices in all Jewish community centers within its region.

Salkin said he chose to release workers rather than cut salaries of federation executives or other employees because reducing top salaries "wouldn't have achieved the objective, and, secondly, I think it's a common experience that cutting salaries is at best a de-motivator and, at worst, encourages people to leave."

The CEO said he's sorry to have to let people go, but the federation has a responsibility to balance its budget not only for its own fiscal well-being but in order to serve as a role model for its beneficiaries.

"I think that everyone can understand the requirement for an organization to be fiscally responsible and have a balanced budget, because if you don't, in the long run, you perish," he said. "The federation has been here 93 years and needs to be here another 93 years. So the perspective has to be on what's in the best long-run interest of the community."