The Douglas Administration announced Wednesday afternoon a proposal to reduce state worker costs by $7.4 million. The proposal sent to the Legislature does not include layoffs, but indicates that layoffs (a reduction in force or RIF) remains a possibility if an agreement is not reached by mid-September. This proposal was developed jointly with the committee and represents a collaborative effort by the Legislature and the governor to address the $28 million FY10 shortfall and take steps to shrink out-year deficits.
The $7.4 million in labor cost savings would be found through wage and benefit reductions. The governor's office says that this otherwise would represent about 200 layoffs. Another $4.59 million in savings will be achieved in state-subsidized pharmacy programs, with $3 million of that coming from a federal grant. A $1.8 million savings is a paper transger of money for adult education coming from the Education Fund instead of the General Fund. The other large block of savings to the 2010 General Fund budget comes from a surplus from the FY 2009 budget of $6.88 million. Most of that came from a windfall from the estate tax late in the fiscal year.
Meanwhile, Joint Fiscal Committee also met on Wednesday to extend the retirement incentive plan to a total of 330 state workers. The state would pay the retiree 80 percent of health insurance and up to $15,000 in cash depending on years of service. The retirement date is September 1. Part of the reason for the incentive plan has been that state workers have not been retiring or moving on to non-state jobs at the usual rate, meaning that attrition rates have not reduced payroll as expected. The state has suggested that the economy has been the principal reason for state workers not leaving their jobs.
According to a press release sent by the governor's office, "This proposal contains no immediate RIFs. However, we are seeking $7.4 million in FY10 labor cost savings through agreement with the state employees union. If we are unable to reach agreement by mid-September, we will begin the process of determining savings through attrition, vacancies and/or - as a last resort - reductions-in-force."
The letter from Governor Douglas to Representative Mike Obuchowski, chairman of the Legislature's Joint Fiscal Committee is copied below. The entire document is attached as a PDF.
AttachmentSize
Rescission Proposal to JFC 080509.pdf265.48 KB