Agencies consider options to fill budget gap

Jan. 21, 2008 - On the heels of a less-than-rosy budget report in December and the persistent rumor that the state budget must be re-balanced, the governor has asked state agencies to look at strategies for cost savings, including implementing Early Retirement Incentive Plans for some departments.

In a memo from the Office of Budget and Management, Director Pari Sabety asked agency directors to consider ERI plans as they look for ways to “explore cost-containment options.”

Historically, early retirement plans are implemented as an alternative to layoffs, and are an early indicator of budget tightening in the months ahead.

According to the memo from OBM, agencies can request that a plan be considered allowing the employer to “buy” employees’ retirement time of up to three years or service credit equal to 1/5 of the total service credited.

Agency plans must be approved by OBM and must show a cost savings of at least 5 percent.

Meanwhile, reputable economists both locally and nationally, have been painting a grim picture of current fiscal realities that include bad employment numbers, a broken housing market, falling sales tax revenue and the threat of a recession.

“Although the future is unknown, given what the experts are telling us, there is no other conclusion to make, but that state revenue figures will continue to be down,” said OCSEA President Eddie Parks.

“We are gravely concerned that there will be cuts.”

Unlike the federal government, the state government must operate with a balanced budget. In fact, other states are feeling the same squeeze.

• Governor Schwarzenegger just announced a proposal to cut California’s budget by 10 percent across the board that would include the elimination of 7,000 jobs and the closing of as many as 48 state parks.
  
  
• New York Governor Elliot Spitzer just announced he will close four prisons and six juvenile centers.
  
  
• Michigan says it will add sentencing reform to its list of cost-cutting measures in an effort to downsize its state prison system.

While rumors swirl that Ohio’s state agencies are already receiving marching orders, OCSEA is gearing up to present its own money saving ideas, which could include:

• careful consideration of the state’s private contracts with outside vendors;

• revisiting a proposal to overhaul agencies’ management structure; and

• looking again at streamlining private prison management.

Despite these budget concerns, the state’s prison population continues to swell and staffing in both DR&C and DYS is at dangerous levels.

Other agencies, like ODNR, which has been cut by almost half their workforce in the last 15 years, have seen a significant downsizing.

“No matter what the revenue picture is, there are real problems that we need solutions for and that require resources now. These are issues, like the overcrowding in the prisons, that can’t wait for an upturn in the economy,” said Parks.

See Related

OCSEA Budget Center

Budget Forecast - January 2008 (PDF)

ERI OCSEA Education Factsheet (PDF)

Early Retirement Incentive (ERI) Plans Memo from OBM Director Sabety (PDF)

Office of Budget and Management