State workers face bleak budget picture

(Updated 11:40 a.m. EST, Oct. 3, 2008)

STATES WITH MID-YEAR BUDGET GAPS State Percent of general fund Arizona 1.0% Connecticut 1.7% Florida 6.7% Georgia 7.5% Hawaii 2.8% Illinois unknown Maryland 1.8% Massachusetts unknown Nevada 7.5% New Hampshire unknown New York 1.1% Ohio 1.9% South Carolina 2.0% Vermont 2.0% Virginia unknown Source: Center on Budget and Policy Priorities

John D’Errico Jr. had been a probation officer in Rhode Island’s sex offender program for more than 34 years, with plans to work for several more, when a move earlier this year by the General Assembly blindsided him.

 

To deal with a burgeoning budget deficit, lawmakers voted May 1 to require state employees who retire after Sept. 30 to pay substantially more for their health care.

 

That left D’Errico, who turns 59 this month, a tough choice: retire early and still pay 10 percent of his health care premium, or retire after Sept. 30 and pay at least 20 percent. So D’Errico, despite his caseload that included some of the state’s most serious sex offenders, retired June 30.

 

It was upsetting, he said, to face losing benefits “after 34-plus years working with certain assumptions — that you had a deal with the state, that when you retired such-and-such was going to happen.”

 

“When I got into state service 34 years ago, it wasn’t what I was promised. The deal changed at the end,” D’Errico said.

 

The economic downturn has hit states hard, and among those feeling the effects are state employees, whose salaries are being frozen, who are retiring before they wanted to, who are being asked to take furloughs, or unpaid days off, and who, in an estimated 7,000 cases, have been laid off.

 

State employees have traditionally accepted lower salaries in return for greater benefits and job security. But with the economy in a doldrums — only three years after states had emerged from the last recession — the hiring and salary freezes and benefit cuts that occurred earlier this decade are making a comeback as states struggle to meet their budgets.

 

Leslie Scott, the director of the National Association of State Personnel Executives, said most states seem to be reverting to hiring freezes, instead of the more extreme layoffs and furloughs. “But of course, as the budgets get tighter…It seems like everyday we see headlines that say (states are) expecting a bigger deficit than planned,” she said.

 

A recent report by the Center on Budget and Policy Priorities, which tracks policies that affect the poor, found that 15 states face shortfalls in the budgets they just passed.

 

Tracking news accounts, the American Federation of State, County and Municipal Employees (AFSCME) union estimated that almost 7,000 full-time state employees nationwide have been laid off, and reported that state officials have announced planned layoffs of another 26,000. Additionally, more than 7,000 people in seven states have taken early retirement.

 

In July, California Gov. Arnold Schwarzenegger (R) touched off a firestorm by laying off more than 10,000 part-time and temporary state workers. He also sought to temporarily lower 200,000 employees’ salaries to the federal minimum wage of $6.55 while the Legislature was hammering out a budget, though that plan was stymied.

 

Illinois Gov. Rod Blagojevich (D) similarly drew resentment in late August when he cut $1.4 billion from his budget partly by eliminating 325 jobs from the Department of Children and Family Services, the Department of Health Services, the Department of Natural Resources and the Illinois Historic Preservation Agency.

 

The outcry led the Legislature to restore money to prevent the layoffs. That bill is now on Blagojevich’s desk. If the governor doesn’t sign it, employees would lose their jobs by Nov. 30.

 

“The governor has threatened to throw these state employees out of work without regard for the essential services they provide: protecting abused and neglected children, providing essential human services to the neediest Illinois families, including food stamps and Medicaid, and administering our state parks and historic sites,” said Anders Lindall, a spokesman for AFSCME Council 31, which represents 39,000 state workers.

Even if union members’ jobs are saved, other state employees in Illinois aren’t faring so well: the attorney general’s office has laid off 19 workers and the treasurer’s office has dropped six employees because of budget cuts.

 

Tennessee and New Jersey are among the states that offered early retirement packages to state workers. Tennessee hoped to save $64 million by getting 2,300 workers, out of 12,000 offered, to accept the buyouts; instead, only about 1,600 people did. Although Gov. Phil Bredesen (D) said no layoffs were needed until January, the Department of Human Services let 12 employees go in August.

 

In New Jersey, 3,828 employees were eligible for the buyout, and Gov. Jon Corzine (D) hoped about 2,100 people would accept, for a savings of about $90 million. As of Aug. 1, about 1,488 employees took the deal.

Rhode Island’s decision to charge workers more for health benefits if they’re still on the job after Sept. 30 resulted in more than 1,250 employees retiring this year, including the acting Medicaid director, the state welfare agency’s budget chief and almost one-fourth of the Department of Environmental Management.

Some worry that losing so many employees could affect state operations. Schwarzenegger’s honing 10,000 from the workforce led several Department of Motor Vehicles offices to close on Saturdays.

 

D’Errico, the Rhode Island probation officer, fears the remaining employees at his former office will be swamped with work. “You have to get to know (the sex offenders)…they have to get to know you,” he said. “A big thing with sex offenders is their stability and stress. Usually when they get stressed out is when they offend. But they (the government) don’t take these things into consideration.”

 

While many state employees will escape layoffs, some will see smaller paychecks because their hours are being cut. Officials at Georgia’s transportation department and in the New Hampshire judicial system are considering forcing staff to take unpaid furloughs, while furloughs have already been announced at the Illinois secretary of state’s office, the comptroller’s office, and at Georgia’s Department of Family and Children’s Services. Last month Georgia Department of Insurance and Fire Safety employees began taking one day off each month.

 

“The alternative would’ve been to fire individuals,” said Georgia Insurance Commissioner John Oxendine, who still works on his forced day off. “We felt like instead of sitting there picking on individuals and having them not able to meet the (financial) needs of their family, it would be better if everybody contributed a little bit.”

 

Some state employees are also being charged more for benefits. In Georgia, non-education employees’ salaries are being frozen and health insurance premiums have increased an average of 7.5 percent.

 

In Rhode Island, the governor is trying to get members of the largest state employee’s union to pay more for their health care. Gov. Donald Carcieri (R) and union leaders negotiated a contract that would have had members pay more for health care in exchange for raises in the future; members overwhelmingly rejected the contract.

 

Carcieri then issued an executive order to force employees to pay the health care increases anyway, but a judge blocked the order, and the two sides are now in arbitration to resolve the dispute.

 

Meanwhile, the budget picture appears to be worsening, and governors in states with new shortfalls are looking to shave money from human resources. Connecticut Gov. M. Jodi Rell (R) has said layoffs and buyouts are a possibility because of a $300 million deficit, and Ohio Gov. Ted Strickland (D), with a budget shortfall of about $540 million, ordered cuts that could lead to layoffs. Hawaii and Maryland officials have discussed eliminating pay raises.

 

See Related Stories: 
States act to cushion Wall Street meltdown (9/30/2008)
Wall St. ills worsen state fiscal headaches (9/19/2008)
Budget gaps triple for ’09 (7/24/2008)
Weak economy squeezing more states (6/19/2008)
23 states face budget gaps in ’09 (4/25/2008)
State salary, hiring freezes start to thaw (7/6/2005)
State hiring freezes not so tough (6/6/2002)
State hiring freezes underscore budget woes (11/16/2001)

Contact Pauline Vu at pvu@stateline.org.