NLPES Question of the Month

May-July 2003 
 

HAVE STATE BUDGET PROBLEMS HAD A DIRECT EFFECT ON YOUR OFFICE OR DAY-TO-DAY WORK THIS YEAR-AND WHAT SPECIFIC IMPACTS DO YOU ANTICIPATE IN COMING MONTHS?
Jane Thesing, South Carolina

I believe that South Carolina experienced budget shortfalls sooner than some other states. As I was preparing to send this, I looked back over the budget cuts we have sustained and found that our budget has been cut 19% since the beginning of FY 02. These have been mostly a continuing series of across-the-board budget cuts that have affected all state agencies, although they affect agencies such as ours that have only state funds to a greater extent than agencies with other sources of revenue. In any case, the first year we took the cuts by trimming operations costs with such measures as giving up 1/3 of our office space, cutting the number of phone lines, cutting back on travel and training expenditures, etc. In the current year, we have been able to take the additional cuts we have sustained by not replacing two staff who have left. We have not had layoffs to date.

Another factor that came into play this year was a statutory audit of our new lottery. The law provides that the lottery is to pay for the audit, so this new source of revenue has also helped, and since the lottery agreed to pay us over two years, it will also help next year! The loss of staff has affected the amount of work we can do. Although the effect of staff loss is hard to quantify, we currently have a backlog of audit requests and are being slowed in finishing ongoing projects. Although we identify significantly more in cost savings that we cost the state, it is hard to convince others that we are more needed than the basic services which have been so severely impacted by the cuts. Let's hope for a brighter year next year! 


Joel Alter, Minnesota

In late 2002, Minnesotans learned that the state faced a projected $4.5 billion budget shortfall for the 2004-05 biennium (plus a larger-than-expected shortfall for the remainder of the 2002-03 biennium). In addition, voters elected a new Governor in November 2002 who pledged not to raise state taxes--and kept his promise. Consequently, the budget reductions for most state agencies (including ours) have been unprecedented, or close to it.

In anticipation of upcoming budget problems, our office (unlike other agencies) did not incorporate 2002 salary increases into employees' base salaries, opting instead for one-time increases. In early 2003, we decided to print most copies of our reports in-house, rather than getting 400-500 copies of each report professionally printed. We made a lot of small changes internally-for example, canceling voice mail for non-managerial staff, newspaper and periodical subscriptions, and organizational memberships; prohibiting out-of-state travel; reducing computer purchases; stopping purchases of bottled water for staff; etc.

In early 2003, the Governor proposed a 15 percent reduction for our office-on top of reductions to our budget that were made during 2002. Eighty-five percent of our office budget is payroll-related, so we prepared plans for staff layoffs, and we surveyed office staff on their willingness to take two weeks off annually without pay (as a way to prevent additional layoffs).

Ultimately, the budget approved for our office for the 2004-05 biennium was 16 percent less than the budget we started the previous biennium with. When the Deputy Legislative Auditor for Program Evaluation retired in May 2003, we did not fill the position. A last-minute legislative appropriation enabled us to avoid the layoff of a permanent program evaluation staffer, but two additional positions remain vacant. We will be able to hire only one temporary staffer this year (compared with past years when we've hired three or four). Two support staff who have done a lot of work for our program evaluators were laid off. We received legislative authorization to transfer authority for local government best practices studies (which our office has conducted since the mid-1990s) to the Office of the State Auditor; our best practices staff now work on program evaluations, allowing us to maintain or increase the number of evaluation reports produced..

Many of the specific implications of the budget reductions are still unclear, but we are clearly feeling the pinch. A salary freeze appears likely, along with employees picking up a larger percentage of insurance costs. We will likely have less money for training and travel. We plan to give up a portion of our leased office space. We are still considering the option of having staff take time off without pay. We are grateful that we avoided layoffs of permanent program evaluation staff, but it is unfortunate that we will not be able to fill vacant positions. 


Ken Levine, Texas Sunset Commission

In Texas, we were required to submit reductions of seven percent in January (at the beginning of our session) for the current fiscal year. For the upcoming fiscal biennium (that starts Sept. 1) our budget is reduced about 12 percent. We can make this reduction work without layoffs if we do not fill several open positions and reduce spending in other areas.

So, what does this mean for our Sunset reviews? Since our schedule of reviews is set by statute, we have little control over how many agencies we review, or the size and difficulty of the agencies chosen. Our adjustments will come in the size of the teams assigned to a review, and therefore the amount of analysis that can be done. To balance that though, undoubtedly we will be working longer hours. I don't believe that legislative expectations will change as to the depth and strength of our recommendations. Nor will our professional expectations for our own work.

At Sunset, we now have a staff of 29, down from 34. We have 24 analysts. For the upcoming biennium, we have 30 agencies set for Sunset review, with all the analytical work conducted in about 16 months before the Legislature returns. While the math doesn't look too good, we will find a way to get the job done.

This summer, we are reviewing our internal methods for conducting reviews, looking at better use of technology, use of standards, and looking at any ways to shorten the process without losing quality. In other words, if we can work a little smarter, perhaps we won't have to put in quite the number of hours necessary to provide expected results with less staff.

Since our budget is primarily salaries, savings in other areas provide little impact on the budget. However, we have made reductions in travel, subscriptions, printing and a few other items. Every little bit helps.

In six months to a year, we should know quite a bit more about how the cuts are working and whether they have had impacts on our work and our reports. 


Gary VanLandingham, Florida

OPPAGA received a 6.4% funding reduction for fiscal year 2003-04 from the prior year funding level. This was our share of an overall legislative budget reduction plus the suspension of the Sharpening the Pencil school district review program for the year. As a result of the budget reduction it was necessary to reduce our staffing level and expenses. Most of the staffing reduction was accomplished through staff attrition and retirements (6 positions); however, it was necessary to lay off 4 employees. While such staffing reductions are difficult, generally OPPAGA is okay in a tight budget year. We are continuing to examine how we can work more efficiently and effectively and be of greater service to the Florida Legislature. 


Sylvia Hensley, California

Although California is facing a record deficit, our budget has not been adversely affected. While we have voluntarily implemented some cost cutting measures, these measures have not affected the resources available to conduct audits. For example our staffing levels and salary practices remain the same. Additionally, we continue to promote employees and provide merit pay increases; however, we have discontinued bonus programs that are not available statewide and we have reduced and placed tighter limits on the educational programs we will fund. We have also limited the number of conferences, especially out-of-state conferences, that staff are allowed to attend. Although we continue to recruit new staff, we are limiting the amount of out-of-state recruiting and focusing our efforts on those schools where we have been most successful in the past. We are also cutting non-essential administrative and capital improvement expenditures. 


John Sylvia, West Virginia

The only impact that the budget shortfall in our state has had on our office is that we have a larger proportion of "large" agencies to review compared to previous years. For example, we have been asked to look at Workers' Compensation with the intent of identifying cost savings. We have more work than ever before, and there will be no layoff of staff, although we have been without two staff members who were mobilized to Kuwait. We have been short two people for the past eight months. It is nearly certain that our office staff will not receive annual salary raises this year. The last nine years we have received annual raises. Overall, our office hasn't been significantly impacted by the state's budget problems. 


Jim Pellegrini, Montana

Montana's budget problems affected all state agencies. We anticipate hearing that from all of them while we conduct our audit work. The Legislature started from the fiscal year 2000 base and then used what money was available to fill in the budgets to match 2004 and 2005 projected revenues. When all the smoke cleared we were only down $12,000 in personal services and $107,000 in operating expenses-out of a $3.48 million total operating plan. That's about a 3.5% reduction.

We are going to drop our criminal investigator position that was on contract with the Department of Justice; out-of-state travel is down; some data processing areas were placed on longer time periods for completion; and dues were eliminated to some organizations. The workload did not go down. In fact, one of the areas for review is the impact on agency programs from vacancy savings, and how the work that is impacted by those vacant positions is managed. We do have two open positions that helped us manage our personal services expenses and get through the previous fiscal year. We are now recruiting for those positions; and hiring at a lower annual salary will result in some budget flexibility. It's going to be business as usual. 


Nancy Zajano, Ohio

The Legislative Office of Education Oversight in Ohio has not spent any dollars on staff travel for professional development, foregoing sessions sponsored by NCSL, ECS, the American Evaluation Association and the American Educational Research Association. In the past these sessions have been important for developing the skills and knowledge needed for our work, and new staff have been the most affected by these cutbacks.

In addition, we have not fully replaced staff members who have left and have limited our expenditures on computer upgrades and supplies whenever possible. 


Maria Chun, Hawaii

Although initially asked to reduce our budget by 10%, we have not experienced any budget cuts.