In the wake of the Legislative Analyst’s Office projection that California is confronted with a staggering $68 billion deficit, Governor Gavin Newsom’s Department of Finance is urging state workers to make financial sacrifices to mitigate the budgetary challenges. A budget letter, directed to agency secretaries, department directors, and officers overseeing budget, accounting, business services, and human resources, was released on Tuesday by the Department of Finance, announcing a comprehensive expenditure freeze.
The freeze encompasses a range of areas, from non-essential travel to the replacement of printers, fleet vehicles, and office supplies. The budget letter, signed by Finance Director Joe Stephenshaw, emphasizes the imperative need for state government efficiency, effectiveness, and judicious expenditure.
According to the letter, all state entities are directed to take immediate action to curtail expenditures and identify operational savings. An integral component of these measures is the suspension of the state’s popular leave buyback program for the 2023-24 fiscal year, effective until the end of June 2024. Notably, this suspension excludes correctional employees represented by the California Correctional Peace Officers’ Association, who are entitled to an annual buyback of up to 80 hours of leave according to their contract.
The leave buyback program typically allows state employees to cash out vacation and annual leave time once a year, aiding in reducing the state’s leave balances. The letter cites the importance of avoiding a financial burden on the state in the future, as employees cash out their remaining leave at a higher salary upon leaving state service.
The Department of Finance had previously implemented a similar expenditure freeze in April 2020 amid the onset of the COVID-19 pandemic. Subsequently, state employees experienced a “personal leave program” or furlough, wherein their monthly pay was reduced by 9.23%, compensating with 16 hours of leave. The latest directive comes as an anticipatory measure to address the upcoming budget challenges, though the potential for furloughs or other concessions from unions remains uncertain.
H.D. Palmer, spokesperson for the finance department, acknowledged the substantial challenge ahead for the governor and the Legislature in closing the budget gap in 2024. The expenditure freeze serves as an early initiative in that process, but whether furloughs or other measures will be pursued is not explicitly indicated.
The budget letter also instructs department leaders to refrain from entering new contracts, leasing agreements, or purchasing new equipment and services. Non-essential IT purchases, like replacement copiers and new cellphones, are to be halted, and office supplies are to be ordered sparingly. Departments are instructed to scrutinize office supply orders rigorously. Furthermore, departments are required to reevaluate costs associated with ongoing information technology projects.
