Using Furloughs as a Means to Balance Budgets

Times are tough. The Center on Budget and Policy Priorities estimates that the FY2011 total budget shortfall facing states will reach $140 billion.  Here in my hometown of Chicago, Mayor Daley announced this week that we are facing a historic deficit of $654 million. And to pile on top of that the State of Illinois has had its bond rating downgraded to a level that provokes the term “junk bond” in the same sentence.  Revenues are simply not supporting expenditures.

In recent years, we have witnessed many different methods for balancing budgets. The one that threatens our profession the most is the use of furloughs on select portions of the workforce.  In response to questions regarding pending staff raises, Illinois Governor Quinn gave non-union staff (2,700 out of over 50,000) 24 furlough days, or a 9.2 percent pay cut.  This brings the state a savings of $18 million on a year when we have a $13 billion deficit. And Illinois is not the only one doing this.  States and municipalities all over the country are reducing non-bargaining unit workdays of staff. But what is the effect of these actions?

The demoralizing effect alone is amazing.  Contrary to the myth, government work is difficult, requires long hours, and is at times, a thankless job.  We do it because we believe in the services we provide; we believe in creating good government.  Many of the people I talk to who are subject to furlough days are unhappy; they have decided not to put forth the extra effort to achieve an end result. Trying to get your job done on the days that you are at work is difficult because the person that you need to talk to is likely on a furlough day. Many are considering employment outside of government.  And for what?  To save 1% on a budget deficit when what legislators should really be considering is how to even out revenues and expenditures? Legislators do not want to raise taxes when their offices are on the line.  They don’t want to face the difficult question of reducing services either.  Utilization of furlough days is only delaying the inevitable: we need a fundamental and structural change in how we budget and spend government dollars. In the meantime, we threaten to scare off the talent that we have.

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2 thoughts on “Using Furloughs as a Means to Balance Budgets

  1. Breaking News from the Sacramento Bee:

    An Alameda County Superior Court judge Monday temporarily barred Gov. Arnold Schwarzenegger from imposing new furloughs on state workers beginning Friday.

    Excerpt from the ruling:

    “Petitioners have also made a sufficient showing of great or irreparable harm to at least some of their members through the thirty plus declarations submitted
    with the applications. The verified petitions allege such harm to all of their members. Examples of the types of great or irreparable harm that have been
    submitted include being members put in desperate financial circumstances by additional furloughs because the previous furlough orders have depleted savings and retirement accounts already; homes have been lost or are at risk of being lost because of inability to keep current on mortgages; credit scores have declined because of inability to pay bills, rendering it difficult or impossible to obtain
    further credit; members have been rendered unable to afford food for an adequate diet for themselves and their families or to buy necessary medicines. The stress and emotional strain of further furlough deductions amounting to a 14-15% pay cut can never be fully measured or adequately compensated, even if Petitioners win on the merits and are awarded back pay after the long delay inherent in litigation of
    this type.

    I agree with Mr. Hunter: reducing the workforce may be necessary. Let’s actually deal with the problem that we have. Make a conscious effort to examine the workforce and see if and where reductions are necessary.

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  2. Furloughs also create additional problems that are less visible but just as significant. For instance, local governments in North Carolina that used furlough strategies last year still had to contribute an equivalent of the loss days’ share to the State Retirement System so their employees would get credit for the year worked at their posted salary. Some places also reported problems with overtime and use of accrued leave, which did little to help cash flow during the year.

    If reducing workforce is necessary, then public administrators should “lead by example” in the courage department and recommend permanent position cuts. Finding “who” must be cut should focus on poor and mediocre performers, not simply the person holding the position you wish to eliminate. This is easier in non-Union states (like North Carolina), but not necessarily “easy as pie”.

    Honestly, governments must develop an active re-evaluation strategy with respect to their employees. Even when times are good, it is never justifiable to fund positions (or employees) who are not contributing in a substantive manner to a jurisdiction’s measurement of productivity. Even when a business profits, they still have an inherent necessity to find where they are not profitable (or are losing money) and eliminate this weakness. While the metrics for government are different, we can find a way to implement constant evaluation of our staffing, and when necessary and appropriate, eliminate positions (good times or bad).

    With respect to talent, the key is not to terminate the wrong employees. Positions and employees need to be separated. If someone performs well, but is in a position we no longer need or not of prioritized significance, we should do our best to relocate them and use the opportunity to eliminate a problematic, poor-performer somewhere else.

    Strategies like this will actually improve employee morale where it matters, among those we want to see in our workforce.

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