Third Round Budget Press Conf. – Thurs., Oct. 31, 2002
Today, I’m here to release a third round of budget cuts and identified savings for the current fiscal year. As you recall, six weeks ago, DEFAC projected a $95 million gap between expected revenue and planned expenditures for the current fiscal year, which runs until June. So far, in two previous announcements, we have identified cuts and savings valued at $16 million.
Today, I am announcing another $9 million in cuts and savings. As you know, I am currently working in four areas to save money:
Agency cuts of about 3 percent of discretionary spending
Efforts to reengineer government, or as JJ says, to do more with less.
An intensive hiring review aimed at keeping vacant positions open.
And a critical review of proposed purchases and expenditures by state agencies.
The $9 million I am announcing today comes from both agency cuts and reengineering efforts.
First, I am announcing cuts to state agency budgets totaling $7 million. As you will see from the list we are providing you they come from a number of agencies and cover a variety of items.
Approximately $3.9 million of the cuts in this round come from the Department of Education. Of these reductions, $1.1 million will be realized by eliminating the plan to release complete sample tests under the Delaware Standard Testing Program. In addition, the educator evaluation system is not yet finalized and, as a result, there is a one-time savings of $860,000 from training and a pilot program for this year.
The delay in implementation of the educator evaluation system also allows a one-time savings in the area of technology, totaling $700,000.
The elimination of contingency lines, unused balances and surpluses, and a delay in technology system data warehouse makes up the remainder of the DOE cut.
Another large portion of this cut -- $1.6 million -- comes from Delaware Health and Social Services. Maintaining some employee vacancies at DHSS saves over $400,000. Eliminating carryover funds from the Division of Substance Abuse and Mental Health saves $300,000.
Using carryover funds from last fiscal year to fund care for DHSS clients will save $265,000. The start of a new Crisis Triage program to assess and process service delivery has been delayed due to building renovations and will save $200,000. You will see descriptions of the rest of the DHSS cuts on your list.
To highlight other cuts: I am cutting an additional $117,000 from my office representing all of the carryover funds in the Governor’s contingency line.
This is an amount appropriated to the Governor now and in past administrations for use at the Governor’s discretion. In the past, I have chosen to use mine on items like homeland security, agriculture projects and marketing/tourism efforts for Delaware.
Delaware’s courts have contributed $225,000 in cuts in their travel, contractual, supply and capital lines. The Public Defender’s Office is saving $80,000 on personnel.
Other cuts in other agencies in this round include the maximizing the use of federal funds, reduction of surpluses and general reductions of operating costs. Again, you have the list and descriptions.
In this round there are some effects in these cuts on state services. Delaware students won’t have full sample tests for our state testing program as we had hoped, just sample test questions as they have had in the past. And Delawareans may continue to experience a slowdown in state services as we hold vacancies open.
However, as I have said in the past, we are working to minimize the effects of the cuts on essential state services.
Reengineering
I am also announcing today savings of $2 million. This is money that had been sitting as a deposit – for years -- with one of the state’s health insurance carriers.
It is much like the deposit you would pay at an apartment or to the phone company. It was there in case there was ever a lapse between the time when the state’s carriers paid health care providers and the state reimbursed the carriers for paying those claims.
Now, the state will essentially pay health care providers directly rather than going through the health insurance carriers. This method is consistent with current private sector practices. This means the $2 million deposit is no longer needed. It will be returned to the state as one-time revenue. Further, we will be able to collect interest on that money as well once it is deposited in the state’s accounts.
Hiring, Purchases
Let me talk about the other two parts of my four-part plan.
In hiring, I can report that since September 17, the state has held the line on filling non essential general fund positions. Among the requests that I have approved have been:
911 emergency response operators direct care staff in state hospitals and several other key positions (2 nurses and a national guard budget controller) for a total of 50 General Fund positions.
In purchases, we have stopped for review more than $450,000 in proposed purchases by state agencies.
Conclusion
To recap, today’s announcement of $9 million in cuts and savings brings the total identified cuts and savings to $25 million in 6 weeks. We will continue to work and expect to be able to announce the rest of the agency cuts by mid-November.
We look at other states right now and we see Virginia, which has laid off 1,800 workers and closed DMV offices one day a week. We see Idaho cutting back tours and services at state parks. We see Illinois closing work camps and prisons. And many states raiding emergency funds or raising taxes.
To this point, Delaware has not done any of these things. The cost of government – like the cost of living for Delaware families – has been rising tremendously over the last two years, driven by health care and expanding facilities and services. But the state budget has not grown at anything approaching a rate reflecting these increases. That’s because we have worked for close to two years now at cutting costs and doing more with less.
That’s why each time I announce a round of cuts – each tougher than the last – I say that the toughest decisions are yet to come. So I say it again today – the toughest decisions are yet to come.
Thank you for coming today.
