4th Budget Cut Press Conf. – Wed., Nov. 13, 2002
Once again, I join you today to announce further progress in closing the gap between anticipated revenues and the approved budget for the current fiscal year. This gap was caused largely by the fall of the stock market over the summer and was estimated at $95 million by DEFAC in September.
As you know, to date I have announced cuts and savings totaling $25.2 million. Today, I am announcing another $34.8 million in identified cuts and savings. That will make a total of $60 million worth of closure in the budget gap to date.
Of course, the cuts and savings so far have come in a four-part plan:
• Agency cuts
• An intensive hiring review
• A review of purchases
• And reengineering efforts
Let me talk first about the agency cuts being announced today.
Agency cuts
I am accepting the next $11.5 million worth of cuts from agency, which now puts us close to the $35 million goal I had set for this part of the four-part plan.
These cuts today come from 15 different state agencies. The largest portion of the $11.5 million is a $4.2 million cut in the Department of Transportation. Of the money from DelDOT, $3 million is savings coming from a refinancing of debt, with the rest coming out of personnel, operations, travel and contractual services.
Other significant cuts in this group include:
• $1.1 million from Corrections. The largest part of this cut comes from a decision to stop replacing inmate clothing except for when it is seriously damaged. Another significant Corrections cut is reduction of overtime pay for parole officers.
• $1 million from Public Safety, almost exclusively from a decision not to replace 47 State Police vehicles this year.
• $768,000 from Health and Social Services, largely due to switching services to special or federal funds and expenses for purchasing care being less than projected. DHSS will also raise the fee for obtaining documents from the Bureau of Vital Statistics from $8 to $10.
• $1.6 million from Children, Youth and Their Families, half of which comes from a decision to reduce the use of out-of-state providers for rehabilitation.
• $1 million from Administrative Services due to a change in the way we buy fleet vehicles from straight purchase to lease purchase.
As I said before, the agency cuts being released today encompass fifteen different agencies. And as you can tell, we are beginning to see effects on state service in these cuts. You will receive a detailed list of cuts.
Hiring freeze
The next part of the four-part plan that I will address is the intensive hiring review. To this point, the way the hiring review has worked has been that cabinet secretaries have forwarded all vacant positions to me that they wanted to fill, though I have approved only a few general fund positions – 50 so far.
At this point, with still a large budget gap to make up, I am elevating the hiring review into a hiring freeze. From this point on, I expect state agencies to only request to fill the most critical positions.
Agencies voluntarily keeping some vacancies open has resulted in some of the savings counted as part of agency cuts that have been announced. But by freezing every vacant position and keeping those positions vacant through the year, we now project to save at least $13 million from now to June.
Reengineering
Reengineering government is about analyzing the practices or government – perhaps questioning things that haven’t been questioned before. It is something I have been doing since the start of my term and I have some significant progress to report.
Currently, the state of Delaware holds in reserve a number of stocks and cash that have been escheated -- that is, left without a locatable owner. This reserve is held in case someone whose stock or bank account has been forfeited to the state after the normal time limit and process later comes and makes a claim.
We have determined that this reserve account contains more than necessary at this time. Therefore, we will take $9 million as revenue for FY03 by liquidating part of this reserve.
Also under reengineering, I announced on Oct. 31st that we had eliminated the need for a cash reserve with one of the state’s health insurance carriers by changing the way the claims of our employees are paid. We have now done the same with our other carrier, resulting in an $800,000 savings.
Finally, by implementing a disease management program for our employees, we project to save $500,000 this year on health care costs.
Next Steps
The agency cuts, hiring freeze and reengineering efforts I have announced today total $34.8 million and bring to $60 million the progress toward closing the $95 million gap.
There are a number of initiatives underway to continue saving money.
We have further health care savings opportunities to pursue. We are still working to reduce the cost of state purchasing. The Secretary of Finance is attempting to collect bottle deposits that have not been turned over to the state for some year.
And after some positive conversations with school superintendents, the Secretary of Education has asked the school districts to consider voluntarily cutting administrative costs in the districts by just over 1 percent, provided they do it in a way that does not impact children in classrooms.
In the next several weeks, I intend to meet with legislative leaders, report to them on the progress so far, and discuss options for future cuts and savings. I have some options and tough decisions I wish to discuss with them for reducing expenditures even further, reducing personnel costs, reengineering government and expanding revenue.
We have made tremendous progress, but there are still significant cuts to be made, or decisions made about revenue. I will continue to keep the people of Delaware updated on our progress.
Thank you.
