LANSING – With Michigan projecting a $1.8 billion deficit for the coming fiscal year, at least some of the budget dollars will have to come from savings in what has to be spent. Management and Budget Director Lisa Webb Sharpe is looking for those savings, but expects much will be found in places already explored.
But Webb Sharpe told Gongwer News Service in a recent interview she also hopes to be able to spend some new money in the coming year for savings into the future.
The state has already seen some $550 million in savings from various efforts, and Webb Sharpe said there is more to be squeezed.
“We don’t have any glitzy new initiatives; we’re doing those things that work,” she said.
Some of that savings is little things like buying in bulk and paying on time. She said the state has saved, and will continue to save, thousands through its energy cooperative with universities that allow energy purchases for all of the institutions to be treated as one bulk buy.
“When prompt payment discounts exist, we take advantage of those,” she said.
Some of the savings are from being good stewards of resources, she said.
Some of that stewardship is better tracking what is purchased and what is paid for it. Webb Sharpe said the department is working on a data mining effort that will give it even better information about state buying patterns.
Where some of that new spending could come in, she is still hoping to implement an electronic procurement system. The Department of Transportation has one coming shortly, because it has restricted funds that can be dedicated to the effort.
Webb Sharpe said she is hoping to see some general fund dedicated to expanding the project to other state departments, but has yet to see that money make it through the appropriations process. Bids for a system have come in ranging from $5 million to $16 million she said, and it is not a system the can be purchased ready-made.
The system allows the department to take orders and check inventories of goods electronically instead of using written purchase orders.
Some of the savings will come with moving vans attached. Webb Sharpe said she is working with a number of agencies to move them out of leased space and into state-owned offices.
The state has already cut its leased space by 1 million square feet in the last four years, but she said there is room to move more of those employees into state-owned offices.
“We’re looking at the placement of offices that are quite frankly all over the state,” she said. The effort involves balancing what the agency says it needs and what a DMB review shows it actually uses.
While there are some departments, like State, that need to have offices in a variety of communities, “for departments that have administrative functions, can we consolidate those into regional offices?” she said.
In particular, the department is looking at offices in Southeast Michigan, where there is room in Cadillac Place in Detroit for some of those employees currently in leased offices.
She did not disclose any of the offices that will find themselves packing in the coming months because she said those moves have not yet been announced to employees.
But one move that is being considered is some Department of Attorney General staff. The Williams Building, where the department headquarters is lodged, still has some vacant space since Attorney General Mike Cox was denied his request to install a gym there.
“He won’t be getting a gym,” Webb Sharpe said of the space, but she noted the department does have some leased space in the Lansing area and DMB officials are examining whether those workers, or some other state employees, could be moved to the Williams Building.
Where leases are still needed, the state is going to be seeking further rent reductions. Webb Sharpe said the state has already lowered its average lease rate by $1 a square foot over a time when lease costs generally have been going up.
In both owned and leased space, the state is also looking to cut things like energy costs. In addition to the purchasing cooperative, she said the state has also been going through its buildings installing energy efficient lighting, better insulated windows and other efficiency items.
“You’ll notice the banks of lights nearest the windows are turned off in most buildings so we can use the natural light,” she said.
Buildings also have energy monitors to be sure people are turning off lights, computers and other equipment when they leave for the night.
Moves are also coming in the form of agency transfers. Though it will not necessarily be a short-term good, she said the recent orders consolidating internal auditing and accounting into DMB, as well as all human resources functions under the Civil Service Commission, will end up saving money.
There will not be any initial positions lost from the transfers, but she said as the moves are worked out there will be less need for managers because groups of workers can be consolidated.
Some other savings for the state will likely come from employees during the current contract negotiations, but Ms. Webb Sharpe said she would not know what those would look like. “I expect we’ll see some push for some benefit changes,” she said.
Not likely on the plate will be banked leave time. “That was quite a pay cut for people,” she said, noting that some state employees still have unused banked time.
Though not directly a state cost, she said she expected in the coming year there would be changes in retirement plans for school employees. She said she has been providing information to legislators on the state’s pension system and how that might apply to schools.
She said there has yet to be any pushback on the state’s change to a defined contribution plan for new employees. “I think people have recognized that’s the way the world works,” she said.
The key is ensuring employees are contributing enough to the system. She said that is one of the issues addressed with employees when they first start with the state.
Webb Sharpe did not expect too many further travel changes in the coming fiscal year. The department had already announced food and lodging reimbursements would not change and she expected standard mileage rates would remain about the same as well.
After the recent spate of changes, where many department directors and most judicial employees gave up assigned vehicles, she did not expect any further motor pool adjustments. “We have enough pool vehicles,” she said, adding that employees driving 11,500 miles a year or more for business travel can still be assigned a vehicle.
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