LANSING ? The state announced Thursday its plans for solving the $145 million called for in the enacted fiscal year 2012 budget by requesting state departments develop contingency plans to address the needed savings should union negotiations fail.

Reforms announced Thursday by the Michigan Department of Corrections provide $50 million in savings that will be used to offset the employee concession target from $145 million to $95 million. Those reforms include closing a prison as well as exploring competitively bidding prisoner health and mental health services.

?The necessary and preferred long-term structural reforms to bring state government employee compensation and benefits in line with the state?s fiscal realities, achieve stability and build for the future have only been partially met,? said State Budget Director John Nixon. ?We needed to act to ensure a continued balanced budget. We will work with the unions to achieve the needed structural changes and to address total employee compensation in FY 2013. We were also able to fulfill Governor Snyder?s priority of avoiding layoffs at this time with these actions.?

SBO outlined the following overall contingency plan to meet the now $95 million target:

1. Eliminating 367 jobs across state government. This is an elimination of funded, vacant positions and avoids immediate layoffs of existing employees. The existing vacancies are the direct result of the administration?s caution in filling positions vacant as the result of the state?s early retirement incentive in 2010. While hiring decisions have been made in critical need areas such as human services, hiring as a whole has been intentionally delayed due to budget concerns and the administration?s focus on fiscal responsibility. This action will likely place an additional burden on existing staff and departments? workloads. Estimated savings: $33.3 million.

2. Working with the Legislature to implement a solution for other post-employee benefits (OPEB) like employee contributions into the defined benefit retirement plan. Estimated savings: $18.8 million.

3. Implementing additional reforms in the Department of Corrections to be bargained with state unions. Estimated savings: $15 million.

Until these three structural changes can be formalized and the state can realize full fiscal year budgetary savings, SBO will utilize the following tools:

1. Instituting debt refinancing for the State Building Authority. Estimated savings: $19.8 million.

2. Requiring at least four furlough days for represented state employees. Furlough days will not be required for non-exclusively represented employees (NEREs) to reflect the fact that they did not receive the pay raises received by represented employees last year. Furlough days will not be implemented for direct care workers in 24-hour facilities, and thus will not result in increased overtime costs in Corrections and other departments. Estimated savings: > $9.5 million.

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