DOF Orders Current Year Expenditure Reductions Among All State Agencies and Departments

On Thursday, the Department of Finance (DOF) issued a two-page budget letter directing all state agencies and departments to immediately undertake specified actions to reduce current year expenditures amid the ongoing COVID-19 pandemic. Pointing to the significant economic impact from COVID-19, DOF indicates that revenue decreases and cost increases are expected to last for several years and that “federal funding provided to date will not be sufficient to address the magnitude of the fiscal crisis resulting from COVID-19.

As such, DOF detailed four areas that all state agencies and departments must reduce expenditures and identify operating savings:

• New Goods and Services Contracts: DOF indicates that departments may not enter into any new service contracts, contracts or agreements to lease or purchase equipment, issue purchase orders for goods or services, or make changes to an existing contract if the change would increase costs, except purchases that directly support teleworking strategies, personal protective equipment and hand sanitizer, or other purchases necessary to reduce the spread of COVID-19, respond to COVID-19, or meet other time-sensitive critical needs.
• Travel: DOF indicates the current restriction on all non-essential travel will remain in place until further notice. All state agencies and departments are instructed to cancel all plans for non-essential travel both in-state and out-of-state.
• Hiring: Departments are instructed to use discretion when filling vacancies and assessing staffing needed to fill essential positions “given the need to maintain flexibility in an environment of severely constrained resources.”
• Leave Buy-Back: DOF indicates the annual leave buy-back of accumulated vacation or annual leave in 2019-20 has been cancelled due to the fiscal emergency, including for excluded employees.

The DOF letter further provides exemptions to agency secretaries and cabinet-level directors under the following instances:

• Addressing a declared emergency
• Providing 24-hour medical care
• Avoiding a significant revenue loss
• Achieving significant net cost savings

The full DOF budget letter is available here.