Workforce Reduction Plans (WRPs) submitted by state agencies will save $260 million over the next two years “through a combination of severance payments, attrition, and the elimination of funded vacancies,” the Division of the Budget (DOB) just announced.

Pardon us for holding our applause.  That $260 million savings amounts to less than one percent of the $26.8 billion in projected general fund spending on salaries and benefits for the state workforce in fiscal years 2009-10 and 2010-11.*   And since the figure was already counted in Governor Paterson’s financial plan, it also does nothing to reduce this year’s projected $2.1 billion deficit, or out-year budget gaps ranging from $4.6 billion in 2010-11 to $18.3 billion in 2012-13.

Roughly one-third 30 percent of the 3,722 jobs eliminated by the WRPs will be vacated by employees who accepted a $20,000 per-person severance payment that Paterson negotiated with state unions (although it’s not clear he needed their permission).

DOB is promising more to come:

Now that the initial savings goal for the severance program has been achieved, further action is under consideration for additional savings to taxpayers. As part of Governor Paterson’s continued effort to lower taxpayer costs, additional one-time $20,000 severance payments in excess of the 1,089 announced today and assumed in the state financial plan may be authorized to produce further savings. Agencies are encouraged to continue to aggressively seek cost-reductions through this program.

* The projected savings is also less than half the projected increase in general fund spending on salaries, benefits and pension contributions in 2010-11 alone.

About the Author

E.J. McMahon

Edmund J. McMahon is a senior fellow at the Empire Center.

Read more by E.J. McMahon

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