California Tightens Its Belt
May 7, 2020
Department of Finance (DOF) sent Budget Letter BL 20-11, to a number of State Department Directors, Officers and Agency Secretaries outlining additional measures all state agencies and departments under the direct executive authority of the Governor must take immediately to reduce current year expenditures regardless of funding source. CSAC is sharing this information as an indicator of the impact COVID-19 is having on the state budget and fiscal management of state departments.
Per an earlier Budget Letter, BL 20-08, the state anticipates significant economic impacts from the COVID-19 pandemic. The severe drop in economic activity is expected to result in a recession, immediate significant decreases in state revenues affecting FY 19-20, and significant increases in safety net programs.
According to the latest Budget Letter, these immediate actions consist of the following:
- Leave Buy-Back—Cancellation of the state’s annual leave buy back of accumulated vacation or annual leave in 2019-20 due to the fiscal emergency.
- New Goods and Services Contracts—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, to respond to COVID-19, and to meet other time-sensitive critical needs.
- Travel—The cancellation of all non-essential travel will remain in place until further notice.
- Hiring—Departments should 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.
The full details of BL 20-11 and other Budget Letters can be found here.