Preparing for the coronavirus impact on our budget
DHS Director's Message
Message from DHS Director Fariborz Pakseresht
May 11, 2020
The COVID-19 virus remains top-of-mind weeks and weeks into its initial impacts. We have all been affected. Some of us know people whose health has been impacted, and for those of us who don't, we have certainly felt the change in our everyday lives. The sleepless nights, extra hours, and pain in our communities is real.
On top of what we've already incurred, the job losses and closed businesses will have a budget impact for the State well beyond this moment. The path ahead has many unknowns, and we are planning and preparing for the next phase of the pandemic response the best we can. In light of the sharp drop in economic activity caused by the pandemic, identifying options for keeping our budget balanced is one of the steps we must take.
Earlier today the Governor announced that she had directed state agencies to complete a planning exercise to explore options to address a potential $3 billion budget shortfall in this biennium. All agencies submitted plans equaling a 17 percent reduction for the upcoming fiscal year. For DHS, that adds up to $325 million in General Funds. And, it grows into an even larger reduction since most of our General Fund dollars are matched with roughly $2 in federal funds. The list DHS submitted to the Governor will be posted on our website on this page tomorrow.
We are sending this message today because we want you to hear about the budget situation from us first. And we want to ask you to keep these three points in mind as you have discussions with your colleagues or see media coverage about the state budget.
- No decisions have been made about budget cuts. We regularly conduct budget reduction exercises in good economic times and bad. It is a standard part of the state’s budget management practices to be prepared for unexpected revenue changes and to meet the constitutional requirement for the state to have a balanced budget. Cuts of this magnitude are drastic. The budget exercise provides a starting point for discussions among the Governor and Legislature, which work together to make decisions about our budget.
- Balancing the budget will be a long process. We won’t have good sense of the budget cut target until the state’s May and September revenue forecasts are released. There are many unknowns, including how Oregon’s economy performs as it gradually reopens and whether federal funding will be provided. Budget cuts will be necessary, but we won’t know to what degree for several weeks.
- Minimizing impacts on staff and the people we serve is our top priority. It would be extremely difficult to make cuts of this amount without reducing our staff, provider resources and programs. We began tightening our budget belt from the start of the pandemic by identifying savings, stopping non-essential purchases and travel, and slowing down hiring. Layoffs are a last resort but may be necessary depending on the severity of the revenue losses. To date, there have been no decisions about staff layoffs or furloughs. If those options move forward, furloughs or any modification to compensation of represented staff must be negotiated at the state level with our labor partners.
Since COVID-19 reached Oregon and we launched our response, we have kept information flowing to you so we can keep pace through the pandemic together. We will continue to update you on developments in the budget process and our pandemic response through the COVID-19 Special Updates, podcasts and other forums.
We understand that talk about potential budget cuts piles more unsettling information onto the staff, providers and Oregonians we care about deeply. There are systemic shortcomings that COVID-19 has made clear. Although much is out of our control, we still have an opportunity to focus on what is in our control. Weathering cuts will take a collective response that matches the ingenuity, creativity and heart that you have all displayed during this pandemic. I have faith in our ability to tend to the health, safety and well-being of our neighbors and colleagues.
Thank you for your dedication to our work and the people we serve. Thank you for being a strong and resilient team. Be well.