HONOLULU – Governor Linda Lingle today announced details of the Administration’s plan to furlough all state employees in the Executive Branch to help close the unprecedented $2.7 billion revenue shortfall projected between now and June 30, 2011.  The furlough plan represents the first time labor costs are being impacted to address the state’s budget gap.

Starting July 1, 2009 and continuing through June 30, 2011, full-time employees in the Executive Branch will be placed on furlough for three days (24 hours) per month.  Part-time employees will be placed on furlough on a pro-rated equivalent basis.

The statewide furlough plan will save an estimated $688 million over the next two years and will avoid having to lay off employees at this time.  In addition, furloughs will allow the state to continue to provide public services, maintain employee benefits and avoid recruitment and training costs for new employees when the economy recovers.

The furlough plan applies only to employees in the Executive Branch, including the Governor’s Office, Lt. Governor’s Office and 16 state departments and their attached agencies. 

The plan does not affect the Department of Education, University of Hawai‘i, or the Hawai‘i Health Systems Corporation.  These departments will see their budgets reduced by an amount equivalent to the three-day-per-month furlough, and the management and respective boards of the individual departments will determine how to implement the additional reductions.  In addition, the furlough plan does not affect the Judiciary, the Legislature or the Office of Hawaiian Affairs.

“The primary goal in developing the furlough plans for each department was to achieve the required operational savings, while minimizing disruption to public services,” said Governor Lingle.  “I recognize the impact the furloughs will have on many employees and their families.  This is not something we want to do, but something we have to do to balance the state budget.  We appreciate the public’s understanding and patience as our state employees adjust to the new schedules.”

Since last summer, the Governor has taken a series of steps to close nearly $2 billion of the projected revenue gap, including ordering spending restrictions of 8 percent on all state agencies; eliminating duplicate and inefficient programs; restructuring debt; imposing a freeze on new hires, out-of-state travel and the purchase of new equipment; using special funds and maximizing federal stimulus funds.

On May 28, the Council on Revenues revised its forecast by an additional $730 million shortfall for the remainder of fiscal year 2009 which ends on June 30, 2009, and the two-year budget that begins July 1, 2009 and ends June 30, 2011, requiring the Administration to identify further savings.

Because employee salaries and fringe benefits account for 70 percent of the State’s operating budget, it is now necessary to impose furloughs on State workers to help close the remaining gap in the State’s budget. The furlough savings will account for 25 percent of the total of budget savings that the State must achieve to close the projected $2.7 billion revenue gap.

If the furloughs are not implemented, the State would have to lay off at least 2,500 Executive Branch employees to make up for the projected revenue shortfall. Such layoffs could also result in the shut-down of entire programs and services.  State executive departments are preparing layoff plans in the event that the public worker unions are successful in blocking the implementation of the furlough plan.

In addition to these layoffs, the Department of Education and the University of Hawai‘i will have their general fund budgets reduced by $278.4 million and $106.8 million, respectively, as part of their share of the labor savings, which could result in additional layoffs. 

Under the furlough plan, several departments will close all or portions of operations on specified days.  The majority of the closures will take place on Fridays (see attachment A at www.hawaii.gov/gov). 

To minimize the impact to the public, several offices will extend their hours to accommodate the public during furlough weeks. These offices include the Unemployment Insurance Claims Office, Workforce Development Office (job referral and assistance), and Benefit Employment and Support Services Offices (food stamps, financial assistance, child care and related benefit eligibility determinations).

Some departments and agencies will modify their furlough schedules and remain open on certain days to ensure the public is able to conduct business and meet deadlines, such as when tax returns are due to the Department of Taxation, or when public housing rent collections are due to or housing assistance payments are made by the Hawai‘i Public Housing Authority.

A number of divisions and offices will maintain their current hours of operations and remain open during regular state government business hours (7:45 a.m. to 4:30 p.m., Monday through Friday).  These include the Governor’s office, Lt. Governor’s office, Department of Defense, Hawai‘i Tourism Authority and Family Guidance Centers.  Furlough days will be staggered to ensure public access during normal business hours.

Other agencies and divisions which have hours different from regular government business hours will maintain their current hours of operations and stagger or rotate their furlough days to minimize the impacts on their operations. These include State Civil Defense; Highways, Airports and Harbors Divisions; Natural Resource Conservation and Enforcement; Foreign Trade Zone #9; Information and Communications Services Division (provides state information services, internet and computer support); Public Works Division; Child Welfare Services; Halawa Animal Quarantine Station; Honolulu International Airport Animal Quarantine Holding Facility; Plant Quarantine Inspections; Aloha Stadium; and geothermal drilling engineering. 

Operations that require round-the-clock coverage due to the clientele they serve and responsibilities they handle will remain operational throughout the year on a 24-hour basis. These include the Kalaupapa, Moloka`i and Hale Mohalu Hospital operated for Hansen’s disease patients, Hawai‘i State Hospital, Hawai‘i Youth Correctional Facility; and correctional facilities and community correctional facilities statewide.  The furlough plans and schedules for personnel working at these facilities are still being finalized. 

The detailed furlough plan can be found on the Governor’s Web site (www.hawaii.gov/gov).  In addition, each department will post modified hours of operations for their respective divisions and attached agencies on their web sites. 

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