ST. PAUL, March 10, 2010 – State Rep. Keith Downey (R – Edina) introduced a plan to restructure the state government workforce, reducing the size and cost 15% by 2015.  “This proposal is about more than balancing the budget.  It is about balancing government,” said Downey.

The announcement follows last month’s introduction of GOP government reform initiatives and the news of Minnesota’s continuing budget deficits.  The bill, a companion to the Sunset and Innovation commissions, authorizes furloughs, layoffs, wage freezes, pension benefit restructuring and an early retirement option to achieve the 15% goal.

“This bill brings short-term savings, long-term cost reduction and lasting structural change to Minnesota government.  It offers several tools to achieve the difficult but necessary task of reducing the state government workforce,” said Downey. 

Prior to implementing the early retirement program, the bill requires an actuarial analysis to determine the number of retirees and the amount of savings to be returned to the pension to cover the cost of the program.  The legislation also requires a hard hiring freeze to solidify the workforce reduction and maximize the savings impact.

“The early retirement option offers a fair alternative to cuts and layoffs, doing so in a way that seeks to balance the cost to the pension fund while continuing the discussion of pension reform,” said Downey.

With continued deficit projections, Downey emphasized the need to reform the structure of Minnesota government for reduced costs and improved efficiency.  “The state government nickel-and-dimed itself into these budget problems, and now we have to nickel-and-dime our way out,” said Downey.  “There is no single cut.  Instead, we need to undertake a wide range of reforms to make Minnesota government leaner, more efficient and more cost-effective,” said Downey.

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Reference documents:

Press conference handout (PDF)

2009 MMB Executive Branch Expenditures Report (PDF)

2008 DEED Workforce Report (PDF)

Payroll savings and employee reductions due to Illinois' early-out programs. (PDF)

Update on Thursday, March 11, 2010 at 2:01PM by Minnesota House Republican Caucus

Response to Lori Sturdevant, State Downsizing: Don’t tie next governor’s hands (March 10, 2010)

Facing a current deficit of nearly $1 billion and a projected $6 billion shortfall in the next budget cycle, the time has come for serious state government reform.   This week I announced a plan to reduce state government workforce size and costs 15 percent by 2015.  It offers several tools, including furloughs, cuts, wage freezes, benefit restructuring and an early retirement option. 

This is about more than balancing the budget.  It is about balancing government.  State spending is projected to increase 25 percent and revenue to increase 10 percent in the next biennium.  15 percent is not arbitrary; it is exactly the reduction in spending we need, and it is consistent with other states and so many of our Minnesota businesses have done.  While this initiative alone may not solve the 15 percent spending imbalance, it is a companion to reforms—including the Sunset Commission—to achieve balanced government.

The early retirement option was developed with feedback from Minnesota Management and Budget and implementers of successful early retirement programs in other states.  It requires an actuarial analysis to determine a threshold of retirees and the amount of savings to be returned to the pension fund.  It responsibly addresses pension concerns while acting to confront the realities of our deficit.

Although the governor can propose reductions and retirements, it does not mean the executive can achieve them on their own.  In 2009, 11 of 12 state government bargaining units saw increases in their contract settlements.  This bill would provide legislative backing and the force of multiple-branch support to achieve workforce restructuring.

A 10 percent increase in state revenues should be more than enough!  Businesses across a wide spectrum use staff reductions, early retirements and other mechanisms to become more nimble and effective—that is what Minnesota government needs to do.  This proposal is part of a package of reforms for short-term savings, long-term cost reduction and lasting structural change.  It is time to bring Minnesota government into the 21^st century and serve the citizen-as-customer with the efficiency and effectiveness they deserve.