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February 24, 2003

Blagojevich calls for administrative cuts across state government

Departments, agencies directed to scale-back by 10 percent, leading to approximately $125 million in annual savings next fiscal year-- and $30 million for current fiscal year

Nearly 1.7 billion dollars in FY 03 funds & grants to be placed in reserve for further review

Demonstrating his commitment to reducing government spending and cutting the size of state government, Gov. Rod R. Blagojevich today called on agencies and departments under control of his office to cut administrative costs by an average of ten percent.

Such a move would save an estimated $125 million during the upcoming fiscal year. If the changes are implemented before the end of March, more than $30 million could be saved during the current fiscal year.

“These cuts reflect this administration’s priority when it comes to fiscal planning and budgeting,” he said.

“Our goal and my commitment is to cut spending first,” he said.

Blagojevich said that the kinds of areas where department heads could look for savings could include-- among others-- office space, computers, vehicles, supplies, or unnecessary personnel.

In addition, the governor said that he would initiate steps to carefully scrutinize whether additional pools of money should be spent during the current 2003 fiscal year.

The governor said that he is directing agencies and departments to reserve approximately 8 percent of their operations budget for FY 03. Likewise, agencies administering state grants will be directed to put on hold 5 percent of those funds, while 10 percent in capital improvement funds would be reserved during the rest of the current fiscal year.

Grants that are in the areas of K-12 education, health care and public safety will be exempt from the reserve.

By placing such funds—which could total nearly $1.7 billion— in reserve, the prospective spending will undergo a through review to examine the need for and value of such expenditures.

“We will determine which services, programs and personnel are essential to serve the needs of the people—and which serve only a political need, or are the result of spending that has gone on unchecked, unjustified, and unquestioned for too long,” Blagojevich said.

Upon taking office in January, Blagojevich inherited a deficit of nearly $5 billion—the largest deficit in state history.

As evidence of the opportunities to find savings in the state agencies’ administrative budgets, the governor gave a list of examples of wasteful spending that his administration had found since taking office. Among them were the following:

  • One state agency, Central Management Services, has more than three receptionists at one office— yet, none of them has contact with anyone who is not a state employee.

  • At the Bureau of the Budget, a large administrative staff is on hand to write phone messages on paper-- because the office does not have voice mail.

  • The state’s current cellular phone contract costs 11 cents per minute. Yet, the same company – Verizon - is now advertising a rate three times cheaper.

  • Prior to taking office, the governor’s transition team learned from a senior manager at the Department of Corrections that in an organization with twelve layers of bureaucracy, seven of them were extraneous, adding no value to state services.

  • The state pays an Iowa-based firm $600,000 each year to administer $1.2 million worth of grant funds from the Drycleaner Environmental Recovery Trust Fund-- an astounding 50 percent of what they administer.

“These are just a few examples of areas where Illinois wasted money because of relying on an old way of doing business,” he said.

The directive to cut administrative costs is in keeping with the steps toward consolidation and streamlining of services that have been central themes of the Blagojevich administration to date.

Since taking office five weeks ago, Blagojevich has taken several steps to determine whether state expenditures—even those that are the result of long-established spending practices—are essential given the state’s nearly five billion dollar deficit.

In recent weeks, he has frozen payments for members’ initiatives projects; imposed a hiring freeze on all agency directors; called for measures to reduce administrative costs at state universities; prohibited heads of departments and agencies from acquiring new cars; and initiated a review of whether the high-paid positions held by term-appointees are essential to the operation of state government. Last week, he announced that was canceling costly lobbying contracts with Washington, D.C.-based firms.

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