Raimondo administration seeks furlough volunteers

PROVIDENCE — Faced with a potential $800 million deficit this year and next, the Raimondo administration is seeking volunteers within state government to work only three days a week and rely on federally enhanced unemployment benefits to make up the rest of their pay.

The administration says the “work-sharing” program announced Wednesday morning is not technically a furlough, because it will be voluntary.

But the result may be the same as with many other companies across Rhode Island during the health crisis: a reduction in employer expenses, while the federal government pays unemployment benefits for employees’ no-work days between June 14 and Sept. 5.

If 1,000 employees sign on, the administration estimates it can save $4.7 million over 12 weeks. If 2,000 sign on, double that.

Talking about the $800 million projected deficit during her televised daily update, Raimondo said: “It is very hard to see how we could close that gap without additional federal stimulus.”

“All signs suggest that Congress is poised to pass another stimulus act,’’ she said. ”In the meantime, it is important we take as many steps as necessary or as practical to keep our costs down ... in a way that is humane.“

“While we await more news from Washington and Congress, this was a prudent strategy to accrue millions [in] savings over the summer in a manner that would enable a majority of our workforce to be held harmless economically,’’ added Department of Administration Director Brett Smiley.

The administration had not yet reached agreement with all of the state employee unions when The Journal first reported news last week that negotiations on a “work-sharing” were underway.

By Wednesday, the leadership of all of the major unions representing eligible, executive branch employees had signed on, according to Department of Administration Director Brett Smiley.

It remains unclear if others in government — including the courts and general officers — will all sign on.

But House Speaker Nicholas Mattiello and Senate President Dominick Ruggerio announced: “This will be mandatory for all full-time legislative employees who meet the salary guidelines,’’ which in this context means about 120 employees making $75,000 or less.

“The courts are actively considering it,” a spokesman said. Similarly, Lt. Governor Dan McKee’s spokeswoman said: "Staff members were given information on the voluntary WorkShare program and encouraged to complete the request form.“

State Treasurer Seth Magaziner’s spokesman said: “We are still evaluating whether we have eligible staff who could participate without jeopardizing critical functions.”

The basic rules: Unemployment Insurance covers up to 50% of lost wages up to the maximum benefit rate of $586.

Since the state is self-insured, layoffs and furloughs do not, as a rule, save the state as much as they might a private employer, because the state ends up paying the benefits.

But Congress, as part of its coronavirus relief efforts, has committed to paying 100% of the cost of the federal “work-sharing” programs such as the one the state is offering through the year, plus $600 a week in enhanced benefits through the end of July, Smiley said.

Unemployment only pays a portion of lost wages, but Smiley said those making $75,000 or less could break even — or even come out ahead — with the extra $600.

If as few as 1,000 union and nonunion employees in the executive branch volunteer to take the equivalent of a 40% state pay cut while their state benefits remain untouched and unemployment benefits replace “lost pay,’’ Smiley estimates $4.7 million in state savings.

“Why are we doing this?” the administration asked and answered in a summary.

The simple answer: the state is facing an $800-million-plus deficit. It needs to cut expenses dramatically if Congress does not come through with another relief package that helps the states make up their cratered revenues.

“Layoffs and furloughs are the last measures we want to implement. However, if we can maximize participation in this program while maintaining business operations, it will mitigate COVID-19’s long-term impact on programs and services for Rhode Islanders.”