By Adam Pagnucco.
County Executive Marc Elrich has responded to Council President Evan Glass’s memo asking him to quantify potential savings from leaving vacant positions unfunded. His response: he does not want to save more money this way, but he identifies two scenarios that could save $8 million and $9 million.
First, a few basic concepts. The county government always has vacant positions because of turnover. Funding is often budgeted for those positions in anticipation that they will be filled and their eventual occupants will be paid. However, if some positions are anticipated to not be filled for various reasons, perhaps for part of the year, budget savings can be assumed through the use of “lapse.” The FY24 recommended budget defines lapse this way:
The reduction of budgeted gross personnel costs by an amount believed unnecessary because of turnover, vacancies, and normal delays in filling positions. The amount of lapse will differ among departments and from year to year.
So if a governmental entity wants to save money, it can preserve vacant positions on paper but simply not fill them. The state government does this regularly. For example, in Governor Wes Moore’s FY24 budget, a two percent cost of living adjustment was funded in part by asking “agencies with high vacancies” to “fund the COLA from their vacancy savings.”
The council is hunting for savings in Elrich’s recommended budget because they do not want to levy his entire proposed 10 percent property tax hike. (They would also like to free up money for their own spending proposals.) That’s why the council asked Elrich to look at money spent on vacant positions. How much in savings can be found?
Elrich began by writing:
As you are aware, the County currently has a higher-than-normal number of vacant positions. As of March 3, the number of tax supported vacant positions in the County was 1,184. Combined, the five departments with the most vacant positions – Police (274), Health and Human Services (246), the Department of Transportation (188), the Department of Correction and Rehabilitation (81), and Montgomery County Public Libraries (71) constitute almost three quarters of the number of vacant tax supported positions Countywide. These are all front-facing departments.
In looking at departments or functions with more than 10 employees, the five with the highest percentage of vacant positions include the County Council (25.5 percent), Technology and Enterprise Business Solutions (25.3 percent), the Office of the Inspector General (23.5 percent), Community Engagement Cluster including Urban Districts (20 percent), and the Board of Elections (20 percent).
The fact that the council itself has the highest vacancy rate in county government is a juicy morsel. Thanks for that, Marc! Elrich goes on to say that the historical average for lapse savings built into county budgets is $35 million a year. In FY24, his recommended budget includes $51 million in lapse savings, $16 million more than the average. In other words, Elrich has already saved money by not filling vacancies and has redeployed that money to fund his own priorities.
Elrich does not want to go any further because he wants his department directors to “have the flexibility to fill critical positions.” However, he offers two “non-recommended scenarios” for more savings. Following is an excerpt from his response.
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Scenario 1 (FY24 Savings: $8,516,000)
This scenario increases the lapse rate for the six departments with a large number of vacant positions. As stated before, my budget assumed that half the budget cost associated with longterm vacant positions would not be needed in FY24. This scenario assumes that 50 percent of the remaining balance associated with long-term vacant positions will not be needed in FY24. In addition, the positive lapse adjustments made for Montgomery County Public Libraries (MCPL) and the Department of Recreation (REC) in the Recommended Budget be reversed. While my budget did not include additional lapse assumptions for the Legislative and Judicial branches, this scenario assumes 50 percent of the budget associated with current vacant positions in the County Council, the Office of Inspector General, and Circuit Court be lapsed.
Scenario 2 (FY24 Savings: $9,681,000)
Similar to Scenario 1, this scenario increases the lapse rate for the six departments with the most long-term vacant positions. However, this scenario assumes that 60 percent of the remaining balance associated with long-term vacant positions will not be needed in FY24. Similarly, the positive lapse adjustments made for MCPL and REC in the Recommended Budget be reversed Positions Funded in the FY24 Budget and this scenario also assumes 50 percent of the budget associated with current vacant positions in the Legislative and Judicial branches in Scenario 1 be lapsed.
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This is essentially an opening bid. The council could achieve greater savings by using higher lapse rates and spreading them to more departments. It could also ask MCPS, Montgomery College and Park and Planning for similar vacancy data since the county government only accounts for 29% of the combined positions of these agencies. Hiring freezes and eliminating positions through attrition could save even more money. During the Great Recession, the county cut more than 1,000 work years in two years through attrition.
Between vacancies and staff recommendations for savings in MCPS, the council is starting to acquire some options for going below Elrich’s full tax hike, perhaps significantly below. We shall see how much lower they can get soon enough.
Elrich’s memo to the council appears below.