Michigan plans to furlough 64% of workforce, save $80M to deal with budget woes

The state of Michigan hopes to save up to $80 million by requiring thousands of state employees to take two days of furlough per pay period through July 25. 

Instead of reimbursing employees through the state unemployment fund, Michigan will rely on a federal work share program that will give employees partial unemployment benefits to make up for some of their lost wages, according to Gov. Gretchen Whitmer’s office. 

State managers — who will be required to take one furlough day every other pay period — won’t be compensated through the federal program and will instead experience a 5% reduction in pay. 

The furloughs will affect 31,000 employees — more than half the state’s 48,295 workers — between the managers and lower level employees participating in the federal program. They begin Sunday. 

“As we continue to combat COVID-19, it’s clear that we’re facing unprecedented challenges that will lead to serious budget implications for the state of Michigan,” Whitmer said Wednesday in a statement. “Utilizing this federal program keeps state employees working so they can continue to provide critical services to Michiganders and protects their paychecks so they can continue to support their families.”

The layoffs will not affect employees working in law enforcement, veterans homes, the prison system and other professions working on the COVID-19 front lines. 

The state estimates a shortfall of up to $3 billion in the current fiscal year and an up to $4 billion shortfall next year because of the COVID-19-induced shutdown.

The current year budget is a little less than $60 billion while next year’s proposed budget totals $61.9 billion. School aid and general fund monies, financed by state tax dollars, account for $26 billion of next year's budget. Federal money comprises most of the rest.

Whitmer’s announcement comes nearly three weeks after the governor temporarily laid off 2,900 workers for 10 work days for a savings of about $5 million. Attorney General Dana Nessel also laid off 100 workers last month. 

Whitmer took a 10% pay cut last month and her executive team and cabinet took a 5% cut. The governor's office will also use the federal work share program. 

All laid off employees will retain their health insurance and other benefits and will be automatically enrolled to receive unemployment benefits, an accommodation Republican lawmakers criticized considering the private residents still awaiting benefit payments. 

eleblanc@detroitnews.com