[ODF_Private_Forests] ODF Budget Planning Update

[WEEKS Kevin]

ODF Private Forests News members:

Associate State Forester Clark Seely sent this update message to ODF staff Wednesday about the evolving budget reduction situation for both the present 2007-2009 budget and the pending 2009-2011 budget.

Please note that the scope of budget concerns have expanded into the future of the Forest Development Fund, potential ODF layoffs and federal support from the national stimulus package being considered in Congress.

Questions about the Private Forests News service? Contact:

Kevin Weeks
Public Information Officer / Private Forests Division
Oregon Department of Forestry
(503) 945-7427

________________________________
From: SEELY Clark W
Sent: Wednesday, February 11, 2009 2:01 PM
To: ALL FORESTRY
Subject: FYI - Department Budget Planning Update

Hi everyone...we're writing today to give you another update on the budget situation, our reduction planning, and next steps.

Uncertainty - and continuing deterioration in the economic outlook - are realities we continue to face. If anything is certain, it's that the information in this message will change in the coming weeks and months. Tough decisions and actions lie ahead as the Legislature determines how to meet the state's highest priority needs during this recession.

We'll continue to keep you posted as we adapt to the latest developments and prepare for the future.


2007-09 outlook remains difficult; revenue update coming soon

The Governor and the 2009 Legislature are working to address shortfalls for the current biennium, which ends on June 30 of this year. An update released in late January estimated that the state's General Fund could be 3.7 percent to 6.3 percent short of the amount necessary to continue current services state government-wide through June 30 - a wider gap than previous forecasts had suggested. The state economist will release his next forecast on February 20, and we'll update you again at that time.

In the meantime, the Legislature's joint Ways & Means Committee will hold hearings this week on the 2007-09 situation and possible reductions. The Committee will hear an overview of the natural resources program area on Thursday.

Reductions are amplified when they must be taken entirely in the last several months of a two-year budget period. Accordingly, a biennial General Fund reduction of 5 percent amounts to a cut of about 25 percent of the funds actually remaining for the rest of this biennium. The effect is further amplified by the loss of matching dollars when General Funds are cut.

We've taken various actions to save money this biennium, including holding positions open and deferring vehicle replacement payments in Private Forests, and suspending Sudden Oak Death treatments. But balancing the 2007-2009 budget is expected to require additional action, possibly including early implementation of reductions in alignment with the Governor's Recommended Budget for 2009-2011.

It's important to remember that as we make reductions in our operating programs this biennium or next, we will also take corresponding reductions in administrative services programs based on reduced services required.

Additional information about the 2007-09 situation is available on the ODF Web site, at
http://egov.oregon.gov/ODF/docs/2007_09_Red_Summary.pdf


State Forests Division faces significant revenue problems

Although much of our planning has focused on expected reductions in General Fund, which occurs in our Private Forests and Fire programs, we're also seeing serious erosion, due to the economy, in the timber sale revenues that fund State Forests.

Studies of various scenarios suggest that our Forest Development Fund, which captures these revenues, could run out by 2010 or 2011 without cost-saving measures beyond those already in place, or a recovery in the timber market.

A forecast issued last week predicts a 30 percent to 40 percent drop from 2007-2009 to 2009-2011. This is a more significant decline than earlier forecasts. Given current economic conditions, the short-term outlook is likely to continue to deteriorate. The State Forests Division will update revenue forecasts quarterly, monitor expenditures closely, and continue to implement additional cost-saving measures, including planning for staff reductions.


Factors we must consider include managing the risks of timber sales going into default, our ability to sell timber in the current market, and shifts in the Governor's Recommended Budget of Forest Development Fund dollars to other uses within ODF.



Harvest levels on the state forests are another key factor. While the Board of Forestry seeks long-term increases on the Tillamook and Clatsop state forests, a reduction is necessary to bring harvests to levels that are sustainable under current management plans.


State Forests Division leaders and Area Directors are developing guidance for further budget reductions that will be needed through 2010 and beyond. Budget units will be directed to develop reduction options through the normal fiscal budgeting process. Direction will come initially through area staff meetings this week. As with our other budget challenges, the outlook and our plans will likely continue to change.


Seniority information to be distributed

As we've discussed in previous messages, the Governor's Recommended Budget for 2009-2011 includes a 10 percent General Fund reduction for ODF, focused in Private Forests. The Legislature has directed agencies to prepare plans for additional reductions above this level.

Although we won't know for certain what our 2009-2011 budget will look like until the Legislature completes its work this summer, as you know, we have been preparing for reductions for some time. We're keeping positions vacant, trying to find more secure positions for employees in positions that will likely lose funding, and undertaking other measures.

Although we will do our utmost to avoid or limit layoffs, if they are necessary, for union employees they must be accomplished according to specific provisions of the labor contract. Seniority is a key factor in this process.

Many of you have asked for information that will help you ascertain where you stand in terms of seniority. Supervisors will be sharing this information in the coming weeks in conversations with employees most likely to be affected by reductions. It's important to keep in mind that this is not the beginning of a layoff process, but information that may help employees in their own planning. Should layoffs become necessary, our Human Resources Program will provide specific direction, notice, options and assistance to affected employees.

More information about ODF reduction scenarios for 2009-11 is available on the Web at  http://www.oregon.gov/ODF/docs/2009_11_Red_Summary.pdf


Federal stimulus dollars will help

You've no doubt read or heard news reports about efforts at the federal level to help stimulate the economy. Congress passed one large stimulus bill last fall, and is currently debating another. At a time when reductions dominate our outlook, the federal stimulus action represents some unanticipated additional funding.

Based on the legislation that has already passed, it continues to appear that about $4 million will be available for fuel reduction treatments in Oregon. These funds are in addition to the normal Community Assistance, Western State Fire Managers, and State Fire Assistance dollars that we receive.

There is a very strong expectation that states rapidly move these new funds into projects. We plan to accomplish this through a mix of existing but unfunded grant proposals, and new proposals submitted by districts. Our goal is to submit a complete package for use of these funds to the U.S. Forest Service by the beginning of March, and the funds may arrive as soon as April. We anticipate these funds might support as many as five or six positions in the field to administer fuel treatment projects around the state.

Future federal action may bring additional dollars. We don't know at this point. In any case, we are focusing on how best to position ourselves to compete for and use any future stimulus packages.


The bigger picture for ODF and its employees

Like virtually all organizations, ODF will need to adjust to an environment in which funding is very tight. We need a clear understanding of what we can and should achieve with the resources we have, and of the best way to organize our agency to reach those goals. In addition to the strategic discussions occurring at the executive level, we're also working with the Board of Forestry on these questions.

Our economy will always have ups and downs, and we will always adjust to them. Whatever our level of staffing and funding, we need a clear picture of how we can best serve the public, and of where we should head in the future.

We'll also continue to share information, and to seek solutions that work best under the circumstances for employees and for the agency.

Thanks very much for your continued hard work in the face of some of the toughest and most uncertain times we have seen. If you have questions or suggestions, don't hesitate to contact your supervisor or any of us.


Jim Paul                                                              Paul Bell
      Private Forests Division Chief                              Fire Protection Division Chief

Nancy Hirsch                                                      Clark Seely
State Forests Division Chief                                 Associate State Forester


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