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Tribe Uses Unique Strategy to Avoid Layoffs

Navajo Times, News report, Jason Begay Posted: Aug 26, 2009

The controller and Budget and Finance Committee all but guaranteed that the Navajo Nation will not lay off any employees in these final few months of the budget year.

And for the most part, officials are trying to avoid layoffs for the 2010 budget year as well, however, at least one governmental branch foresees some cuts if it can't increase its operating budget.

But for now, the tribe's financial officials are confident they will avoid cutting employee positions with a unique accounting strategy.

"There will be no layoffs," said LoRenzo Bates (Upper Fruitland), committee chair. "That includes full-time employees and youth employees."

Employees were growing concerned as several program's have begun to run into the red, cleaning out their accounts. However, this is not the case with most programs, which will likely end the year with a surplus.

The nation will continue through the year watching its accounts "globally," said the controller, Mark Grant.

"We will be monitoring the Navajo Nation's budgets as a whole," Grant said. "Making sure the nation doesn't go into a deficit and there are no layoffs."

This global monitoring of the budget means the tribe's financial officials will pool all of the personnel funds of the general fund programs. This includes Department of Justice, EPA and the offices of the controller and management and budget.

From this pool, the tribe will continue to pay its employees throughout the remainder of the budget year, which ends Sept. 30.

Using this method, any surplus that one program has would offset any deficit that another program might have.

"We are telling all the programs to continue operating with the personnel they have, to continue to turn in timesheets for them," Grant said. "And not to layoff anybody simply because their balance might be in the negative."
This new method would also allow programs to continue hiring, if they were set to hire new employees in the next two months. However, new hires should be accompanied with a budget transfer from the program's operating budget, Grant said.

The tribe encountered a scare last week when reports showed that programs were entering into the red. At the time, this was blamed on the Navajo Nation Council's recent $9.7 million expenditure, which came from the program's current personnel funds.

This money, if unspent, usually is fed into the tribe's fund balance at the end of the year. The council - having previously cleaned out all other money resources into the red - then spent the personnel money months before the year was over.

Young Jeff Tom (Mariano Lake/Smith Lake), who sponsored the spending bill in July, was quick to point out on Monday that the tribe will not layoff employees.

It's common for the nation's programs to pad their budgets, Tom said. At the end of the year, the nation tends to collect upwards of $12 million in unspent funds, he said.

This excess money was designated for the programs to hire new employees. However, a number of those positions go unfilled, which is why the money is eventually returned to the tribe's coffers, said Tom, who has a penchant for finding money and diverting it to the chapters.

"If they would hire these people, then we wouldn't be spending this money," Tom said.

If the council didn't spend the funds, much of which goes to slush accounts for chapters and delegates to give to constituents, the money would remain dormant in the central government, Tom said. The council would rather see the funds spent on the public, he said.

Still, the plan as announced on Monday does not mean the tribe is out of the dark yet. Bates ordered the offices of the controller and management and budget to remain in constant contact to ensure both have the same figures. They also requested updates on the tribe's finances at the close of every pay period through Sept. 30.

"If there are any adverse consequences to this, this committee needs to know immediately," Bates said. "There will be no waiting until the next regular meeting."

The committee was scheduled to meet for the duration of the week for its budget hearings. This is when the tribe's branches and departments present their financial positions and possibly request extra funds for the 2010 budget year.

However, the tribe is in the midst of a budget crisis and barely managed to pool enough resources to create a budget worth $161.4 million. Using some creative outlets, the Budget and Finance Committee in June granted each of the three branches the same amount as the previous year.

However, this would not account for inflation and the cost of auto, physical and liability insurance, which the programs are expected to absorb this year.

Faced with these extra costs, both the executive and judicial branches reported to the committee that they face laying off several employees next year - between 10 and 24 in the judicial branch and up to 50 in the executive.

During his presentation, Speaker Lawrence Morgan (Iyanbito/Pinedale) said the legislative branch would likely not face any layoffs.

In his address to the committee, President Joe Shirley Jr. said the upcoming budget shortfall could have been offset had the council not voted to override his veto of the $9.7 million bill.

"This budget shortfall could have been substantially offset if the personnel savings from vacant positions was accrued, as required by law, at the end of the fiscal year," Shirley said. "The people's needs are greater than anyone else's. However, it's most unfortunate that those people who now have to pay the cost of this budgetary crisis are our own dedicated employees."

The committee will continue meeting in its budget hearings through the week. The council is expected to approve the 2010 budget in September.

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