The Georgia Department of Insurance overspent its budget so much that Commissioner Ralph Hudgens has been forced to lay off staffers and order others to take four unpaid furlough days over the next few months, The Atlanta Journal-Constitution has learned.
The furloughs are the first in state government in several years, likely since it recovered from the effects of the Great Recession. The agency’s chief financial staffer was demoted and transferred to Georgia Correctional Industries, the manufacturing arm of the state’s prison system.
Gov. Nathan Deal’s budget office was only alerted to possible problems in Hudgens’ office last week, and officials with the Office of Planning and Budget are going over the agency’s books.
There was no mention of problems during the recently completed 2017 General Assembly session, when lawmakers approved a budget for the upcoming fiscal year that increased funding to the office.
Officials in Hudgens’ office said they do not suspect criminal wrongdoing in the shortfall. The agency has been laying off employees for about six weeks, and so far 10 have either been let go or resigned, they said.
The agency has not yet submitted a plan detailing the furloughs, which is required for state agencies.
Hudgens blamed the shortfall on faulty information he was given by staffers about how much money was available to boost pay in his department.
“The department was losing employees to other state and local agencies because our salaries were not competitive,” he said in a statement. “We performed a comparative job market analysis across state and municipal agencies and brought our employees’ salaries up to a competitive rate over a period of 18 months.
“During this process, the in-house budget information I received about available funds was inaccurate, thus putting a strain on our budget,” he added. “Like every household in Georgia, the department has to balance its budget, and we will do so this year.”
Hudgens, a former state senator who was re-elected to his second term as commissioner in 2014, manages a budget that will hit $21.6 million in fiscal 2018, which begins July 1.
His agency is responsible for regulating the insurance and small loan industries. He also serves as the state fire marshal, and his agency runs fire safety and prevention programs and investigates fires.
Hudgens’ agency saw its budget cut about 20 percent during and immediately after the Great Recession. The number of “authorized positions” — or jobs in the department — fell from 310 positions in 2009 to 209 in 2012.
As of Thursday, his office had 216 employees, officials said. His employees were told of the furloughs Wednesday.
Furloughs were common during the Great Recession, when state revenue plummeted and agencies sought to avoid mass layoffs. They continued for years in many rural school districts that struggled to pay bills even after the recession was well behind the state.
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