Analysis of the 2008-09 Budget Bill: General Government

Department of Industrial Relations (7350)

The mission of the Department of Industrial Relations (DIR) is to protect the workforce of California, improve working conditions, and enhance opportunities for profitable employment. These responsibilities are carried out through three major programs: the adjudication of workers’ compensation disputes; the prevention of industrial injuries and deaths; and the enforcement of laws relating to wages, hours, and working conditions. In addition, the department regulates self–insured workers’ compensation insurance plans, provides workers’ compensation payments to injured workers of uninsured employers and other special categories of employees, offers conciliation services in labor disputes, and conducts and disseminates labor force research.

The 2008–09 budget includes $67.8 million General Fund for the support of DIR. This is a decrease of $550,000 (0.8 percent) General Fund compared to current–year expenditures.

Proposal to Relocate Headquarters Is Premature

The Governor’s budget proposes $432,000 ($130,000 General Fund) in 2008–09 to support the initial planning costs for the ultimate relocation of the Department of Industrial Relations’ (DIR’s) headquarters office during 2009–10. The purpose of the move is to (1) allow for the expansion of the Administrative Office of the Courts (AOC) and the Department of Justice (DOJ) into existing DIR space and (2) provide additional space for DIR. We recommend rejecting the Governor’s proposal because neither AOC nor DOJ has justified the need for an expansion, and we believe that a proposal to authorize DIR to begin relocation activities is premature. (Reduce Item 7350–001–0001 by $130,000 and various special funds by $302,000.)

Background. The DIR headquarters office has been located in the Hiram Johnson State Building (HJSB) in San Francisco since 1999. This space is shared with AOC and DOJ. The DIR currently occupies approximately 107,400 square feet of office space and houses 475 employees in the HJSB.

Governor’s Proposal. The 2008–09 budget proposes $432,000 ($130,000 General Fund) in 2008–09, $3.6 million ($1.1 million General Fund) in 2009–10, and ongoing costs of $6.9 million ($2.1 million General Fund) in 2010–11 to support headquarters office relocation activities for DIR. Specifically, in 2008–09 the funds would be used for planning and leasing activities, in 2009–10 the funds would be used to cover the costs of the move, and beginning in 2010–11 the funds would be used to support an additional 48,000 square feet for DIR’s relocated headquarters in San Francisco. The purpose of this proposal is to provide increased space for AOC, DOJ, and DIR.

Governors Proposal Is Premature. The Governor’s budget states that the relocation of DIR is necessary for two main reasons—to accommodate the needs of DOJ and AOC and to provide more space for DIR. However, to date, DOJ and AOC have not provided any plan or justification for this expansion. Because all three state agencies share space within the HJSB, it is premature for one department to begin planning for a relocation before the other departments have provided a plan that justifies their need for additional space. Moreover, the budget balancing reductions proposed for all three departments, if adopted, could change staffing levels and result in a less urgent need for new space.

Analyst’s Recommendation. Because there is currently no plan in place for the expansion of DOJ and AOC, we find the proposal to authorize DIR to begin planning for a relocation to be premature. We recommend rejection of the Governor’s DIR headquarters relocation proposal, resulting in a General Fund savings of $130,000 in 2008–09 and $1.1 million in 2009–10.  

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