State Projects $1.1 Million in FY11 Savings Through Better Real Estate Management

Press Release

Markell Administration Reduces Amount of Office Space, Renegotiates Leases to Create Savings for Taxpayers

The day before unveiling his balanced budget proposal, Governor Jack Markell announced that the state has already achieved savings of $400,000 through improved real estate management practices and is aiming to achieve a total of $1.1 million for Fiscal Year 2011.

"We have been working very hard to find ways to make government more cost-effective," said Governor Markell. "Teams across the state thought creatively about how we could reduce the costs of the space we use in order to preserve core services and make government more efficient. In the last year, we have reduced the size of the state workforce by 1,000 positions without having to resort to layoffs. We are seeing some real success in reducing the size and cost of state office space."

The Office of Management and Budget (OMB) led efforts to review real estate management practices for potential savings. During the past year, the state has negotiated rent reductions, consolidated some office space, and moved some employees from offices that were leased to buildings already owned by the state.

For example, the Victims Compensation Assistance Program was recently relocated from leased offices to a building in Wilmington owned by the state. This has saved the state money, while increasing efficiency by moving these employees closer to their colleagues at the Department of Justice.

To achieve an additional savings of $700,000 to reach the $1.1 million target, the state is undertaking the following:

1. Piloting a lease renewal program. Under this pilot, the state will agree to extend current terms of lease in exchange for savings. We are aiming to save 20% on leases expiring through 2012. Proposals for 41 locations have been received, and negotiations with some landlords have begun.

2. Continuing to evaluate both owned and leased spaced for consolidation opportunities. This process considers both potential savings and the appropriateness of the location for each agency's mission. For example, the OMB is working with the Department of Natural Resources and Environmental Control (DNREC) to identify space for a service center and consolidate multiple leases into one. This will save money, while also increasing efficiency for DNREC and citizens using their services.

3. Analyzing under-utilized state assets for disposition. This would reduce the state's property footprint and return much needed capital.

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