California state government ending office leases as employees shift to telework

New budget documents show California’s state government has begun to make progress on one of the promises of telework: saving money on office leases.

The Department of General Services, which manages about 14.4 million square feet of leased office space for the state, has relinquished or is in the process of relinquishing about 767,000 square feet of space, according to Gov. Gavin Newsom’s Monday budget proposal.

The changes will save the state about $22.5 million per year, according to the state’s projections.

They’re the first specific figures on lease savings the state has released since Newsom announced in May 2020 that he would move to make telework a permanent option for state workers with jobs that could accommodate it.

Over the next three years, the state expects to reduce leased office space by 20%, which would save about $84.7 million per year, according to the budget proposal.

Along with leases, the Department of General Services manages state-owned buildings. Major renovations and new construction projects totaling about $4 billion will continue in Sacramento, according to budget documents.

“While statewide consolidation efforts will continue, the administration recognizes the need for modern office space to conduct the state’s core business functions, and remains committed to investing in the construction and renovation of these assets,” Newsom’s budget proposal states.

The state is relinquishing leases in 30 cities. The majority of them — 23 leases — are in Sacramento, Department of General Services spokeswoman Monica Hassan said in an email.

Twenty-four departments, boards and offices have been affected so far, Hassan said.

In addition to saving money on leases, the state’s shift to telework is expected to reduce traffic congestion and vehicle emissions while helping the state recruit and retain workers in a rapidly changing hiring environment.

The transition to remote work has ripple effects for the economy, and in how employees interact.

Downtown businesses that depended on a steady stream of state workers have struggled during the COVID-19 pandemic, with some restaurants closing. State worker union representatives have said the shift to remote work is making recruitment more difficult.

The shift to permanent remote work is still unfolding across state government. The Newsom administration has directed department leaders to support telework, but has given them the discretion to hash out specifics, including how many days per week employees show up in person.

Large departments in general have been telling employees they need to spend about half their time in the office, while smaller departments and offices have been more likely to authorize full-time remote work.

Below are the departments that have been affected by the lease reduction process so far, according to Hassan:

▪ Alcoholic Beverage Control

▪ Baldwin Hills Conservancy

▪ California Community Colleges

▪ Department of Community Services and Development

▪ Department of Consumer Affairs

▪ Department of Corrections and Rehabilitation

▪ Department of Fish & Wildlife

▪ Department of Food and Agriculture

▪ Department of Forestry and Fire Protection

▪ Department of General Services

▪ Department of Health Care Services

▪ Department of Managed Healthcare

▪ Department of Military

▪ Department of Parks & Recreation

▪ Department of Rehabilitation

▪ Department of Social Services

▪ Department of Tax and Fee Administration

▪ Department of Technology

▪ Department of Toxic Substances Control

▪ Employment Development Department

▪ Financial Information System of California

▪ Governor’s Office of Business & Economic Development

▪ Office of Systems Integration

▪ Office of the Inspector General

This story was originally published January 12, 2022 at 5:25 AM.