Telework for state workers could save California $225 million annually, audit finds
Allowing state employees to work from home could help California save up to $225 million in office space costs, according to a report the California State Auditor released Tuesday morning.
That opportunity to cut costs will disappear if workers are required to return to offices four days a week next July, the auditor warned.
Gov. Gavin Newsom’s rationale for his return-to-office order “could have made better use of information about departments’ office space needs or the associated costs of those space needs before directing state employees to work an increasing number of days per week in the office,” State Auditor Grant Parks said in a statement Tuesday.
State workers, their unions and California lawmakers have waited for the audit to provide a third-party perspective to the telework debate that has lasted over a year. The findings echo what many state workers and their labor representatives have said about telework: it presents an opportunity to reduce California’s expenses.
Public employees and their labor representatives have argued that remote work offers workers more flexibility, helps them and the state save money and curbs unnecessary carbon emissions from reduced commutes.
Newsom has cited the need for more in-person collaboration and mentorship among the government workforce. Flagging business in downtown Sacramento, which was previously supported by a robust influx of state workers each day, was also part of the governor’s decision to bring employees back.
“This audit on state telework is not a scientific study, nor does it paint a complete picture of the state workforce or the benefits of working in person,” spokesperson Tara Gallegos said in a statement.
The Governor’s Office disagreed with the auditor’s findings, saying the budget savings should be treated as hypothetical and incomplete. However, Gallegos said that the Governor’s Office will take the recommendations into account moving forward with managing the state’s workforce.
Lawmakers question Newsom’s telework policy
The saga started in April 2024 when the Newsom administration directed state employees back to offices two days a week. Many eligible employees had been working fully from home since 2020 in response to the COVID-19 pandemic.
State lawmakers asked the California State Auditor to study potential savings from reduced need for office spaces and the impact of hybrid work policies on employees’ productivity, among other topics.
Assemblymember Josh Hoover, R-Folsom, led the audit request after hearing from hundreds of constituents who work for the state about how remote work had benefitted them. Hoover expressed skepticism that telling workers to return to offices was the “right long-term move” for the state. During budgetary hearings earlier this year, legislators questioned the Department of General Services and the California Department of Human Resources leaders about the potential costs of the return-to-office order, which agency heads could not provide.
The audit took on a renewed urgency this spring when Newsom increased the in-person requirement for state workers to four days a week. A group of bipartisan state lawmakers, many of whom represent Sacramento-area districts, implored Newsom to pause the return-to-office order until the auditor’s office published its report.
The unpopular mandate also faced intense pushback from union leaders who filed legal challenges against the governor and state workers who protested and erected billboards around Sacramento criticizing Newsom.
Eventually, Newsom did postpone the return-to-office order just before it was set to go into effect in July as a part of negotiations with bargaining units that included several provisions to help California reduce employee compensation costs this fiscal year.
Telework audit findings
A review of 19 select departments found that those agencies largely did not use a combined 3.2 million square feet of unused office space, which auditors estimated cost those agencies $117 million.
DGS estimated the state could reduce the amount of leased and state-owned office space by 30%, according to the report. Based on that amount, if the state maintained its current policy allowing telework for three days, the auditor’s office estimated California could save as much as $225 million annually.
If employees are required to resume working in person most of the week, the state won’t be able to offload office space.
“In fact, the State may need to obtain additional office space to accommodate all employees who may eventually return to the office; however, as of June 2025, the State had not determined how much additional office space it would need to obtain,” auditors wrote.
Auditors noted that the Governor’s Office could have better used available information to make changes to telework policies. The administration did not collect necessary data on departments’ office space needs and associated costs before announcing the two-day and four-day return-to-office orders in 2024 and 2025, respectively.
Despite the fact that DGS collected valuable information from departments about how telework served those agencies, auditors wrote that it doesn’t appear the Governor’s Office took that information into consideration when it issued either return-to-office order.
In response to auditor’s questions about what information was used when developing the return-to-office order, the Governor’s Office shared two articles about the benefits of in-person work.
“We found that respondents to our surveys of state departments, as well as state managers and staff, believe that telework is effective and can benefit state departments and employees by lowering costs and the amount of needed office space and improving recruitment and retention without negatively affecting productivity, collaboration, or customer service,” the auditor wrote.
This story was originally published August 12, 2025 at 10:10 AM.
