Budget Update from DSHS

The Washington State Department of Social Health and Services (DSHS) has released an update on what they are doing in response to the significant budget shortfall the state is facing, which is an estimated $12 billion over the next four years. As a result, Gov. Ferguson recently directed state agencies within the executive branch, including DSHS, to complete a budget-reduction exercise to identify savings and submit plans to his office by Feb. 6.

DSHS was directed to identify $702 million, less than 6% of their appropriation, excluding cash benefits to clients, in General Fund-State savings for the 25-27 biennium which begins July 1,2025. This exercise instructed agencies to consolidate management positions, reduce administrative overhead and restrict equipment purchases to those necessary for core agency functions. It also instructed agencies to reduce out-of-state travel by at least 50% and in-state travel by 25%, along with other cost-saving considerations.

Gov. Ferguson will now review the plans that agencies have submitted and work with the Office of Financial Management to publish and eventually provide his recommendations to legislative budget writers. DSHS anticipates the governor’s final recommendations will be published on the OFM website later this month.

The next caseload forecast comes out next week and the next state revenue forecast will be released in March, both of which will trigger the Legislature to begin in earnest the work of crafting the budget to fund state government for the next two years. This exercise, and the ensuing action by the Legislature, is all part of the long discussion over the legislative session that will ultimately give DSHS a final, enacted budget. At that time, they will know what, if any, savings reduction actions are needed, and which, if any, of their proposals will be implemented.

DSHS will keep you informed as they continue to navigate through these budget challenges.