| Detroit Free Press
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LANSING – Many if not most state office workers may never fully return to their desks once the coronavirus pandemic is over, meaning the state can significantly reduce the amount of space it leases in Lansing, Detroit, and elsewhere.
The savings resulting from state employees working from home are starting to show up in state budgets, including Gov. Gretchen Whitmer’s 2022 budget to be presented to the Legislature on Thursday. But those savings are now expected to extend well beyond the life of the coronavirus pandemic.
The remote work that was forced by COVID-19 is dovetailing with a goal that preceded the pandemic of reducing the nearly 5 million square feet the state leases at an annual cost of about $80 million, said Brom Stibitz, the director of the Department of Technology, Management and Budget.
“It’s clear that the world has changed in the past 11 months and expectations of the work environment are changing with it,” Stibitz told the Free Press in a Wednesday interview. “People in leadership positions have learned their staff can be as productive — and sometimes more productive — when they work remotely.”
The move to remote working even after shared office space is again safe from the fear of spreading the coronavirus is happening not just in state government, but in the private sector, too. It means taxpayers could reap big savings on lease and occupancy costs but cities could see major harm to their central business districts, where office building owners and the restaurants and other businesses that cater to office workers also pay a significant share of taxes.
In Lansing, “downtown is a ghost town, now,” said Michael Mahdi, owner of The Daily Bagel on Washington Avenue, a couple of blocks from the state Capitol. “We are down almost 60%.”
Mahdi’s shop, which serves coffee, bagels, sandwiches and other items, relies not just on foot traffic but on catering of breakfasts and lunches for state office meetings. The catering business has been pretty much wiped out, Mahdi said.
Exactly how it all shakes out across state government remains to be seen. Stibitz stressed the paramount consideration is not how much floor space state workers occupy. Instead, the priorities are delivering quality customer service in an efficient way, ensuring productivity, and being able to measure employee performance while being concerned about how taxpayer dollars are spent, he said. Building relationships between employees and supervisors is another consideration, he said.
The analysis will have to be done agency by agency, with operations examined by function. Those analyses will likely happen over the next few months, while canceling any leases could take from a few months to a couple of years, he said.
But at DTMB, which has close to 3,000 employees, Stibitz said parts of the agency can likely reduce the amount of office space they need by 50%. Most of those DTMB workers occupy buildings that are owned by the state. But if they take up less space in state buildings, the state can move other workers into state buildings from privately owned buildings the state is paying to lease.
Some DTMB employees may never return to the office once the pandemic is over. And, “I would not be surprised if a majority of the office workers were able to work remotely two days a week,” or possibly three, he said.
As of this week, 57% of the state government workforce — or close to 28,000 employees — are working from home. But that percentage is misleading because it includes state functions such as prisons, which are requiring corrections officers to report to work just as they did before the pandemic. Looking at agencies that are mostly composed of office workers, the percentage is much higher, with about 85% of DTMB employees now working from home, he said.
The earliest state employees have been told they can expect to return to their offices en masse is May 1. But that date could still be pushed back.
Already, the state is reaping savings.
So far, the state has only canceled one lease as a result of state employees working from home, but there have been two other leases the state was planning to sign that it decided to nix, Stibitz told a recent meeting of the House Appropriations Subcommittee on General Government.
“And then I would say … there’s probably nine other leases that we’re in various stages of looking to cancel as a result of COVID,” he told lawmakers. “I would expect more of that to continue.”
But leases are not the only savings resulting from work-from-home.
For the 2020 fiscal year, which began Oct. 1, 2019, six months before the pandemic began:
- State utility costs were down $1.4 million, or 7%.
- Elevator maintenance costs dropped $94,000, or 24%.
- Other maintenance and repair costs dropped $360,000, or 82%.
- Purchases using state credit cards dropped $870,000, or 27%, while other state purchases of supplies and materials dropped $356,000, or 21%.
There were also new building costs related to COVID-19 in 2020 — such as $573,000 in extra janitorial costs for enhanced cleaning, plus another $246,000 spent to clean after “COVID events,” such as when a worker tests positive for the virus. The state has also spent more on equipment to help workers do the job from home and an extra $230,000 on COVID-19-related supplies for its buildings.
But while those COVID-19-related costs would be expected to disappear post-pandemic, some of the savings would be expected to continue if state employees continue to work from home.
“I think there could be significant savings,” said state Rep. Greg VanWoerkom, R-Norton Shores, who chairs the subcommittee at which Stibitz appeared and is pushing the state to perform the same analyses he said all businesses are having to perform in the changed environment.
But it’s not all good news.
Mahdi, the downtown Lansing deli owner, understands the reasoning for keeping employees home during the pandemic, but hopes it does not continue any longer than is necessary.
“Downtown is state-oriented,” he said. “When the offices are working from home, all of this has an impact on us.”
Lansing Mayor Andy Schor feels the same way.
On Feb. 3, Schor wrote Whitmer, saying that about 15% of downtown businesses have closed over the last year and up to 25% of downtown dining, retail, and entertainment-based businesses are threatened with extinction by dramatically reduced sales.
“We understand and fully support your decisions to keep state employees safe,” Schor said in the letter, also signed by Tim Daman, president and CEO of the Lansing Regional Chamber, and Cathleen Edgerly, executive director of Lansing Downtown, Inc.
However, “once state and local health department leaders deem it is safe to do so, we request that you ensure that state employees return to work in-person.”
Stibitz said he meets regularly with Schor and the impact on downtown will be among the issues considered as any decisions are made. A positive for Lansing is that while the state leases many buildings downtown, it also employs many downtown workers in buildings that are state-owned, he said.
In Detroit, the biggest state office complex, Cadillac Place on West Grand Boulevard in Midtown, is also state-owned. Still, the state leases more than two dozen other buildings in Detroit, both in Midtown and around the city, records show.
As for state employees, many initially viewed work-from-home with trepidation. Though views are not unanimous, most seem to have grown to appreciate it, said John DeTizio, labor relations director for the Michigan Association of Governmental Employees, which represents about 2,000 state managers, supervisors, and executive assistants.
“We are still surprised at how well it’s been working,” DeTizio said Wednesday.
“You would think you would have to be face to face to supervise these employees. But with Zoom meetings, what the heck is the difference?” he asked.
“A lot of members call and say there is truly no reason for me to go back to the office and pay for parking in Lansing or Detroit.”
But Sen. Curtis Hertel, D-East Lansing, whose constituents include large numbers of state employees, said projections of work-from-home continuing in a big way beyond the pandemic appear overblown to him.
“People in general like human contact,” and “I don’t think most people have enjoyed Zoom life,” he said.
“I think once we’re past this, I don’t think we’re headed into a 100% new tomorrow where most people are working from home.”