Most Virginia agencies have yet to be impacted by the federal government shutdown, and federal programs such as Medicaid and Social Security have been unaffected.
But beginning Wednesday, the state is expected to furlough at least a dozen employees across several agencies as federal funding sources used to pay them has dried up.
That’s according to Secretary of Finance Stephen Cummings, who provided an update on Tuesday to the Senate Finance and Appropriations Committee at Tidewater Community College in Portsmouth.
In Virginia, 71 agencies use at least some federal funding sources to pay their employees. Federal funds account for approximately $11.5 million in weekly state agency payroll expenses, plus another $11.6 million in federal funds that goes toward payroll at colleges and universities. State agencies said in a survey response they had between two weeks and 90 days of funding availability. Those agencies have been instructed not to assume that they will be reimbursed by the federal government.
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More than 7,000 state employees, including about 400 contractors, who receive at least part their paychecks from the federal government could be impacted, Cummings said. The state employs more than 160,000 workers, according recent employment data report from Virginia Works.
“No employees have been placed into furlough,” Cummings said.
But, 15 to 20 employees across “a couple” agencies were told they would be furloughed Wednesday if no deal was reached. Cummings said he could not comment on which agencies were impacted because that had not yet been publicly released.
Wednesday marks the second week of the shutdown, and the first missed paycheck for federal workers.
“We actually think we’re in pretty good shape through the month of October to manage this,” Cummings said. “If it does extend well beyond that, then we’re going to have to be looking at some more difficult decisions on what do do and look at any available resources collectively on what we might use some of our excess resources to try to fill.”
Programs such as Medicaid and Social Security are unaffected by the shutdown, and education funding, including Title I funds, have been appropriated through the end of the school year. The Supplemental Nutrition Assistance Program benefits have been extended through October.
“Certain functions that had funding authorizations in place continue to operate, and to date the majority of the programs have been able to use prior year balances to continue most programmatic spending,” Cummings said.
Cummings said based on 2019 shutdown, the state general fund shouldn’t be impacted by the shutdown, assuming that federal workers receive backpay. That remains uncertain as the Trump administration has said that those workers are not guaranteed backpay after a shutdown.
Though Virginia revenues climbed 2.7% year over year in September, the commonwealth could be impacted by other factors. Bob McNab, chair of the Department of Economics at Old Dominion University, told state senators that both the U.S. economy and Virginia economy had slowed. McNab cited Workforce Adjustment and Retraining Notifications — or WARN notices — from health care provider Sentara, which announced layoffs and job cuts earlier this month.
“Those (layoffs) are likely to accelerate in the coming months as the impacts of the One Big, Beautiful Bill become more apparent on the health care environment, which providers now say is more challenging than it was before,” McNab said.
Kate Seltzer, 757-713-7881, kate.seltzer@virginiamedia.com
