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Effective Date: February 2, 2026 (see revision log for what changed on this date)

Guideline

The general recommendation is to use a 4% vacancy savings estimate when creating future year budgets. However, units need to develop a plan that works best for them and aligns to actual vacancy savings. Ìý

Vacancy savings refer to the unspent portion of a unit’s salary and benefit budget that results from temporary position vacancies —such as those created by employee turnover, retirements, delayed hiring, or leaves of absence. These savings are not guaranteed and must be managed strategically to either support current year’s planned spending or as part of an overall reserve strategy.

Key Details

• General fund vacancy savings should be considered during the budget planning phase. Ìý
• Units must balance the need for proactive budget deployment with the risk of overcommitting funds that may not materialize.
• Departments should consider selecting and implementing an appropriate vacancy savings strategy.
• Units remain responsible for balancing their actuals by year end and should monitor vacancy savings closely.

Planning Considerations - Three Approaches

Approach #1 - Future Year Budget Planning

General recommendation to use a 4% vacancy savings estimate when creating future year budgets. This approach involves estimating vacancy savings in advance—typically at 4%—and incorporating that estimate into the upcoming fiscal year’s budget. Units using this method plan for a salary and benefit roster that exceeds their actual budget, anticipating that temporary vacancies (due to turnover, retirements, or delayed hiring) will result in savings that offset the difference. The introduction of vacancy savings as part of your budget strategy increases the risk of budget overages and requires careful management by unit leadership.

Future Year Example:

• Department has a $10,000,000 continuing salary and benefit budget.
• Based on BFP's guidance and your internal analysis, determine any departmental turnover, retirements and employee events that cause vacant positions to yield temporary vacancy savings of 4%. Ìý
• Therefore, during budget planning, your department plans the roster (including vacant positions) to total $10,400,000.
• Throughout the year, vacancies are managed, and the timing of replacement hires brings total expenses back to $10,000,000.

Approach #2 - In Year Budget Planning

A unit may elect to conduct monthly reviews of its budget and vacancy status to maintain ongoing visibility into salary expenditures. This method is particularly suitable for departments with minimal staff turnover. Rather than estimating savings upfront, this approach focuses on tracking vacancy savings in real time. Monitoring the monthly budget and staffing status allows for the opportunity to identify actual savings and reallocate funds as needed.

In Year Example:

• An employee is earning $5,000 per month and has vacated a position. ÌýAssuming it will take two months to fill the vacancy, this leaves $10,000 in vacancy savings which can be utilized for one-time needs.

Approach #3 - End of Year Budget Planning

In this more conservative strategy, units do not assume any vacancy savings during the budget planning phase. Instead, they track actual underspend throughout the year and apply any realized savings at year-end. This approach does not assume savings upfront. Instead, it tracks and applies any actual underspend budget at the end of the fiscal year and should be paired with a plan to utilize reserves (see 5-Year Reserve Utilization Plan guidelines). Ìý

End of Year Example:

• Department has a $10,000,000 continuing salary and benefit budget.
• At year end, departments may have turnover, retirements and employee events that cause vacant positions to yield temporary vacancy savings of 4%. Ìý
• Therefore, $400,000 unused salary and benefit budget can be deployed instead of using reserves, to support items listed in your reserves spend plan.

FAQ for General Fund Vacancy Savings

While the examples provided aim to clarify an overview of the recommended approach to planning your vacancy savings, it may be best to reach out and talk through specifics for your unit.Ìý