The state Employment Development Department plans to begin cutting staff to address declining funding from the federal unemployment insurance program.
The Sacramento Bee reported Tuesday that EDD employees received a memo explaining that the department expects to have a $150 million shortfall through June 15.
The memo attributes the shortfall to federal underfunding of the unemployment insurance program and the federal budget cuts known as sequestration.
In the memo, Chief Deputy Director Sharon Hilliard encourages staff "to explore other employment opportunities" in EDD that do not rely on funding from the unemployment insurance program or with other agencies.
Spokeswoman Patti Roberts says the department cannot maintain staffing and services to keep up with demand. It already has reduced telephone service hours, moved staff to other programs and restricted overtime.