After years of shaping state budgets, overseeing human resources and working on tax reform, Minnesota Management and Budget Commissioner Myron Frans is leaving state government for a senior leadership post at the University of Minnesota. Jim Scho­walter, who previously held the job under former Gov. Mark Dayton, will return to the role as the state faces serious financial challenges. Frans' interview has been condensed.

The state made controversial cuts to its Corrections Department. Why cut there?

For Corrections and Department of Human Services and Department of Public Safety … even before COVID-19 we knew they were having some budget challenges. These are changes based on a structural deficit problem in their budgets.

We also do plan to have other agencies make cuts and modify their spending plans for this year. We needed to do both. We couldn't just do enough cuts in other agencies to make up for these other deficiencies in these 24/7 operations. We're in the process of gathering information from all the agencies about what can they do to control and reduce spending for 2021 to deal with the $2.3 billion deficit.

How do you foresee balancing spending cuts or tax increases with depleting reserves to handle a deficit?

One of the things [state agencies] can do is to cut agency budgets, which we're doing, and to make hiring freezes, salary savings, layoffs. We hope that there's some more money from the federal government.

That will be the challenge: How much of the $2.3 billion reserve do we have to draw down between now and when the Legislature comes back? We need to work with the Legislature to look at all the tools because you have new revenue, we have obviously budget reductions, we have program reductions. Also there are shifts [such as delaying school payments].

All of these things have to be on the table for the Legislature when they come back in 2021. Sometimes there are funds available; for example, U.S. Bank Stadium has funds available in the reserve that might be able to be used.

Republicans have asked for an updated budget forecast. Why wait until November?

It was really important that we look at the July 15 return date for income taxes and other taxes. Once that came in about where we thought, we felt confident we're on the right path and the next best time to do it is in November.

What unfinished priorities do you want Schowalter to take up?

You've got to figure out a way so that we have a bonding bill every year. We cannot postpone some of this asset preservation work. That supermajority [needed to pass a borrowing bill in the Legislature] makes it so, so hard. We've got to find some way to make it more sustainable.

The second thing would be continuing the racial justice and equity issues in hiring and the workforce. That is critical work. We're making progress and we've got to keep doing that and not let up.