Report: Coming wave of state retirements could save Connecticut $900 million
The state could see between 5,000 and 6,000 retirements from executive branch agencies next year, and a new report to the governor says Connecticut could save between $600 million and $900 million in the reorganization that will follow the mass exodus.
That includes streamlining hiring and shrinking the workforce in some areas — a change that won’t happen easily.
Gov. Ned Lamont now has a list of actions he can take to deal with the surge of retirements expected on or immediately before June 30, 2022, when pension rules change. Boston Consulting Group, which the administration hired to come up with a plan to address the retirements, has identified about 200 ways to cut costs.
Many of them involve ways to modernize state government using technology, an initiative already underway in his administration.
“The world is changing rapidly, and our government needs to move more quickly to transform how we operate to have the greatest positive impact on people’s lives,” Lamont said in a written statement Wednesday announcing the report’s public release. “This report will help us do that.”
The consulting group, however, acknowledges upfront in its report citing “opportunities” to save money that many of its recommendations will be difficult to implement. They “require coordination across multiple agencies, legislative change, bargaining with state employees’ labor unions, investment in new technology, and more.”
A cursory look at the report by the State Employees Bargaining Agent Coalition, which represents the overwhelming majority of unionized state employees, yielded sharp criticism.
“In this historical moment, Connecticut’s elected leaders should be focused on mitigating the impacts of the pandemic on all people living in the state,” the coalition said in a written statement following the report’s release. “This includes expanding and strengthening services to support those in need and reversing the direction of an economy where we’ve watched the gap between the rich and poor expand significantly since the start of the pandemic.”
The coalition pushed back against the notion, presented in the report, that the possible loss of thousands of the state workforce’s most senior and experienced employees is an opportunity. “That opens the door to more austerity and further deep cuts to services, instead of acknowledging the very real challenges facing the state,” the coalition said.
Currently, the state has nearly 30,000 executive agency employees. More than 8,000 of them are eligible for retirement next year, with 72 percent saying they are seriously considering it. Thousands of employees of the state’s colleges and universities could also retire, but those areas were not covered in the BCG report.
Many employees cited the looming changes to state employee benefits, including to their health benefits and to the cost of living adjustments to pensions, as the reasons they want to retire. The changes, many of which take effect on July 1, 2022, are the result of a concessions deal made in 2017 between former Gov. Dannel P. Malloy and the state’s labor unions.
Malloy cut at least 3,000 executive agency jobs during his time as governor. The efforts to address the wave of retirements started while he was still in office with the legislature directing him to hire a national consultant to study the issue and make recommendations. That study was not funded.
With pension costs dominating the state budget, the Lamont administration saw the so-called “silver tsunami” as a chance to rein in spending and use technology to centralize many of the business functions of state government.
“The pandemic has opened a lot of people’s eyes to adopting new technology,” said Josh Geballe, the state’s chief operating officer and commissioner of the state Department of Administrative Services.
Take the transition of two-thirds of the state workforce to remote working, which essentially happened “over night last year,” Geballe said, a trend that could continue even after the state returns to a level of normalcy when the pandemic is over.
The report underlines teleworking as a significant way the state can save money by not renting or owning as much office space. Prior to the pandemic, labor unions did not favor teleworking, the report says, “limiting the number of days non-managers could telework and not allowing managers to telework altogether.”
Going forward, any changes to where state employees work would need to keep in mind those who handle highly confidential documents and need dedicated space to store them, the report says.
One area where jobs could be reduced is the Department of Correction, the report says, noting that Connecticut’s prison population has decreased by 40 percent over the past five years, but that the state’s number of authorized corrections officer positions does not reflect that reduction.
Lamont, in his current budget proposal, is already eyeing savings in this area with a proposal to close three of the state’s correctional facilities.
The report also recommends shifting more state services, such as social work and mental health, to private nonprofits, which have been stretched thin in recent years and even more so during pandemic as their workloads grew.
Independent of the report, the administration believes “a lot of the risk that we have with the significant number of retirements coming in the next year creates a lot of opportunities for employees,” including promotions, training to learn new skills, and helping the state find innovative ways to do business going forward, Geballe said.
The state is also identifying roles for which the compensation may be “off market,” to help recruit more people to those positions and make the salaries more competitive, Geballe said.
Geballe and Melissa McCaw, the governor’s budget director, will lead the effort to further analyze the report’s recommendations to determine which would be most feasible to implement. That effort will largely play out in budget negotiations between the administration and the legislature in the coming weeks.