The Middletown Press (Middletown, CT)
Sweetheart state deal is crippling
Connecticut is facing a onehalf billion dollar deficit in the two-year $41 billion budget Governor Malloy signed less than four months ago on Halloween. The actual trick, though, was played four months earlier when the Democrat-controlled Assembly ratified the Governor’s super-sweetheart deal with state employee unions, the SEBAC 2017 agreement.
Once SEBAC 2017 was inked, there was no way to balance the budget. Connecticut’s budget will never balance until state employee pay and benefits are scaled back dramatically.
SEBAC 2017 includes a wage agreement for five years — one retroactive — and a 10-year benefits agreement. Yes, for 10 years, employee benefits are untouchable.
Let’s focus just on the fiveyear part of the deal that will hit employees pay checks: wage provisions and deductions for employee contributions to fund their own benefits. To begin, a recent study by the American Enterprise Institute found that Connecticut is the only state where state employees have higher wages than private sector employees.
Malloy claims he’s achieved billions in wage savings from “painful” sacrifices made by employees. He claims “independent actuarial analyses found” the savings.
Hardly. According to the governor’s own summary of his deal, “Wages estimates were developed by OPM (Office of Policy and Management),” the governor’s own budget department, which is not independent, nor staffed by actuaries.
Moreover, that same summary says the savings were derived from “elimination of potential increases.” Savings from potential increases? That’s the stuff of fantasy.
State Sen. Len Suzio, R-Meriden, has analyzed the impact on the average employee, which shows exactly the opposite of Malloy’s yarn, namely continuing wage increases. The legislature’s non-partisan Office of Fiscal Analysis has reviewed and validated Suzio’s analysis.
The governor spun his tale of savings by pointing to three unpaid furlough days this year —worth $850 for the average employee — and a wage freeze for the first three years, followed by 3.5 percent wage increases in each of the next two years. Note that flat years followed by annual increases do not save anything.
But there’s more. Malloy failed to mention something called “step increases,” which are regular annual wage increases for every full-time employee. “Steps” average 3 percent, according to OFA. While they are suspended for the three-year wage freeze, they recommence in the fourth and fifth years. Wages will increase 6.5 percent in each of the final two years of the deal, or 13.6 percent compounded.
According to OFA, the average state employee made $74,000 last June. Four years later, he will be making over $84,000. Where’s the pain? Where are the savings?
Malloy skipped over the cash payments that employees are receiving. First, to soften the “hardship” of the wage freeze, SEBAC 2017 pays every employee a “one-time payment” of $2,000 to $2,850 in the third year. In effect, that cancels one of the three years of the wage freeze.
Then, there are annual “longevity payments” paid to longer serving employees every year, including the three years of the wage freeze. Employees with 10 to 15 years of service receive $1,000 and those with more than 15 get $2,000.
Most employees have served more than ten years. So, conservatively, half of employees will receive $5,000, bringing their cash receipts over the five years to more than $6,000, including the minimum $2,000 “one-time payment” and deducting $875 for unpaid furlough days. No “pain” here, and no savings.
Now, how about employee contributions to fund their own benefit programs? There’s a two-stage increase in their contribution to their pensions — 1.5 percent of salary next year, plus another 0.5 percent thereafter. So, deductions from employees’ paycheck will total between 2 percent to 4 percent in the fourth year and thereafter — paltry amounts compared to the 13.6 percent salary increase.
There are three 1 percent annual increases in employees’ share of their health care premiums, taking them from about 12 percent to 15 percent of the premium in the fifth year. Not much pain here. Not much savings either, with the state share declining only from 88 percent to 85 percent.
That’s it. There are no other adjustments to state employees’ paychecks.
But Malloy thinks he extracted sacrifice, so he must have traded something for it, right? Union negotiators don’t give something for nothing. Malloy gave the unions a four-year, no-layoff guarantee. So, the workforce cannot be downsized to save money.
When SEBAC 2017 took effect last summer, there were about 52,000 full time state employees and 16,000 part-timers, who receive retirement benefits. With about the same number in four years, and wages increasing, simple math tells us that there are no wage savings in the agreement.
Just the average $10,000 salary increase for full-timers will add roughly a half-billion dollars to the state payroll — just for their wages, excluding their benefits, and not counting any increases for part-time employees.
Malloy, the Democrats and their union cronies have played a cruel trick upon the citizens.