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Rell, Unions Have Plan To Reduce Labor Costs


April 07, 2009

State employee unions and Gov. M. Jodi Rell said Monday that they've "worked out the framework for an agreement" that would reduce labor-related costs by $637 million during the next two budget years beginning July 1, partly through a retirement incentive package.

Under the proposed agreement:

•The unions would make wage concessions, but Rell's office would grant a two-year no-layoff period protecting most state employees.

•The Rell administration would have the right to make government reorganization moves, but, in general, employees whose jobs are cut by such decisions would be offered other positions. Those positions would open up because the retirement incentives would result in an estimated 3,000 departures from the state's workforce of 50,000.

"The framework … provides job security for permanent employees during the upcoming [two-year period], as well as the flexibility needed to make organizational changes," Rell's office and the State Employee Bargaining Agent Coalition, known as SEBAC, said in a joint statement.

The unions originally sought a three-year no-layoff provision, sources said.Agreement on union concessions has been viewed as one of the keys to allowing Rell and legislators to close a budget gap that has been estimated at $8.7 billion over the next two years.

Both sides agreed not to make public comments beyond the joint statement.

But in an internal memo Monday obtained by The Courant, Linda Yelmini, the state's director of labor relations, wrote: "It is anticipated that there will be meetings with union leadership over the next several days to attempt to resolve individual bargaining unit issues. SEBAC has scheduled a meeting on April 15 ... to take a vote on the agreement. The agreement will then go out for voting by the union membership."

Over the next week, officials plan to reduce the general framework of the agreement into specific and detailed language that state employee unions could vote on.

Under SEBAC rules, health care and retirement provisions require 80 percent votes of approval by 12 of the 13 constituent unions.

Other contract provisions require only simple majority votes by individual unions; no information was released about how many unions need to approve non-health and non-pension provisions.

General Assembly approval would also be needed.

Although officials gave no details Monday, the joint statement was consistent with key points in negotiation documents obtained by The Courant last week and reported on Saturday.

For example, the documents showed that as of last week — before whatever changes in position may have developed since then — the two sides were talking about concessions amounting to almost exactly the same $637 million announced Monday.

The joint Rell-SEBAC statement issued Monday said that "the proposed agreement includes a Retirement Incentive Program, in addition to changes in health insurance and wages."

One of the documents obtained last week was titled "recommended agreement on financial issues" and said the "proposed agreement" would include wages, health-care benefits, furlough days and a retirement incentive plan.

The negotiation documents obtained last week went on to mention $226.5 million in wage concessions over the next two fiscal years. That includes a "hard freeze" for 21 bargaining units in the first year of the two-year budget — meaning no general wage increases, annual increments or bonuses.

The second-biggest item was the retirement incentive plan covering state employees at least 55 years old and having 10 years of service. Hazardous-duty employees, such as state troopers, need not be 55 but must have 20 years of service, the documents said.

The documents stated that the retirement incentive program would save $101 million in the first year and $93 million in the second year, for a total of $194 million.

A four-page summary in the documents obtained last week titled "Retirement Incentive Program 2009" states that employees who are eligible for the plan "shall have up to three years of service" added to their total for calculating their pensions. It was the same for those in the Teachers Retirement System.

The combination of the wage concessions and retirement plan would account for about two-thirds of the savings package outlined in the documents.

The documents showed $38 million in savings from prescription drug co-pay increases to $5 for generic drugs, $10 for those on the formulary and $25 for other brand-name drugs. The proposal envisioned a "heightened level of mandatory generic substitution."

About $43 million would be saved over two years through premium cost-sharing, effective July 1, the documents said. In addition, three unpaid furlough days would be taken in each of the next two fiscal years, saving almost $60 million.

Among the remaining $70 million or so in savings mentioned in the documents was the deferral of payments, including $50 million to the State Employees Retirement System.

While state officials stressed that one of the documents was not the state's last best offer, the document stated that the deal "does not prevent the state from restructuring and eliminating positions provided those affected bump or transfer to another comparable job." It continued: "SEBAC [would] agree to enhanced provisions for flexibility in transferring employees whose positions are eliminated."

Monday's joint Rell-SEBAC statement concluded: "Details of the agreement are still being discussed, including translating its job security provisions to the particular circumstances of the Judicial Branch and higher education institutions. ... While the parties expressed optimism ... they cautioned that more work remains to be done, and that any agreement ultimately must be presented to union membership for ratification, and to the General Assembly for approval."

Reprinted with permission of the Hartford Courant. To view other stories on this topic, search the Hartford Courant Archives at http://www.courant.com/archives.
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