Deal With Unions Beats The Status Quo, But Should Have Done Much More
But It Disappoints: Union agreement contains some squishy savings, though it starts to bend the cost curve
The Hartford Courant
May 18, 2011
Given how powerful state employee unions are, Gov. Dannel P. Malloy's negotiators may have done the best they could to wring $1.6 billion in concessions to balance the state budget over the next two years. Unions would be wise to say yes to the deal reached late last week. They risk a public backlash and thousands of layoffs if they insist on sticking with the unaffordable benefits they've got.
This is not a perfect deal from either side. Some union members are vowing to vote no. Some taxpayers will note that the changes to pension and health care benefits are not nearly as tough as those in the private sector.
That said, the Malloy administration is trying to bend the state's cost curve long-term with this deal, not just get through this fiscal crisis. The question is whether it will achieve the savings it claims. And whether the Malloy administration could have done better.
The biggest savings in benefits, for example, come from a mandatory wellness program that will push state employees toward preventive health care and penalize those who resist. Preventive care is the right approach that will make people healthier and has been shown to save money. But the savings projected under this plan seem too ambitious — $204 million over two fiscal years, beginning July 1. Preventive care pays dividends, but there's not enough evidence to justify savings that big.
And how do you get $140 million in pension savings from a two-year wage freeze during the freeze?
There are things in the agreement for taxpayers to cheer about, notably the two-year wage freeze, which will save $448 million over two years. The blow to employees is softened by generous raises of 3 percent each year for three years afterward and continued step increases. Longtime employees who get "uncapped" longevity pay merely for staying at their jobs will miss only one payment — when they should not be getting any.
Also, in the small-victory department is a $35 co-pay for emergency room visits — not a large enough payment to dissuade some state employees from expensive, unnecessary visits, but surely better than nothing.
Mandatory mail-ordering for maintenance drugs will result in savings, as will raising co-pays on non-maintenance drugs. Why not raise them on maintenance drugs as well?
Where The Deal Disappoints
The agreement disappoints those of us who were hoping for more fundamental pension and health care changes.
Maybe it was too much to wish that overtime payments would be removed from the pension formula, and that there would be a cap on pensions, so that some state employees could not game the system and make more in retirement than they make while working.
Or that all employees, not just new ones (and not just employees retiring after 2022), would have to wait till age 63 to retire (with 25 years of service) or age 65 (with 10 years of service).
As for the governor's four-year no-layoff concession, we didn't like the two-year no-layoff agreement struck with Gov. M. Jodi Rell in 2009, and we don't like this one. It ties the governor's hands in a tenuous economy.
At the moment, however, this deal beats the status quo. It begins to move toward a more sustainable system. It also beats putting thousands of people on unemployment. The unions should ratify the agreement.
Reprinted with permission of the Hartford Courant.
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