For years union leaders agreed to underfund the state’s public pension funds in exchange for perks offered up by whoever the governor was at the time — whether the perks were increased pay, greater job security, or an early retirement scheme.
As payments for retiree pensions and healthcare eat up a higher and higher portion of the state’s budget, the union’s chief negotiator would like you to believe the blame for our sky-high pension debt should be laid at the feet of governors, especially Gov. John G. Rowland.
Earlier this week, Daniel Livingston blamed Rowland for instituting a payment system in 1997, which led to payments that started small and grew over time as the budget grew.
But Livingston needs to take another look at the 1997 SEBAC 5 agreement that instituted the “level percent of payroll” funding method — because he’ll find his own signature attached to the bottom.
Union leaders also make up half of the Retirement Commission, which determines how much the state should put toward public employee pensions every year. It is in this commission that the political maneuvering has occurred — trades that have left Connecticut’s taxpayers with an exorbitant bill.
Those negotiations were described to me this week by Linda Yelmini, whose signature is also at the bottom of the 1997 agreement. Yelmini is the recently fired head of the Office of Labor Relations.
Yelmini said that after the unions and “management” — representatives of the current governor — come to an agreed-upon amount to pay into the fund, the legislature is asked to approve the figure. Yelmini said to her recollection the legislature has never refused to pay the asked-for amount.
As I spoke to Yelmini I was struck by two things — her encyclopedic knowledge of the state employee contracts and the history leading to their adoption, and her straightforwardness. She spoke as plainly about her firing as she did about how the state government goes about its business.
No one knows at this point why Yelmini was fired, least of all Yelmini. The governor’s office has released various evasive answers — saying Yelmini’s office was being “reorganized” and that she would be replaced by a “political appointee.”
As well as her institutional memory, Yelmini is also known as a tough negotiator and as a strict enforcer of the state’s rules and regulations for public employees. Is that why Yelmini was fired?
Yelmini said she believes the union leaders were being truthful when they told her they didn’t have anything to do with her firing. But she also said putting a political appointee in charge of her office is the wrong move.
Having a high-level civil service employee — a person who can work for governors of various political stripes — provides continuity, and stops the government from repeating mistakes, she said. A political appointee would only serve so long as the governor who installed him or her stayed in office.
It was never up to Yelmini to make the big policy decisions — like how much salaries would go up, or how much the state paid into the pension accounts — but she did get to enforce the rules once they were made. Her tough enforcement may have ultimately been what got her fired, but the cause of her termination will likely remain a mystery.
Unless, of course, Gov. Dannel P. Malloy and OPM Secretary Ben Barnes tip their hand by appointing someone hand-picked by state employee labor union leaders. If that happens, the state’s taxpayers will be the losers.
Contrast that with Yelmini, who said that she’s “always believed that my ultimate clients are the taxpayers of Connecticut.”
Malloy, who seems increasingly beholden to special interest groups, cannot say the same thing.
As the pension debt puts more and more pressure on the state budget, there are now calls from the left — including Livingston — to change the state’s spending cap. It’s the cap, they claim, that’s the problem — not the years of overspending, adding debt, and living beyond our means.
But look at the numbers — our budget has grown twice as fast as inflation over the past two decades. And according to a report issued last year by the Connecticut Business and Industry Association, since 1992 state spending for retiree health benefits has increased by 981 percent, while state employee pension costs have gone up 583 percent.
Of course this is unsustainable. But putting aside the unions’ desire for the state to tax and spend more, what other recourse do we have?
According to a recent report issued by the Connecticut Policy Institute, the state doesn’t have many legal avenues it can pursue with regard to current retirees or employees who’ve already vested in their pensions. Most state employees “vest,” or are promised a pension, after 10 years of employment.
Ben Zimmer, CPI’s executive director, said that means the mounting pension debt will cause problems for two groups of people — taxpayers, who are on the hook to pay off this debt, and younger state employees who haven’t vested yet, and are still vulnerable to changes made to the pension system, or who may find there is no money left for them in the funds.
Maybe, since it was the union leaders who helped get us to this point, the unions should also bear some of the burden. Perhaps they can funnel the millions they’ve been spending on campaign contributions into the pension funds instead.
Better yet, they can renegotiate the lopsided contracts now in place, and give Connecticut’s taxpayers some relief by putting on the table things like cost of living adjustments for retirees who earn pensions over $50,000.
Something is going to have to be done, and hopefully Malloy will have the political will to do it. If not, pension payments will start to squeeze out all of the other things the state spends money on, like roads and schools and healthcare for the poor.
That’s already starting to happen. It’s all part of our “permanent fiscal crisis.” But beware the calls to lift the budget cap — because lifting the cap will also mean higher taxes.
Suzanne Bates is the policy director for the Yankee Institute for Public Policy. She lives in South Windsor with her family. Follow her on Twitter @suzebates.
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