HARTFORD, CT— Gov. Dannel P. Malloy and the state labor unions are close to reaching a five-year deal that would freeze wages over the next three years, require employees to contribute more to their pension and healthcare benefits, and reduce cost-of-living increases for retirees.
The framework, according to documents obtained by CTNewsJunkie.com, would save $1.5 billion over the next two years, but it does not offer state employees protection against layoffs.
The second to last page of the document says it “avoids the need for mass layoffs,” but does not offer blanket layoff protection.
The framework “provides the state greater flexibility than has been provided in previous agreements to work with individual collective bargaining units regarding major reorganizations,” the document states.
Though it first must be agreed to by the State Employees Bargaining Agent Coalition leadership and membership, the deal also would require state employees to take three furlough days before the end of 2018.
The first three years of the deal would save the state about $385.2 million in wages. In 2020 and 2021, state employees would be rewarded with 3.5 percent wage increases.
Including the reduced health and pension benefits, overall the savings would amount to $712.6 million in 2018 and $849.4 million in 2019.
The three consecutive “hard zeros” — meaning no wage increases at all, no scheduled step increases or longevity payments — represents a first for the unions. No more than two consecutive years of hard zeros had ever been negotiated in the past, according to a 14-page Power Point detailing the framework of the deal.
The proposal also creates a new pension tier that would be a hybrid of a 401k type plan and a defined benefit plan. The new Tier IV plan would cap the defined benefit at 60 percent and require the employee to contribute 5 percent. The 401k part of the plan would require the state to match 1 percent of an employee’s pay in a defined retirement account. Employees must also contribute 1 percent of their pay to that portion of the plan.
Employee contributions to their pensions in 2017 would increase by 1.5 percent of their pay for all tiers. In 2019, the employee contribution increases again, by an additional 0.5 percent, for all current tiers.
The plan also changes the pension payments for state employees in retirement.
Employees who retire after July 1, 2022, will forego about 18 months of cost-of-living adjustment increases after they retire and the new retirements will no longer receive a 2 percent increase per year. Instead, they will be tied to the Consumer Price Index.
As far as health benefits are concerned, the cost of going to the Emergency Room will increase more than 700 percent from $35 to $250. The cost of generic drugs also will double from $5 to $10 in most cases and non-generic drugs will increase from $25 to $40.
New employees also will be asked to contribute more to their health insurance. New employees will share 15 percent of the premiums and premiums for existing employees will increase 1 percent for each of the next three years starting in 2020 — increasing the contribution from 12 percent to 15 percent.
The health plan also moves current retirees over the age of 65 to a Medicare Advantage Plan and increases the retirees’ share of Medicare Part B. Currently, the state pays the full cost. The plan also requires new retirees to increase their healthcare contribution by 1.5 percent in October 1, 2017, and employees who retire after June 30, 2022, will have to contribute an additional 5 percent.
The most controversial piece of the deal may be the extension of the health and pension portion of the agreement for another five years until 2027. The current deal Malloy struck with the unions back in 2011 is not expected to expire until 2022. And that deal was an extension of the one former Gov. John G. Rowland inked with the unions back in 1997.
By pushing the deal back to 2027, labor would not have to negotiate for another nine years, which means they could sit out the next two gubernatorial terms.
House Minority Leader Themis Klarides, R-Derby, pounced on the decision to extend the deal five more years.
“Committing taxpayers, future governors and the next five legislatures to paying for fringe benefits that are unseen anywhere else but in state government — and a pension system that is collapsing around us as we speak — is unfathomable,” Klarides said. “After months of negotiations, this proposed deal falls short of where we need to be.”
Klarides said Republican legislative leaders were briefed on the details of the deal Monday afternoon.
The savings do not justify extending the unaffordable pension and healthcare benefits five years to 2027 without substantial changes in how Connecticut pays for them, she said.
A spokesman for AFSCME Council 4, which represents the largest number of state employees, said Monday that no deal has been reached.
A spokeswoman for the Malloy administration also said there was no agreement and declined further comment.