HARTFORD, CT —Facing criticism following a concession package he negotiated with the state employee workforce in 2011, Gov. Dannel P. Malloy obtained an actuarial analysis for the tentative framework his administration reached last month for the latest deal.
The analysis by Cavanaugh MacDonald Consulting and Segal Consulting found the plan that still needs to be ratified by the rank-and-file union members provides $700.9 million in savings in the first year and $868.6 million in the second year for a cumulative savings of $1.569 billion over the next two fiscal years.
“The materials affirm that the proposed structural reforms to pension and benefit costs will result in billions in savings to the state, obtaining significant annual savings for taxpayers over each of the next twenty years,” Malloy said in a press release.
It’s estimated to save nearly $5 billion in the first five years, and $24 billion over the next 20 years. The contract for health and pension benefits would be extended another five years from 2022 to 2027.
“Our state’s employee unions came to the table, entered discussions in good faith, and arrived at an ambitious framework that achieves significant long-term savings,” Malloy said.” Should this agreement be adopted, it will deliver substantial structural reforms that will produce billions in savings for our taxpayers while continuing to provide for essential government services.”
The individual bargaining groups are expected to vote on the contract over the next few weeks. Voting could go well into July.
Union officials declined to comment on the analysis Tuesday.
The workers’ agreement provides for wage freezes that save $716.4 million over the biennium and nearly $500 million per year thereafter, according to the analysis.
The analysis sought by Malloy also showed that proposed pension changes will save the state $210 million in fiscal year 2018 and $238 million in fiscal year 2019.
It determined over the course of the deal the amount the state would have to contribute would decline by $400 to $500 million per year.
Proposed health changes will save $136 million in the first two years, but both the premium cost sharing and formulary changes increase those savings to well over $100 million per year into the late 2020s and early 2030s, according to the analysis
Retirement savings, according to the analysis, will eclipse $200 million per year in the 2020s as retirees move to the Medicare Advantage program.
Malloy said an added benefit of the deal is at least a quarter of our workforce is likely going to retire before the existing State Employee Bargaining Agent Coalition agreement ends, allowing the state to change the benefits structure five years sooner, meaning there will be more than 10,000 employees with the new Tier IV pensions on July 1, 2022.
This attrition will save the state almost $77 million in the first two years, with the savings increasing to $97 million annually by 2037, according to Malloy.
House Minority Leader Themis Klarides, R-Derby, said she appreciated the work.
“We appreciate the governor’s attempts to validate the savings he hopes to derive through the professional assessments he has provided,” Klarides said. “The report presents a rosier picture than we have seen to this point.”
She added that a previous SEBAC agreement hatched in 2011 failed to live up to its promises.
Senate Republican President Len Fasano, R-North Haven, has argued that the state would save more money if they made changes to the health and pension benefits of state employees through statute, instead of allowing them to be collectively bargained by the unions and the governor.
Jack Kramer contributed to this report.