Pen to check choice of financial investments for secure not delayed retirement plan. Retirement finance concept.
Credit: Michael D Brown / Shutterstock
Alan Calandro

Most people who follow state government know that more than 25% of state employees could retire by June 30. This is due to upcoming changes that will reduce pension and health benefits. The budget for next year even includes $155 million in anticipated savings from these retirements.

When Governor Lamont took office, there was much talk about the enormous potential this could create for state operations. Unfortunately, the optimism on change has given way to age-old politics. 

Namely the symbiotic relationship between Democrats and state unions. Instead of seizing the opportunity to restructure and improve state operations, the governor has chosen to offer bonuses, pay raises and other incentives to keep current employees and recruit replacements. A recent report on the contents of the tentative deal revealed $3,500 in bonuses for some state employees and 2.5% salary increases for all unionized state employees for the current and next two fiscal years. 

State Republicans have criticized the bonuses and salary increases primarily based on the cost during this time of inflation for the public. Leaving aside the bonuses, 2.5% salary increases are not overly generous, especially considering the existence of high inflation and the lack of raises during tight budget years over the last 15 years. Nonetheless, they are right to criticize the deal – but mostly for the wrong reasons.

The deal is bad not because it is overgenerous, but because it will preserve the status quo. Overall government inefficiency is perhaps 50% due to outdated union culture in Connecticut. 

Union leaders tend to be old-school adherents to the same tiresome anti-management philosophy of the past 50 years. The rhetoric hasn’t changed much but the times have. Advancements in technology and globalization require the ability to adapt easily to constant change. In the days of worker abuse in the early 1900s, unions were extremely valuable. But in Connecticut in modern times they tend to be a drag on government efficiency. They do not encourage customer service or quality employee performance.

Too often, for unions, the customers are themselves rather than the public, which is why the state should be taking advantage of retirements by focusing on modernizing, reorganizing, retooling, and outsourcing as much as possible. The major advantage in choosing among hiring private employees/services is that change can be made quickly to accommodate the needs of customers. Not working well? Terminate the contract and find a better solution in the marketplace.

That cannot happen in the state union system. State employees know it can take 1½ years to terminate a problem union employee. Even obvious problem employees like those getting caught doing drugs on the job have union protections that defy logic. This creates a reverse incentive for managers to improve their workforce. The reward for taking on the hard work of improving their team’s performance is stress, aggravation, and accusations. The union propagated culture is one where managers are the enemy. As a result, state managers do not improve their management skills, avoid active managing, and confine their duties to signing timesheets. Managers complain about bad employees and employees complain about bad managers.

Union leaders need to be open to working in tandem with properly motivated managers. When this rarely happens, it works well and problems are solved quickly in the few places where it exists. Consider the viewing of pornography on a state computer at work. A good union leader recognizes that such an act requires immediate termination rather than a knee-jerk defensive reaction to activate union defenses. But this requires union leaders and managers to establish and maintain trusting working relationships. But there is little sign that this culture is even desirous of being pursued – probably because it is considered largely impossible.

Year after year thoughtful legislative proposals designed to achieve savings and close budget gaps or improve services are scrapped due to collective bargaining restrictions that delay any meaningful savings beyond the years being budgeted. Naturally, since legislators are primarily focused on solving the current budget, not much time is spent on long term planning, especially when legislators know an angry union representative or campaign donor awaits. And there is big money funding the 44,000 person state workforce – about $2.5 billion in salaries alone and that’s only in appropriated funds (which accounts for 64% of state controlled spending) and doesn’t include fringe benefits which range from 66% to 116% of salary costs depending on the type of employee (although these fringe benefit “cost recovery” rates are highly overstated due to the state’s legacy unfunded pension liability).

However, if state leaders are committed to unionized employees performing most of the work, there are compromises that can be made to improve the current approach. From the union side, flexibility in operations and delivery of services to customers has to be recognized as important – and supported. The rules allowing lengthy grievances and bumping rights need to be removed. The knowledge that a change can be made quickly would make all the difference in employee motivation. Employees do sometimes suffer wrongdoing by managers. But there are plenty of legal and other options for aggrieved employees, especially in this deep blue state, to pursue such as the Commission on Human Rights and Opportunities, which is known to be heavily employee biased. In the highly sensitive modern human resources governmental environment, terminating anyone, including those without union protections, is legally tenuous, cautious and often avoided.

Another compromise by unions should be to recognize that the age of defined benefit pensions is over. The state should convert to a defined contribution 401k plan like everywhere else. And the state should provide a matching amount at the average to upper levels of what the private sector offers in return. This would eliminate the unfunded pension liability problem going forward since the matching payments by the state would have to be funded annually as needed. These plans could be adjusted as necessary for special categories of employees such as hazardous duty employees.

On the state side, I have noted previously that universal medical care is a governmental necessity right behind providing justice. But short of that, the state should provide upper-tier health benefits (as it currently does). Any efforts to reduce health benefits should be abandoned. On the salary side, state salaries and raises should be tied to private-sector levels and firmly adhered to. There are firms that provide this information by metro regions, state, and the nation. In addition, the state needs to make a serious robust investment in training and staff development like corporations do. There is almost no professional development in the large state workforce currently beyond the cookie-cutter selection offered by the bureaucratic Department of Administrative Services. State employees do not feel valued and this would go a long way to improving morale, employee skills, and customer outcomes.

But alas, even with the above changes, governmental efficiency will never be considered as high as the best in the private sector for several reasons. 

First, private sector entities routinely engage in portraying their performance as better than it actually is. Their errors are mostly hidden. Plus, since the private sector is not a monolith who knows how well the “private sector” really performs.

Salary levels, raises, and bonuses are also mostly unseen which smooths the way to reward high-performing employees while avoiding employee griping and hits to morale that are common in the public sector. Bonuses are fairly routine in the private sector but the public would not approve of them as a performance incentive for public employees, which is understandable given that bonuses are usually tied to profitability.

The vast majority of the public will find fault with spending anything “extra” on government employees, which is why real staff development funding is almost nonexistent in the state.

This boils down to another vicious cycle: the public thinks the government doesn’t perform well and therefore they should not get more funding. The government doesn’t get more funding to keep up with the necessary changes happening in the world (especially technology) and therefore it underperforms. And so the repetition continues without signs that it will change.

Alan Calandro

Alan Calandro is a life-long unaffiliated voter and former director of the legislature’s nonpartisan Office of Fiscal Analysis.

The views, opinions, positions, or strategies expressed by the author are theirs alone, and do not necessarily reflect the views, opinions, or positions of or any of the author's other employers.