Tentative labor plan includes wage freezes, job protections

By SUSAN HAIGH Markets Associated Press

State employees could receive four years of job security if they agree to concessions such as a two-year hard wage freeze and higher insurance premiums and pension contributions that add up to an estimated $1.5 billion in savings over two years, according to summaries of a draft framework for a labor concession agreement being considered by labor leaders.

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Union officials still need to decide whether to present the proposal to rank-and-file members for consideration.

Copies of two summaries of the framework, the result of months of closed-door negotiations between Democratic Gov. Dannel P. Malloy's administration and the state employee union leaders, were obtained Monday by The Associated Press. Malloy has been seeking $700 million in labor savings in the new fiscal year beginning July 1 and an additional $870 million in the second year of the two-year budget.

A summary compiled by Malloy's administration calls the proposal "an historic agreement" that includes "significant reforms to wages, pensions and health benefits — including for retirees." But House Minority Leader Themis Klarides, a Republican, says the proposal "falls short of where we need to be."

Cutting state worker costs is considered crucial for covering the state's projected $2.3 billion deficit in the first year of the approximately $40 billion two-year budget. The second year is predicted to have a $2.7 billion deficit.

A closer look at the proposal:

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JOB SECURITY

Under the tentative plan, unionized state workers could receive four years of full job security, effective July 1, if they agree to the concessions. Any layoff notices that have already been issued would be rescinded.

One summary notes that the unions would be willing to discuss "voluntary alternatives" if there are state agency reorganizations. The summary comprised by Malloy's administration contends the proposal would provide the state with greater flexibility when handling major reorganizations.

In the 2011 labor concession agreement Malloy reached that runs until 2022, workers were promised two years of no layoffs in exchange for various givebacks, which included an employee wellness program and retirement changes.

This proposal would extend the health and benefits portion of that deal for an additional five years, until June 30, 2027, but with some changes. That could become a point of contention with legislative Republican lawmakers, who have voiced concern about extending that agreement.

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WAGES

Besides three furlough days, the proposed framework calls for a "hard freeze" in the first two years of the plan, retroactive to 2016.

In the third year, some workers could receive a $2,000 lump sum bonus but not a pay raise. The document from Malloy's office says those three years add up to $385.2 million in wage-related savings by the second year of the two-year budget.

In the fourth and fifth years, the proposal includes 3.5 percent general wage increases, plus the annual increments that some units receive. Units without annual increments would receive an additional 2 percent.

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BENEFITS

One summary indicates there are "no major health care design changes" in the proposal. Rather, it said, "substantial savings" is generated from proposals such as implementing a "standard formulary to prevent prescription drug price gouging."

The copay for unnecessary emergency room visits is increased from $75 to $250, while a copay will also be imposed for outpatient use of out-of-network labs. Increases in prescription drug copays are also increased, with generics doubling from $5 to $10 with some exceptions and non-generics increasing from $25 to $40.

Under the proposal, pension contributions for current employees would increase 1.5 percent, beginning July 1. An additional 0.5 percent pension contribution increase is also scheduled for July 1, 2019. That's on top of the current contribution, which can range from 2 percent to 5 percent.

The proposal also creates a new hybrid pension/401(k)-style retirement plan for new state employees.