Malloy Signs Tentative Concession Deal With State Unions

June 27--A deal with state unions that would save more than $1.5 billion in the next two fiscal years by requiring workers to pay higher health insurance premiums and co-pays in addition to creating a pension and 401(k)-style hybrid for new employees took a step forward Monday as the governor announced a tentative contract.

The deal is the final piece of a concessions package that state workers will vote on next month.

Malloy hailed the deal that will provide both short-term and long-term savings through the State Employee Bargaining Agent Coalition, known as SEBAC.

"Connecticut's state budget needs serious people willing to make serious change, and thus far, SEBAC has answered the call," Malloy said. "There are still several steps remaining, but it is truly a credit to our partners that the rhetoric surrounding the deal did not stifle their willingness to help."

The package will save an estimated $1.5 billion over the next two years, but Republicans say that is not enough because the state is facing projected deficits of nearly $5 billion over the next two years. The legislature must approve the deal, and the vote would be tight if all Republicans continue to voice their opposition.

On a website created for state employees, union officials urged rank-and-file members to vote "yes."

They said the deal meets the unions' three main objectives: protecting services, shielding most workers from layoffs for four years and extending health and retirement benefits for an additional five years, through 2027.

"It is clear that the gains our unions have made in the past are at significant risk," union leaders wrote on the union website. "These agreements provide a level of security for members, our families, co-workers and those we serve in a time of great uncertainty."

Malloy and the unions had already announced a broad framework that would provide $1.5 billion in concessions over the next two fiscal years. The latest update was the final piece in the negotiations.

Malloy, a Democrat who is not seeking re-election next year, says the current agreement is the best one possible, while Republicans say that more savings are needed to help plug the projected deficit.

In addition, Republicans question the agreement to extend the union deal to 2027. The current agreement ends in 2022, and the unions sought the extension.

Senate Republican Leader Len Fasano said he has concerns about both the four-year restriction on layoffs and the five-year extension, saying they could limit a future governor's ability to manage the state.

"For three years that new governor's hands are tied on structural changes," Fasano said. "So if you decide you're going to close prisons, if you decide you're going to make certain structural changes ... if you're running for governor, your platform has to be, 'For the first three years, I'm tied to a deal.' I don't know if that's fair."

The components of the package will save billions. In a sharp change from the past, the co-pay for visits to the hospital emergency room would be $250, up from the current $35. Before 2011, there was no emergency room co-pay for state employees.

Under the latest deal, the prescription drug co-pays would increase to $10 for most generic drugs, up from $5. The lowest-price drugs would remain at $5.

The tentative agreement also calls for a new Tier 4 for state employees that would provide a combination of a traditional pension and a 401(k)-style plan for new state employees. In addition, only 60 percent of an employee's overtime would be factored into the pension, rather than the current 100 percent. Republicans and conservative Democrats have been calling for years for a 401(k) plan, saying that state employee pensions are bloated and allow some retirees to receive more than $100,000 a year. The current system of pensions has commonly been blamed, in part, for the state's fiscal situation.

New state employees would pay for 15 percent of their insurance premiums, up from the current 12 percent. By the 2022 fiscal year, the average contribution would be 15 percent.

A summary of the agreement says the deal "comprehensively redesigns health care benefits for active employees and pre-65 retirees" that includes conversion to a prescription formulary for the first time in an effort to restrain the rising cost of prescription drugs.

House Speaker Joe Aresimowicz, a Democrat from Berlin, praised the deal. "We've all been on the same page from Day 1: $700 million [in savings] in year one, $800-plus million in year two and the long-term structural changes of billions of taxpayers dollars being saved is the area where we've all landed," he said.

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