Connecticut’s teachers may be better off with a 401(k) style, defined contribution retirement plan than under Connecticut’s massively underfunded pension system, according to some number crunching. Assuming a 6.5 percent employer match and adjusted for inflation, a defined contribution plan could yield similar retirement savings to that of the existing ...
Starting with UConn, State Employees Need More Realistic Contracts
Administrators at the University of Connecticut want the board of trustees to approve a new contract for non-teaching employees. The trustees should refuse and ask for a better deal, for students and for the people of Connecticut.
This year most state employees will negotiate a new wage contract. One bargaining unit, made up of state police, agreed on a contract last year. These contracts only cover the wage schedules and working conditions for state employees because healthcare and retirement benefits are handled separately on a statewide basis through a process known by the acronym SEBAC.
Gov. John Rowland notoriously signed a 20-year SEBAC agreement in 1997, committing the state to providing extravagant healthcare and pension benefits through 2017. One could perhaps chalk that up to the irrational exuberance that was all too common during the internet boom.
Busts follow booms as surely as day follows night and two busts later Gov. Dannel Malloy took over for Rowland’s caretaker successor, Gov. M. Jodi Rell.
With the state still suffering from the fallout of the Great Recession, Malloy sought concessions from the unions and enshrined the new arrangement – slightly less luxurious, though still without compare outside of government – in a five-year extension.
Cadillac health coverage for life and risk-free retirement funded by pensions have to be the backdrop for wage negotiations for state employees this year.
It is clear that the the UConn administration did not have this mindset. Non-teaching employees can expect a 2 percent raise next year, followed by 3.5 percent raises for the next four years.
The raises are made up of two components. The regular increase is 2 percent in the first year and 1 percent in each of the following four years. The second component is a trade to bring the employees up to a full 40-hour workweek. Right now these employees work 35-hour weeks. In every year of the contract after the first, the employees will work an extra 1.25 hours per week. In return, they will receive a 2.5 percent raise each each of those years.
Promising a 3.5 percent raise in fiscal year 2021 could, perhaps, be forgiven if UConn didn’t already pay competitive rates and offer “outstanding benefits” as it brags on its employment website. Many taxpayers will be troubled – although probably not surprised – that UConn employees don’t already work a full work week. Paying full-time employees more to get them to actually work a full 40 hours is nothing less than exasperating.
Each finalized union contract is important because other unions use them to support their case for raises. House Majority Leader Joe Aresimowicz, D-Berlin, told the Associated Press late last year that he already saw a “pattern” of raises emerging out of the one contract already signed.
Aresimowicz is well-placed to know about union contracts. He represents the people of his district part-time, but his full-time job is representing state employees who belong to AFSCME, a union and his employer.
The proposed contract also highlights a problem lawmakers could fix. The state charges UConn for pension and healthcare benefits for its employees. However, the charges are not based on things UConn control. For example, if UConn incentivizes an employee to retire early and then replaces that employee with a new employee who earns less, the state will charge UConn less for retirement benefits because the charge is a percentage of each employee’s salary. This arrangement would is not likely to save money, as the state has found with previous early retirement incentive programs.
This may be why UConn is adopting its own retirement incentive program in this new contract. The “phased retirement program” will allow employees to work half-time at half salary for up to three years while still earning full credit toward retirement for those years. This program will only add to burdensome long-term promises our state has already made to its employees, but for implementing it UConn will get credit for saving money.
The General Assembly leadership, which includes Aresimowicz, frequently declines to hold votes on union contracts, allowing them to be approved by default instead of a direct vote. This year, that practice should change. Lawmakers should demand that each union contract faces an up or down vote. The Malloy administration has asked for as much.
But the trustees shouldn’t even send this contract to lawmakers. It does not take into account the already significant compensation guaranteed to UConn employees in the form of retiree healthcare (before Medicare kicks in and supplementing it after) and pensions that only grow with each raise.
In-state UConn students are facing a 31-percent increase in tuition over the next four years. With their 17 percent increase in pay, at least UConn employees will be able to afford it.
Oh, nevermind, they already get free tuition for their children.
This article first appeared in the Lakeville Journal.
Over the past year, Connecticut’s Auditors of Public Accounts have found instances of workplace violence, benefits paid to deceased individuals, abuse of overtime, state agencies that violate both state policy and union contracts and “massive financial reporting errors” in Connecticut’s state agencies. According to state statute, the Government Administration and Elections ...