Interest adds to taxpayer burden of $100 million union settlement
Payments awarded to state employees through a 2015 SEBAC settlement includes a 5 percent interest rate from the date of loss in 2003. Due to the size of the settlement and the number of claims to be processed some payments are delayed and will result in accruing more interest, adding to the financial burden taxpayers must cover.
The $100 million settlement being paid to current and former state employees that were laid off during the Gov. John Rowland administration has already resulted in an $18 million deficit in the attorney general’s budget.
Jaclyn Falkowski, spokeswoman for Attorney General George Jepsen,confirmed that the state negotiated a compromise of 5 percent interest. However, some payments are delayed due to the number of people involved . She said the attorney general’s office does not have an estimate for the cost of interest accrual due to delays.
Falkowski pointed out that the delay is due to prioritizing the largest claims first and having to evaluate each separate claim of loss by state employees. The settlement involves 2,799 people “each with an individual claim and circumstances in their employment history that have to be evaluated in order to determine what each person is eligible to receive.”
The attorney general’s office has “significantly increased” its number of staff to evaluate the claims, Falkowski said. “We are continuing to use our best efforts to process claims as quickly as possible while ensuring that awards are made both fairly and accurately.”
The settlement is the result of a 2003 lawsuit which claimed that Rowland unfairly targeted union employees during layoffs. The case was finally settled in 2015 when a federal appeals court ruled against Rowland and the legislature’s judiciary committee voted to accept the results.
The SEBAC settlement has already had an effect on the state’s deficit. The Office of Fiscal Analysis estimated a $54.3 million deficit for General Fund state agencies – $18 million of which was due to payments made as a result of the settlement.
The OFA estimates that the total deficit for 2018 will reach $1.2 billion.
Falkowski noted the attorney general’s office is trying to find ways to expedite the payments through working with a class counsel. “We are confident that we will be able to make a large number of awards in the near future using this new process.”