Last month, the Connecticut Comptroller’s Office released its statutorily required report on savings generated by Gov. Dannel Malloy’s 2017 deal with the State Employees Bargaining Agent Coalition (SEBAC), which consists of 15 unions representing 45,000 plus state workers. Savings fell short of their $1.089 billion projection by $134.5 million for Fiscal Year 2022.
The report is a requirement that was part of the 2017 SEBAC Agreement to be published yearly “not later than December 1, 2018, and each December first thereafter, until and including December 1, 2027,” the statute says.
The agency had originally struggled complying with the statute — completing only two reports in the first four years — but is now in compliance with its yearly reporting.
The two main categories that failed to achieve promised savings were the negotiated wage freeze and savings from changes to pension calculations resulting in a $47.2 million and $134.2 million shortfall, respectively.
The Comptroller’s Office noted that the COVID-19 pandemic made it “particularly challenging to evaluate” certain items, like changes to active employee benefits due to the “underlying changes in health care utilization.”
The report also noted that calculating savings of “prior policy changes become more tenuous” as years go by. This is especially true for changes within complex systems like health care or pensions.”
Negotiated behind closed doors in 2017, then-Gov. Dannel Malloy struck a deal with SEBAC — which consists of 15 unions representing more than 45,000 state workers — at a time when the state faced a serious budget deficit. With the deal, the state was projected to save $24 billion over the 20 years mainly by freezing wages and changing employee healthcare benefits. In exchange for these “concessions,” employees enjoyed four years of layoff protections, received cash bonuses and were guaranteed step and wage increases in the fourth and fifth years of the contract.
SEBAC members also received an extension of their health and retirement benefits through 2027. Not a bad concession for saving the state money by forgoing raises they were not obligated to receive in the first place.
Gov. Malloy had originally forecasted the state would save $1.109 billion in Fiscal Year 2022, but according to the Comptroller’s latest report, the projected savings to the state was revised downward to $1.089 billion due to Medicare Advantage’s, the state retiree healthcare program, contract rebid in 2018. According to the Comptroller’s office, “It would not be appropriate to claim any ongoing savings.”
The first two years of the contract saw savings exceeding expectations by $128.6 million; however, the past three years’ actual savings missed the mark by roughly $440 million.
Expect more bad news in years to come as the report also states that, as we move closer to the 2027 savings accuracy “related to the agreement will grow less certain.”