The Connecticut Comptroller’s Office (OSC) released its annual SEBAC 2017 Savings Report on Thursday (Feb. 13), revealing that the much-hyped savings from Gov. Dannel Malloy’s 2017 deal with the State Employees Bargaining Agent Coalition (SEBAC) have failed to live up to expectations.
In Fiscal Year 2024, the savings fell $26 million short of the $1.14 billion projection. Initially, the contract was presented as a solution to Connecticut’s budget crisis, with SEBAC agreeing to a freeze in state employee wages, changes to pension calculations, and tweaks to employee healthcare benefits. In return, the state would save $24 billion over the next two decades.
However, the unions made out far better than they led on and far better than taxpayers. SEBAC members secured a four-year no-layoff guarantee, cash bonuses, guaranteed pay raises in the last two years of the contract, and an extension of their already generous health and retirement benefits through 2027.
Despite the fanfare, most of what SEBAC claimed to sacrifice wasn’t real. In other words, skipping pay raises — raises that were never contractually guaranteed — were billed as a concession, but it didn’t cost union members anything tangible. This sleight of hand allowed SEBAC to claim savings on paper while locking in benefits for years to come, leaving Connecticut taxpayers to pick up the tab.
The report breaks down the fairy tale savings into several categories and the numbers expose a shocking failure. The wage freeze, touted as a major cost-saving measure, was expected to save $491.6 million in Fiscal Year 2024. Instead, it fell short, delivering just $468.7 million — a nearly $23 million gap.
This isn’t an isolated incident, either. Savings from the wage freeze have only met or exceeded projections once, back in 2018, when it came in $92 million over expectations. Since then, it’s been a steady trend of underperformance. Year to date, the total savings were projected at $3.226 billion, but the actual figure fell $208 million short, coming in at just $3.018 billion. These imaginary savings highlight one of many failures of the 2017 deal.
Even more disappointing than the overhyped wage freeze savings are the alleged savings from adjustments to pension fund calculations.
One of these changes forced retirees to wait longer for their first Cost-of-Living Adjustment (COLA) raise, increasing the wait from 18 months to 30 months. Another adjustment reworked the formula for COLA raises. Before the deal, retirees received an automatic minimum 2% COLA increase, but the 2017 agreement capped these raises at 2% for employees retiring after July 2022.
These adjustments were projected to deliver $1.85 billion through Fiscal Year 2024. However, like much of the agreement, these promises fell dramatically short by nearly $600 million. For Fiscal Year 2024 alone, the projected savings of $305 million were a far cry from reality, with actual savings amounting to just $159 million — barely half of what was promised.
Leaving a portion of positions unfilled from Fiscal Year 2018 and 2019, retirements were also meant to be major cost-saving measure. They were projected to save $411 million through Fiscal Year 2024. However, like so many other promises in the SEBAC deal, it missed the mark, delivering just $381 million — $30 million less than expected.
Amid the many failures of the 2017 SEBAC deal, only one category exceeded expectations: switching retired employees to Medicare Advantage. This purely administrative change was projected to save $159 million in Fiscal Year 2024 but delivered $356 million instead. Since the deal’s inception, the Medicare Advantage shift has saved a total of $527 million, standing out as one of the rare bright spots in an otherwise disastrous agreement for the state.
While the Medicare Advantage success is an outlier, the annual report as a whole tells a different story and highlights SEBAC’s knack for spinning failed outcomes into supposed “sacrifices.”
Time and again, SEBAC has framed routine business, like delaying raises that were never guaranteed in the first place, as significant concessions. This strategy allows them to play the victim and appear cooperative while securing long-term perks for its members, leaving taxpayers to foot the bill for benefits that far exceed what most private-sector employees could ever hope to receive.
In fact, SEBAC’s Chief Negotiator Dan Livingston has been running the same tired playbook since the 2017 contract was approved. According to transcripts from Appropriations Committee hearings, he has repeatedly pointed to the 2017 deal leaning on buzzwords like “sacrifice” and “concessions” to justify raises and bonuses for union members.
However, SEBAC is currently in talks with the governor’s office pushing for more pay hikes in 2025 and 2026. Unsurprisingly, they’re also renegotiating healthcare and retirement contracts well ahead of their June 2027 expiration date.
It’s no wonder there was an effort to scrap the yearly requirement for this report, which, by law, must be completed annually through the end of Fiscal Year 2027.
The report tears apart SEBAC’s narrative in negotiations that its members deserve massive raises because of the “savings” from their supposed sacrifices.
What’s often overlooked is the reality that it’s taxpayers — not SEBAC — who have been making real concessions for nearly a decade. While state employees have enjoyed guaranteed pay raises and Platinum-level healthcare plans, taxpayers have been burdened by decades of mismanagement in the state’s pension fund.
Gov. Ned Lamont’s term ends on Jan. 6, 2027, and while he has yet to formally announce his plans, there are hints he may seek another term. The real question is whether he’ll cave to SEBAC’s demands yet again in exchange for union-backed campaign support, or if he’ll finally stand up for Connecticut taxpayers. If Gov. Lamont wants to show he’s serious about the state’s financial future, he needs to stop capitulating to SEBAC and start demanding more from the union. A wage freeze and meaningful reforms to pensions and healthcare benefits are long overdue. Taxpayers have made concessions and sacrifices long enough — they shouldn’t have to continue taking a backseat to union interests.
