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Agreement Anticipates 1,000 Retirements

by Christine Stuart | May 17, 2011 11:51am
(17) Comments | Commenting has expired
Posted to: Labor, State Budget

Christine Stuart photo

Mark Ojakian, deputy secretary at the Office of Policy and Management

(Updated 4:03 p.m.) Mark Ojakian, the deputy secretary of the Office of Policy and Management, said the tentative labor agreement he negotiated with the State Employees Bargaining Agent Coalition assumes about 1,000 employees will retire early and save the state $65 million a year.

Gov. Dannel P. Malloy was adamant he was not going to offer an early retirement package to state employees knowing the impact it would have on the state’s unfunded pension liability, but the agreement awaiting ratification by the unions does offer an incentive to get out of state service before Sept. 1.

“When you retire early right now there’s a 3 percent reduction in your benefits. We changed that to 6 percent,” Ojakian said.

He said they offered up Sept. 1 as the deadline to make a retirement decision because they wanted to give employees some time to think about what implications the change in benefits will have on their future. The 1,000 employees expected to take retirement won’t be replaced which is where the $65 million in savings comes from. Over two years it’s 2,000 employees, which is still less than the more than 3,500 that took the early retirement incentive in 2009.

SEBAC, which negotiates on behalf of all of the state’s labor unions, fought against former Gov. M. Jodi Rell’s early retirement proposal in 2010 to save $65 million. The union estimated that $65 million savings would be eaten up and end up costing the state $1.2 billion down the road.

Roy Occhiogrosso, Malloy’s senior communications adviser, said these changes are not considered an early retirement because they’re not offering a cash benefit to employees to retire. He said this increase in penalty from three to six percent is “not even close to that.”

The Malloy administration maintained that early retirement packages such as the one offered by Rell in 2009 and the four others offered in 2003, 1997, 1992, and 1989 are fiscal gimmicks, which won’t help the state in the long run.

With most early retirement packages the short term reduction in salaries of early retirements are offset by larger losses in pension savings and healthcare costs for retirees.

Occhiogrosso said that’s not the case when all the other proposed changes in the SEBAC agreement are considered, such the change which requires all employees to contribute three percent to retiree health care benefits. That change is expected to help reduce the $20 billion unfunded liability in that account.

House Minority Leader Lawrence Cafero, R-Norwalk, said this may not be a typical early retirement package because it doesn’t offer incentives to exit state service, but it seems to run contrary to what Malloy has said in the past.

Cafero said the entire agreement is smoke and mirrors. Cafero laughed at the notion that an “employee suggestion box” will save the state $90 million a year and finds it hard to believe making employees healthier will save $205 million over two years. He said the agreement is full of “false assumptions and gimmicks.”

“It makes you scratch your head on so many levels,” Cafero said.

“It makes you scratch your head on so many levels,” Cafero said. “He makes Jodi Rell look like Donald Trump.”

Cafero said he was talking about Trump’s well-known negotiating abilities.

But union leadership believes it’s a fair agreement. There are always employees that are counting on a retirement incentive program and may be looking forward to one, but “we don’t believe people are going to be frightened out by this package,” Daniel Livingston, SEBAC’s chief negotiator said Tuesday afternoon.

“We think in the long run this package is good for state workers and good for the taxpayers,” Livingston said. “There are lots of people who are going to stay and provide people services that they need.”

He said the union is encouraging people to stay and whether they do or not depends on their expectations and their own personal situations. Some have said the guaranteed 2 percent cost of living increase which comes with retiring before Sept. 1 may also be an incentive for some employees to leave.

Livingston said the unions did not come up with the numbers and those estimates were handled by the Malloy administration. “We trust their numbers,” he said.

“I think the state employees have given back a significant amount in this agreement. Is it everything that we had hoped for, No. Is it a fair compromise? Absolutely,” Ojakian said.

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(17) Comments

posted by: DrHunterSThompson | May 17, 2011  12:28pm

DrHunterSThompson

This deal has no chance to pass. It is asking for everything and giving nothing in return.

posted by: WhiskeyTangoFoxtrot | May 17, 2011  12:51pm

WhiskeyTangoFoxtrot

Probably a lot of older workers hanging around already. Sounds like this agreement will just increase that…..GREAT.

Another thing to complain about down the road when interacting with state offices. Having some pissed off older worker who should have retired 10 years earlier, let alone adding another 3 to that, trying to work at a snails pace.

posted by: MichaelThoughts | May 17, 2011  1:50pm

Let’s be clear (I have seen misreports of this already). There is no early retirement incentive package in the agreement. There is a disincentive to retire early unless you do it by September. These are two VERY different things. I hope you will be clear about this Christine so the facts do not become distorted.

posted by: jonpelto | May 17, 2011  2:07pm

These are some of the best quotes in modern state history.  No retirement incentive?

The Malloy People are being more than a little coy and misleading. 

There is a HUGE “retirement incentive”.  It isn’t the penalty.  The new and mandatory draconian managed care system for state employees also applies to retirees who retire after 9/2/11. 

In addition, the significant change to the Cost of Living Adjustment for retirees also takes place for individuals who retire after 9/2/11.

People will be lined up to retire once they figure this out…

And those who don’t grab that window will certainly bail on the 2nd “retirment incentive” (if they can) when the 3% wage cut takes effect on 7/1/13… that’s the 7 furlough days that you have to show up in order not to get paid.

No there isn’t one retirement incentive in this plan, there are two and this plan (1) will sweep out anyone with long term experience and (2) put far greater and more immediate pressure on the pension fund.

Question for the Malloy people.  Do you really not understand what is in this place or are you purposely misleading the media (and employees).

posted by: Noteworthy | May 17, 2011  2:17pm

Just as I thought and predicted, this agreement will not save $1.6 billion. It is chuck full of gimmicks and assumptions with numbers, and it is doubtful much if any of them will achieve anything close to what the governor said he would achieve. I would have been happier to whack 5,000 employees than pretend this gimmick driven agreement with no layoffs is good for taxpayers. This means that taxpayers are in fact, being hosed and are being lied to about how much they are paying to cover the defict vs. actual reductions in spending. It’s a scam. In the end, our nearly $3 billion in tax increases is what is towing the bloated, wasteful nearly useless state government. Shame on Malloy for lying and shrouding what’s really going on.

posted by: Disgruntled | May 17, 2011  4:22pm

Hmmmm…I wonder if Dan passed out any packages before he left Stamford?
Hmmmm…I betcha you could find one or two if you looked hard enough,beyond all the raises he gave away as he directed his attention to free housing up in Hartford.

posted by: DrHunterSThompson | May 17, 2011  4:50pm

DrHunterSThompson

Noteworthy: don’t worry, you will get your 5000 heads. This deal is DOA.

HST

posted by: NOW What? | May 17, 2011  5:35pm

I’ve read through the agreement and I think it looks pretty good for both taxpayers and State employees, ESPECIALLY considering current economic and political situations.

The “Value Health” modifications are actually GOOD, and help to keep employees’ and the State’s premium costs down. As far as these new provisions go -

At *LEAST* 99.99% of all State employees and retirees are ALREADY doing ALL of this stuff ANYWAY! I don’t know ANYONE who has health and dental insurance who HASN’T been getting a colonoscopy every 5 years, their b/p and cholesterol checked 2xs/yr, mammograms, PAP smears, dental visits at *least* 2xs/yr, etc. Only an IDIOT *wouldn’t* do these things and whatever else their own doctor(s) tell them they need to do. And why should everyone else (including the State) have to pay higher health insurance premiums just because a few irresponsible people prefer to IGNORE their own health needs?

Also, there’s NOTHING in this agreement that would require ANYONE to change their doctors, not even for “Value Health” participants. The networks of participating providers won’t change.

Participation in “Value Health” provisions, in addition to keeping the current cost of health insurance down, will also make it MUCH more difficult for the insurance companies to try to unjustifiably jack up health insurance premiums going forward. Most (if not all) other really large corporations have already been *requiring* employee and retiree participation in these kinds of health insurance provisions for quite some time now; the State of Connecticut’s just been really behind the times on this issue (along with many other issues).

As far as concerns over privacy of our health information go - The fact of the matter is that EVERYONE who has health insurance of any kind - including all CT employees and retirees - ALREADY has their health info accessible to the insurance companies. This is nothing new; it’s been the case for decades throughout the country. The proposed “Value Health” insurance provisions make NO changes whatsoever to anyones’ health info privacy rights WHATSOEVER.

As far as the *rest* of the agreement goes -

Much of what has been agreed to appears to be just plain common sense and which *should* have been in place YEARS ago but which wasn’t due to previous administrations’ irrational and downright CRAZY inflexibility. Employees know best how to improve the State’s operational efficiency by “flattening” the organization and its agencies; BUREAUCRATS and MANAGEMENT have *always* been the obstacle in this regard, and this agreement goes a LONG way towards overcoming those obstacles.

Financially the agreement’s obviously not exactly thrilling for employees to say the least, but let’s face it - politically as well as economically, the State’s ability to raise additional revenue beyond what Malloy and the legislature already agreed to is pretty much *non-existent*, at least for as long as the recession continues. Given that, there are only so many dollars available for salaries and benefit purchasing - so it’s then simply a matter of deciding how to “carve up” those available dollars in a way that benefits everyone as much as possible, both in the short and longer terms. This SEBAC agreement seems to accomplish this in the best, fairest and most humanly achievable manner possible.

The probable consequences of NOT ratifying this agreement -

Massive layoffs in EXCESS of 5,000, especially further down the road as the “ripple effects” of the necessary INITIAL 5,000 layoffs and ADDITIONAL “program” and aid cuts start taking effect. Eventual TOTAL LOSS of State-offered defined-benefit pension and health insurance benefits, because there’d be no money to continue to pay for them and so politicians would be *forced* to remove them from collective bargaining rights. NO “ERIP” because there’d be no money to pay for such a thing (not that there is NOW anyway). *SEVERE* political backlash directed at State employees by angry voters come election day, and for YEARS to come… and, by the way, a LOT of extremist “right-wingers” KNOW this and THAT’S why they’re writing on online “blogs” urging State employees to “vote no” on this agreement - they KNOW that if union members vote “no” that State employees would be destroying themselves (which is EXACTLY what they want). UNION MEMBERS - DON’T BE FOOLED BY THESE DELIBERATELY DECEPTIVE EXTREMISTS!!!!

The agreement seems to genuinely be in taxpayers’, employees’ and retirees’ best interests - both in the short and longer terms.

posted by: Hebee | May 17, 2011  6:41pm

Massive layoffs aren’t good for anyone. More foreclosed homes in our neighborhoods and thousands of more folks on unemployment won’t help our State one bit. The Heath Care Plan actually makes sense. Wow!  Taking an active part in your own wellness is such an uncommon display of common sense. You will get a choice to participate in your own wellness or pay an extra premium for opting out (your choice).  It is a very vocal minority of early to mid-50’s aged Tier 2s that are the ones making the biggest negative noise.  As usual, Union Brotherhood only works if it benefits them. Should it hurt the other guy but work in their favor, great! There aren’t enough of these bitter older workers to sink this package. It is too good of a deal for the majority of State Employees. They will vote yes. These “older, more experienced workers” are also upset because they won’t be able to game the system and have time to milk out all of their accrued sick days before the September deadline. The anticipated retirements will help reduce our work force to a more sustainable level.

posted by: pdm68 | May 17, 2011  9:01pm

I am close to retirement at the DOC after 20 years. When is Sebac or Afscme council 4 going to give the membership the ACTUAL Agreement ???  They have given there “Summary” and also there “Summary and Signed Framework Agreement ” what are these people doing? one place they say “No hazardous Duty ” pensions are changing except new hires and then in # 7 is says that by agreeing to this agreement there is a new tier 3 that preserves tier 2 and 2a and hazardous duty and CHANGES the final computation for your pension from 3 to 5 years—so what one is it ??? There’s so much smoke and mirrors with this agreement—- Where is the state saving ? Yes, I know my Anthem Healthcare is going up 5% July 1 ( which was already happening anyway )—- and the copays and perscriptions are going up BUT Nope we don’t see that anywhere—- Also,I’m 42 years old and by reading this agreement what is stopping me from working another year and working overtime—- There’s NOTHING else in the next year that will affect me—- so my COLA will go down a 1/2 % to have a scale of minimum 2% COLA a year BUT then possible ( I know never ) go up to 7%——They 1/2% of pay to retiree healthcare doesn’t start until July 1,2013—- so I plan on working until June 30,2013—- WHAT MORE WILL I PAY AND WHAT ARE TEY TALKING ABOUT I’LL LOSE ALOT IF I DON’T LEAVE—- WHAT WILL I LOSE BECAUSE I DON’T SEE IT——SOMEONE FILL ME IN !!!

Vote NO anyway

posted by: MichaelThoughts | May 18, 2011  12:00am

Jonathan: I have appreciated your coverage of this process, but I have to disagree with you on at least a few points.

There are “incentives” for people to retire before 9/1/11 or 7/1/13 as you say, but this is not the same as an Early Retirement Incentive Program (ERIP). In the latter, people get extra service time credited for agreeing to retire. This distorts the actuarial tables and causes greater problems for the pension fund.

From what I have read, I also disagree that the new managed health care is draconian. Get your physicals tests and dental cleanings. Take your meds. Get your prescriptions via mail order. These all seem to be simple common sense to me.

I agree that the COLA change might get some people to retire when combined with the fact that the wage freeze will prevent raising the average 3 year base pay much. Yet I am still not sure this would be enough unless someone was already contemplating retirement and just hoping for an ERIP.

posted by: MichaelThoughts | May 18, 2011  12:05am

pdm68: Tier III will only affect new hires (post 7/1/11). If you are ready to retire with 20 years HD service before 7/1/13, then the only major changes are the COLA minimum reduction you note (2.5% to 2%) and the new managed health care plan. You are right there is no change in using overtime.

HD is little affected by much of this because there is no such thing as early retirement for HD employees. The big post-9/1/11 effects are for non-HD early retirees in Tiers II and IIa.

posted by: pdm68 | May 18, 2011  5:49am

What is this so called “managed health plan ” ? I still get to have Anthem BUT now I also have to get a physical every year ( which I already do ) and get my teeth cleaned 2X a year (which I already do )—got a colonoscopy at age 50—- i’m 7 years away—buty I would get one know so I can mke sure I hae no problems at all—SO…If I keep Anthem on to of what I already asked and you told me ... I can stay 2 more year and not pay into retirees health anyway

posted by: newview | May 18, 2011  6:30am

I don’t believe there is much of an incentive to retire early as opposed to a disincentive to hang around and pad your retirement.  The COLA arrangement may be enough for some folks to bail, and many of the conditions for current retirees are applicable to folks with over 25 years as of 7-1-11 who plan to retire by 7-1-13.  So, again, these numbers might be a bit of a smoke screen.  July ‘13 will probably result in a truer number to this fiasco. 

This health care plan is a concern to me.  I have no problem agreeing to something that is typical: physicals..dental.. treatment plans etc.  BUT…I don’t know what these health managment programs will mandate.  If they require I stick a needle in my eye, just because,  and drive to Hartford three times a week to do it, I’m guessing I will opt out for the $100 monthly penalty.  I don’t know what I’m agreeing to!  As is typical of fine printed agreements, I can only assume, I will not have met all the criteria for not being penalized or will have to join so many “plans” that my entire retirement is taken up with group therapies of some sort.  I know I just want to sign up.  Geez…I might want to golf or fish..or..you know run to the town hall to pay my taxes or something.

Tier I folks are basically untouched…they will vote yes…the new HD requirement does not hit current employees ...they will vote yes…smart move to get it passed by NP union.  The folks looking at layoff are voting yes.  The numbers in the middle are the telling factor, and the 2022 factor and options to secure current retirement plans are the selling points.  We shall see.

posted by: WhiskeyTangoFoxtrot | May 18, 2011  11:13am

WhiskeyTangoFoxtrot

Once this gets voted down, don’t worry, they’ll have to extend out the dayes for any agreement as this will get negotiated well into the summer after they start at Square 1.

posted by: NOW What? | May 18, 2011  6:18pm

“WhiskeyTangoFoxtrot”: Your ASSUMPTION that SEBAC and the State will return to the bargaining table if this agreement isn’t ratified is a pretty *wild* assumption - not grounded in *fact*. And I think you know that.

posted by: NOW What? | May 18, 2011  6:20pm

“DrHunterSThompson”: It’s going to pass because the employees are not as STUPID as some people seem to think they are.