State workers insist they can save dollars–if officials listen

The state auditors recently suggested reconvening the Connecticut Progress Council, a “permanent” fiscal accountability agency that stopped functioning after issuing one report 14 years ago.

A second panel charged in the early 1990s with finding $10 million in annual state budget savings through efficiencies “never met or filed annual reports,” according to another report from Auditors Kevin P. Johnston and Robert G. Jaekle.

Gov. M. Jodi Rell’s office couldn’t point to any specific savings Wednesday produced by an online suggestion box opened nearly two years ago to cut costs.

And a legislative group tasked with finding $50 million in savings offered dozens of ideas in a late March report. The anticipated savings are already built in the budget for the year beginning July 1, but the legislature won’t review most of the proposals before January.

Meanwhile, unionized state employees, who fear they will be called on to make huge concessions next year as Connecticut tackles a mammoth-sized deficit, insist they have “win-win” proposals that can trim costs without give-backs – but no one will look at them. And given government’s spotty track record at fiscal belt-tightening, union spokesmen said Wednesday, Connecticut has nothing to lose.

“It’s a mockery of common sense,” Larry Dorman, a spokesman for the State Employees Bargaining Agent Coalition, said. “We are the ones, the front-line workers, who step forward with ideas and they are ignored.”

SEBAC, which negotiates health insurance and other benefits for more than 45,000 unionized state workers, has been touting a plan that it insists will help state government get back on its fiscal feet.

Many of the components in this plan require an initial investment, a prospect that has prompted skepticism from officials staring at the $3.37 billion deficit projected for the fiscal year that begins in just over 13 months.

For example, the state routinely offers cash incentives during tough economic times to encourage senior workers to retire early, a practice that trims salary expenses in the short-term while stripping the pension fund of assets that would have earned more in interest.

Union leaders suggest reversing the process, offering incentives to workers willing to defer retirement – and thereby spend more years contributing to the pension fund rather than drawing benefits from it.

Comptroller Nancy Wyman’s office estimates the 2009 retirement incentive program saved the state $125 million this fiscal year. But a study prepared for her office estimated that retiree health benefit costs would leap $47 million in the first year.

And within five years of the program, the state’s required annual contribution to the pension fund will have jumped by nearly $80 million – simply to compensate for lost interest earnings. Within 10 years, the annual payment will have grown by $129 million.

Other union proposals include:

  • Financial aid and leaves of absence for advanced education to boost workers’ skills.
  • Expanded telecommuting options.
  • Flexible health care spending accounts to allow workers to save wages on a pre-tax basis, sparing state government from paying federal Social Security taxes on those protected savings.

Those options have their critics. Rell spokesman Adam Liegeot said the administration still is reviewing a bill approved by the legislature this year to expand telecommuting.

While union leaders insist many employees would be more productive if spared those daily commutes, the legislature’s nonpartisan Office of Fiscal Analysis stopped short of projecting a savings. State government might spend more on equipment to help employees work at home, and its workers compensation liability might increase, analysts wrote.

Similarly, legislative analysts balked at projecting a savings for flexible savings accounts. Connecticut would pay less to the federal government, but it also would collect less in state income taxes if a portion of workers’ wages were exempted.

And Liegeot noted that a key component of the union’s plan doesn’t involve cutting spending at all, but rather endorses a package of income, sales, business and other tax hikes proposed by a coalition of labor, nonprofit social service and other advocacy groups and worth more than $1.3 billion annually.

“The union’s plan really has nothing to do with achieving government efficiencies and everything to do with raising taxes,” he said. “Governor Rell has already made her position clear:  She is against any proposals to hike taxes.”

The Republican governor, who is not seeking re-election this fall, bumped heads with SEBAC in mid-March after the unions said her request for additional wage and benefit concessions beyond a 2009 package showed “cynical disrespect” to state workers.

That 2000 agreement, which exempted most workers from layoffs both this fiscal year and next, also froze pay for most employees this fiscal year, required workers to take seven furlough days in total across this fiscal year and next, and increased health care costs.

It also enabled state government to cut $229 million from required payments into pension and retiree health benefit savings accounts, and the new budget anticipates cutting contributions by another $100 million in 2010-11.

Still, state employee wages and benefits comprise more than 30 percent of this fiscal year’s $18.64 billion budget. And given the size of the shortfall projected for 2011-12, many legislators from both parties have said they expect labor will be asked to sacrifice again very soon.

SEBAC spokesman Matt O’Connor said the coalition won’t apologize for including tax increases in its plan, adding that politicians who suggest a $3 billion-plus deficit can be closed without such increases are dishonest. “We all know we ought to be having that discussion,” he said, adding that the next governor “is going to have to have that grown-up talk.”

O’Connor added that other cost-saving initiatives that come with virtually no risk also have been all but ignored.

The Innovations Review Panel, a state government working group of unionized employees and management crafted to identify cost-cutting efficiencies, was eliminated in 2003 under-then Gov. John G. Rowland.

Rell established an online suggestion box in October 2008, the Innovative Idea Initiative, the allows anyone to propose efficiencies through her office’s Web site. But unionized workers were left off the panel Rell assembled to evaluate any ideas.

“She’s missing a golden opportunity to do something useful,” O’Connor said.

Liegeot could not identify any specific savings achieved through the online suggestion box.

But he added that “Employees’ suggestions can play a significant role in providing Connecticut residents a more effective government while generating cost savings.  Several of the ideas received by the governor have been followed up on, including moves toward increased e-government and suggestions to consolidate state agencies.”

O’Connor added that the unions also believe significant savings can be achieved by spending less on mid-level management and hiring more rank-and-file workers in many state agencies – another suggestion that has not been well-received by the administration.

Sen. Gayle Slossberg, D-Milford, co-chairwoman of the legislative Commission on Enhancing Agency Outcomes, said among the many proposals her group endorsed consolidating fiscal, legal, human resource and public relations functions in many state agencies and would continue to work with any group next year that has ideas on how to streamline government operations.