Legislative analysts lack details to confirm full concession savings

Nonpartisan legislative analysts say they can vouch for less than 40 percent of the $1.6 billion in labor savings figured into the next biennial budget, and are unable to assess the rest–more than $1 billion–because of unanswered questions or insufficient data, according to a memo submitted late Monday to the General Assembly.

The Office of Fiscal Analysis was careful neither to endorse nor refute the Malloy Administration’s savings estimates involving proposed changes to pension and health benefits, longevity pay or undefined policy changes involving health care, technology and other government operations.

But legislative analysts were pressed for answers as the Democrat-controlled House of Representatives debated another omnibus policy bill designed to help implement the biennial budget adopted last month. The bill was passed early Tuesday on an 83 to 63 vote.

And since that plan hinges on a tentative concession deal that the administration insists is worth $700.7 million next fiscal year and $901.2 million in 2012-13, minority Republicans balked Monday at provision in the measure that would effectively pre-approve the deal – even though state employee unions aren’t expected to complete their votes on ratification until late June.

“I think it’s important to discuss the terms of the agreement,” said House Minority Leader Lawrence F. Cafero, R-Norwalk, who requested further data from OFA after an initial fiscal note reported the savings projected by the administration, but offered no further comment on them. “If they (the savings) are not verifiable, if they’re not true, if they’re not achieved, our budget is out of balance.”

“Please note that at this time we are unable to determine or verify the levels that are contained in these estimates in many cases,” OFA Director Alan Calandro wrote in a memo to Cafero.

The memo also showed several unanswered questions tied to more than $665 million in projected savings for the next two years involving health and pension benefits and longevity pay for senior state employees.

No actuarial analysis was offered to defend $67 million to be saved by increasing penalties for senior employees who retire earlier than the normal age.

Analysts could not determine how much state government would contribute to provide a new hybrid retirement plan for higher education employees.

In evaluating health care provisions forecasted to save $245.9 million over two years, OFA asked for the reasoning behind several assumptions.

A key part of the plan savings is the introduction of a Health Enhancement Program, in which participants would be required to get recommended preventive services and, for those with chronic conditions including asthma, diabetes, or hypertension, participate in disease management programs. The plan would be optional, but those who don’t select it would have to pay an additional $100 a month in premiums and face a $350 deductible.

Milliman, the state’s actuarial consulting firm on the health care provisions, projected that the Health Enhancement Program could reduce health care claims by 4 percent in the first year and 10 percent in the second. But OFA said it received no documentation to show how that assumption was reached.

And OFA asked whether the plan changes could in fact increase medical costs, since the Health Enhancement Plan requires people to get preventive services. Similarly, OFA noted, the use of dental services could increase since the plan requires people who receive state dental coverage to get two cleanings per year. But the increased costs from more people getting dental care were not included in the savings estimates, according to OFA.

The administration attributed most of the $245.9 million savings to the additional premiums people who do not participate in the Health Enhancement Plan would pay, according to OFA. But that, too, is based on an assumption that OFA said it did not have the information to evaluate. The administration assumes that half of those eligible would join the Health Enhancement Plan, but didn’t explain how that figure was reached.

In addition, OFA asked whether certain changes to the health plan would trigger additional changes–and costs.

The tentative agreement would add a $35 copayment for health plan members who use the emergency room unnecessarily, and require preauthorization for certain services, including some MRIs.

OFA said that could cause the state employee health plan to lose its status as a “grandfathered” plan under the federal health reform law, making it subject to new rules that took effect last year. Those include covering preventive care at no cost to the consumer and eliminating lifetime limits on benefits.

OFA said it is unclear if the projected savings take into account the implications of losing grandfathered status. Plans can lose grandfathered status by significantly raising deductibles or raising copayments by more than $5. The proposed emergency room copayment would be an increase of $35.

Malloy‘s budget director, Office of Policy and Management Secretary Benjamin Barnes, called the GOP complaints “a delaying tactic” to hold up approval of a new state budget that closed the $3 billion-plus deficit Malloy inherited for the coming fiscal year.

Barnes also said his office has cooperated with legislative analysts and never shied away from the fact that some of the savings targets in the concession deal, though reasonable, are less precise than more traditional concessions, such as a pay freeze or pension benefit restrictions.

Among the less defined savings targets in the deal are: $180 million to be saved through “reduced procurement costs [and] more efficient agency operations; $90 million from utilizing new technologies and reducing use of private technology consultants; and $75 million from ideas to be provided by a labor-management health care cost containment panel.

But OFA also made it clear that it could not provide any assessment of these less defined savings targets, which total $345 million, because “information as to how savings were estimated has not been provided.”

The budget policy bill, which the Democrat-controlled House is expected to adopt, was designed to spare legislators from having to adopt the concession package in special session later this summer.

Traditionally, unions vote first on any tentative deal. The legislature, which will adjourn its regular session at midnight Wednesday, could return in special session later this summer if members want to vote on any labor-ratified agreement. But instead the policy bill debated late Monday and approved early Tuesday makes it clear the that if the legislature doesn’t call itself into special session within five days after union ratification or by June 30 — whichever comes first — “the agreement is deemed approved by the General Assembly.”

Rep. Toni Walker, D-New Haven, co-chairwoman of the Appropriations Committee, defended the pre-approval option. While the legislature did vote to ratify a 2009 labor concession deal, it routinely allows arbitrated contract awards with its unionized employees to take effect without any vote. “The process of doing this, I believe, has been around for some time,” Walker said.

“We’re talking about $1.6 billion,” Cafero replied. “Why would we not come back?”

“We all take our roles very seriously. We are the budget authority,” said Rep. Vincent J. Candelora, R-North Branford. “The Executive Branch is here to administer that policy. I fear we have got it backwards.”

State Employees Bargaining Agent Coalition spokesman Matt O’Connor said Monday that he couldn’t speak to the legislature’s pre-ratification proposal. The legislature approved the 2009 union concession deal after bargaining units had ratified it. “We’re just beginning the ratification process,” O’Connor said.

Staff Writer Jacqueline Rabe contributed to this story.