Unions, Malloy reach a $1.6 billion concession deal

Negotiators for state employee unions and Gov. Dannel P. Malloy tentatively agreed Friday on a two-year $1.6 billion package of concessions and other labor savings that will help Malloy balance the $40.1 billion biennial budget without 4,700 announced layoffs.

The deal, which is subject to ratification by nearly 45,000 employees in 15 unions, comes after weeks of intensifying negotiations and days after Malloy issued the first of 4,472 planned layoff notices. Only 172 notices actually went out to union members before they were quietly halted Thursday. All will be rescinded.

Malloy announcing the deal. His negotiator, Mark Ojakian, far right.

In exchange for the $1.6 billion in savings over two years and structural changes in work rules and retirement benefits that Malloy’s staff says could save $21.5 billion over the next two decades, the administration promises job security for the next four years. Union members briefed on the deal say pay will be frozen for two years, followed by 3 percent annual raises over three years.

“This is the most significant agreement with state employees in Connecticut history, not just because it solves a short-term problem – but because it produces the kind of long-term, structural reform we – Connecticut’s residents, elected leaders and our state’s workforce – so desperately need if we are to again grow, produce new jobs, and prosper together,” Malloy said.

Malloy’s claim will have to be taken on faith, at least for the weekend. The value and nature of the retirement and health concessions will remain confidential until the State Employees Bargaining Agent Coalition can present the deal to employees, some of whom have been publicly hostile to the idea of concessions.

But that did not stop the Republican minority leaders, Sen. John P. McKinney of Fairfield and Rep. Lawrence F. Cafero Jr. of Norwalk, from raising concerns, based on a briefing they received from Malloy’s chief of staff, Timothy Bannon, and from what they read in online press accounts.

They said the deal seems too generous in that it raises wages by 9 percent over the next five years, rules out layoffs for four years and reportedly extends the basic agreement on health benefits from 2017 to 2022.

Malloy initially sought $1 billion in labor savings for each of the next two years. He did not explain where the remaining $400 million will come from, other than “additional spending cuts and existing budgeted revenues.” He said he will seek no tax increases beyond the $1.4 billion already approved.

The governor was upbeat, but insistent he was not celebrating.

“Yes, it’s a significant accomplishment, and yes, it will save taxpayers an enormous amount of money over time, but any time you ask sacrifices of people you need to be mindful of the impact on their lives,” Malloy said. “And I am.”

The key to ratification for Malloy undoubtedly will hinge on the details not shared: Changes in retirement and health plans. It’s been known for weeks that Malloy was insisting on changes that would raise the retirement age, and the Republican leaders said his staff told them they are expecting a wave of retirements before the changes take effect.

One potential reason: one union member said a summary of the deal says medical benefits for retirees can change for anyone who leaves state service after July 1. Others say retirement age will increase by three years after 2017.

Union representatives also were upbeat.

“I’m standing here today optimistic,” said Larry Dorman, a spokesman for SEBAC. “These have been marathon discussions with the best of good faith.”

But he quickly warned that the ratification process takes time. Friday’s announcement “is significant, but it’s a first step and there are many more steps to climb before we celebrate,” he added.

Dorman said union leaders already had begun the process of notifying the nearly 45,000 employees represented by 15 unions about the details of the agreement.

Though Dorman could not predict exactly how long it would take to educate members about a complicated agreement, and schedule and conduct a series of votes, he noted that a similar process took roughly three to four weeks in 2009 when the coalition struck a concession deal with then-Gov. M. Jodi Rell.

The concession ratification process is a complicated one, given the varying rules set of the 15 unions, and the 34 bargaining units contained within them.

Wage givebacks, for example, are decided on a unit-by-unit basis. If one bargaining unit declines to forfeit wages, another still can agree to do so. That occurred in 2009, when all bargaining units agreed to a one-year wage freeze except two – those representing Correction Department guards and their immediate supervisors.

Concessions tied to health insurance and retirement benefits are decided following a collective voting process, and if adopted, would apply to all union members, said another SEBAC spokesman, Matt O’Connor.
Even though bargaining units within two unions rejected the pay freeze in 2009, their parent unions along with all others within SEBAC approved health insurance and other benefit concessions, which were implemented.

Two conditions must be met for coalition approval of benefit concessions: At least 14 of the 15 unions within the coalition must adopt that portion of the tentative deal, and at least 80 percent of the total state employees casting ballots must endorse the deal.

O’Connor said it could take until early next week just to distribute the written agreement, with portions still to be reduced to writing. The written deal covers only pension and health benefits, the province of SEBAC.

Side agreements on wages with the 34 individual bargaining units still were being written, O’Connor said. The deal calls for no furlough days or reductions in the 40-hour work week, but sources said it freezes pay for the biennium, followed by raises of 3 percent annually for three years, according to sources.

In a notice to their members, SEBAC outlined the deal:

“The agreement is intended to help reduce costs while protecting public services in the current and next fiscal years, and to help put Connecticut on a firmer footing for economic recovery. When finalized, the agreement will provide for savings of approximately $1.6 billion in combined labor cost reductions and service efficiencies. The agreement also provides job security, and does not contain any furlough days or reductions in work hours for permanent state employees.”

Earlier Friday, SEBAC also was sharing few details.

“In order to respect the fundamental rights of the working men and women we represent, SEBAC leaders have agreed not to publicize details until they can be presented to members of our unions. This process will begin immediately,” SEBAC said.

Malloy and the union leaders have kept a tight news blackout on the talks.

“As we move forward, SEBAC leaders appreciate the solidarity, patience, and dedication that has been demonstrated by our 45,000 members. The process has been difficult and anxiety-producing as members wait for details about their future in the agreement. Given the extraordinary stakes involved, we sought to avoid the speculation and misunderstandings that would hamper our ultimate goal of reaching a mutual settlement by keeping our discussions out of the media,” SEBAC said.

Negotiators for the administration and SEBAC met until 3 a.m. today, the latest in a series of talks that seemed tantalizing close to completion.

The labor contingent led by long-time SEBAC lawyer Dan Livingston resumed its internal discussions at 10 a.m., making periodical phone calls to the administration team led by Mark Ojakian, the deputy secretary of the Office of Policy and Management.

Union stewards began notifying members of a deal at midday.

The General Assembly passed and Malloy signed a $40.1 billion biennial budget a week ago that raises a broad array of taxes by $1.4 billion and relies on $1 billion in labor savings in each of the next two years. Without a deal for the savings, the budget is incomplete.

Improving revenue estimates have lessened pressure on the talks to produce a full $1 billion in savings, but Malloy never publicly changed his savings target. Instead of delivering $1 billion a year, the deal will save $700 million in the first year and $900 million in the second.

Since signing the budget, Malloy has tried to increase pressure on labor, first by circulating a list of more than $1.6 billion in optional spending cuts, then by beginning to issue layoff notices Tuesday.

The optional cuts–$455 million in layoffs, plus $1.2 billion in other spending reductions–had its desired effect, drawing howls from municipal leaders and other constituency groups about what many termed “the Plan B budget.”