Tentative State Employee Union Contract Signed By Malloy

HARTFORD, CT —Gov. Dannel Malloy announced Monday that he has signed a tentative contract with the state employee unions that is estimated to save the state more than $24 billion in the long run.

“The agreement by the unions to move forward with a tentative contract that could save the state more than $24 billion is a promising step, clearly demonstrating that they want to be part of the solution to putting the state in a better and more stable financial position,” Malloy said.

The agreement must be ratified by the union before it becomes official.

Malloy thanked his budget secretary Ben Barnes along with Lisa Egan and other members of the Office of Labor Relations who worked with SEBAC to negotiate the deal.

Independent analyses by actuaries found the deal would save the state $24 billion over the next 20 years. $1.569 billion would be saved in the next two fiscal years, which will help alleviate some of the state’s budget woes.
In exchange for the concessions, the health and benefits of the contract will be extended through June 30, 2027. The agreement was set to expire in 2022. It also guarantees no layoffs through June 30, 2020.
Among the savings:

• Health care savings of $136 million in the first two years. Savings increase to about $100 million a year down the road.
• $200 million a year savings in the 2020’s as retiree medical insurance switches to Medicare Advantage.
• Pension savings for the state of $210 million in FY18 and $238 million in FY19. Over the course of the deal the state could save $400 to $500 million per year.
• Wage freezes will save $716.4 million over the next two fiscal years and $500 million a year thereafter.
• At least a quarter of the state workforce will likely retire before the existing SEBAC agreement ends and the framework of the agreement between Malloy and SEBAC allows benefits to change five years sooner. This could lead to 10,000 new employees on a combined pension/401k-style plan that is predicted to save money. Eventually the state will save $97 million annually by 2037.

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