As Layoffs Loom, Malloy And State Unions Dance Around Benefits Talks

Dan Haar

3/10/2016

With a date of June 9 set for state layoffs that could reach into the thousands, you'd think both sides would want to negotiate pension and health benefits to save jobs. Why isn't that happening?

The layoff process is not just talk; it has begun. Earlier this week, Gov. Dannel P. Malloy's budget office sent a letter to union officials notifying them that "reductions in force" might happen by June.

Malloy knows the state must adhere to seniority rules that will force commissioners to lay off their newest, least expensive people — not a smart way to manage a workforce. And he owes his re-election to these same unions, so he'd prefer to avoid layoffs.

Union leaders consider job security a core value, and they know they can save positions by offering givebacks. The two sides are already negotiating pay and working conditions for some 30 state employee unions whose contracts expire June 30. They're also discussing new ways to finance the pensions, an issue separate from the benefits available to employees and retirees, but part of the same overall agreement.

In 2011, Malloy's first year, he and the unions did cut a sweeping deal on benefits and pensions, extending the pact by five years to 2022, and they also gave a two-year wage freeze after a freeze in 2009 — all in exchange for a four-year reprieve from layoffs.

This time around, Malloy hasn't directly, formally, asked the bargaining coalition, known as SEBAC, to reopen talks on benefits. And SEBAC hasn't offered.

It might happen yet. But with benefits closer to what private sector workers generally receive, there's a lot less wiggle room. Also this time, Malloy cannot, or will not, balance any union givebacks with tax increases, as he did in 2011.

And for the unions, agreeing to downgrade benefits — in a year when they're likely to sign new contracts with scant raises — is a hazard.

When would it end? The state could force new givebacks every year. We are, after all, in what Malloy's budget chief, Ben Barnes, called a permanent state of fiscal crisis.

Malloy still hasn't give a total, other than "we're talking about a large number of positions." The number 2,000 is floating around, perhaps because that, combined with the 500 to 600 job eliminations targeted this year by attrition, would cut the state workforce by 5 percent; Malloy is seeking spending cuts totaling 5.75 percent across most agencies.

Malloy said Thursday he would like to see talks on benefits. "That would make a great idea," he said at an event in New Haven. "You can't force someone to open an agreement. I think we're playing a game here. We've had discussions. They know that there are going to be many, many layoffs. Do they want to be part of the solution?

Yes they do, said Dan Livingston, the prominent labor lawyer who's the chief negotiator for SEBAC.

"I don't think SEBAC leaders would refuse to meet with the Governor," Livingston said in an email — but he made it clear that doesn't necessarily mean the coalition would agree to talk about benefit givebacks.

SEBAC's position is that the recent wage freezes, combined with health benefit changes, a longer vesting period for lifetime health coverage and a recalculation of pension payouts based on the average of five years, rather than three, are all still reverberating.

"As the governor knows, the sacrifices made by state employees in 2009 and 2011, continue to provide nearly a billion dollars a year in ongoing savings, and so state employees are already part of the solution," Livingston said. "There is money to be saved by interacting with the unions to fully implement the 2011 agreement, not by trying to force us to change it."

It's hard to make givebacks add up to save large numbers of jobs. Instead the unions want to see, for example, an end to "costly and inefficient for-profit contracting," as Malloy suggested he would do five years ago.

Clearly these would be tough talks. "In essence, they want to have a meeting so they can lecture to us," Malloy said. "It would be great for the state to have a more sustainable post-employment benefit program. Although we made great progress in 2011, it's time to make more progress."

Unspoken in any of this is whether Malloy would ask for curtailed health benefits not only for new employees, and not only for soon-to-retire employees, but also for current retirees — and whether SEBAC would offer that as a way to save jobs.

Livingston added, "I'd like to think he'd at least want to hear constructive views on protecting our economy and our struggling middle and working class even though they may differ from his own."

The state must do more with fewer people as most companies have done, and Malloy has been working on that for five years.

But the state isn't a business and can't run like one. If a private company lays off workers, it's due to lack of demand and the company can eliminate whole lines of products. If the state lays off workers it still has to figure out how to deliver most of the services in play. It can't just stop working with profoundly troubled children or the state is a worse place to live, and that hurts the all-important corporate climate as surely as tax increases.

Beyond that, private layoffs improve finances directly. The state throwing 2,000 people out of work can hurt its own income statement, as the economy declines and tax receipts shrink.

In short, state layoffs might be necessary but they're not the answer that loud detractors of public employees are looking for.

Malloy and SEBAC are at the dance but they're hanging around by the doors. The music is playing.