Democratic leaders favor union members over citizens
“I have a great job. I am able to help people in my district on a daily basis and also help people statewide. But, more importantly, I am a 23 year member, dues-paying member, of AFSME [the public employees union]. That’s the most important aspect of my career.” That’s how Joe Aresimowicz, the leader of the Democrat majority in the Connecticut House of Representatives, explained his priorities in a 2014 speech.
To Joe, aka “A-to-Z,” union solidarity supesedes his duty to citizens. The same is true of the governor, Democrat Dannel Malloy, who admitted — no, ballyhooed — as much in a 2014 speech to a union rally, saying “I am your servant,” after rattling off the many gains he’d achieved for union members.
It’s bad enough that these two public officials favor union members over citizens. What makes it worse is that the interests of public employees and citizens are diametrically opposed. Union Joe’s never-ending fight is for higher pay and better benefits – funded by ever-higher taxes paid by John Q. Public.
Today, the unions are fighting to preserve what are already very generous pay and benefits.
A closer look at employees’ pension benefits is revealing. Pensions are governed by the SEBAC labor agreement, which was amended and extended until 2027 by Democrats along strict party lines in early August. The extension included one significant reform: future hires will receive a hybrid pension, in part equivalent to the defined benefit plan of current employees and in part a 401(K)-style defined contribution plan. Almost exclusively on the basis of this reform, the state’s pension actuaries found savings of about $7 billion over the next 20 years, including $450 million over the next two years.
Transitioning to a defined benefit plan is an excellent reform, except it is overshadowed by other obvious reforms that were passed up. Republicans salvaged several and included them in their budget — to take effect after the expiration of SEBAC in 2027. Surprisingly, the GOP budget was approved by the Democrat-controlled Assembly, but, then predictably, vetoed by Malloy.
Here are three GOP reforms: (1) increase the amount employees contribute to their own pensions, (2) reduce cost of living adjustments to benefit payments (COLAs) and (3) eliminate preferential treatment of high-salaried employees.
The SEBAC extension included token versions of the first two reforms. Employee contributions were raised from the previous trivial levels of 0 percent to 2 percent of salary to a range of 2 percent to 4 percent. The COLA formula was tweaked a bit and its annual effectiveness date changed.
The Republicans budget went further, raising the contribution level to 7 percent, the national average for public employees. The national average is unarguably fair.
On COLAs, the GOP budget included the same reform as adopted in neighboring Rhode Island, namely, the suspension of COLAs until the pension fund reaches a prudent level of funding; Connecticut’s is currently only 35 percent funded.
Finally, for employees with salaries near and above the Social Security “tax and benefit base” ceiling ($127,200 annual earnings), the GOP budget eliminated a pension supplement that “makes up” for “lost” Social Security benefits near and above the ceiling. Essentially, this reform introduces the same needs-based regime which governs the federal Social Security retirement program. An undeniably reasonable proposal.
Even though the three reforms would take effect only in 2027 upon the expiration of the SEBAC deal, the state’s actuaries, Cavanaugh McDonald, found that they are worth $270 million over the next two years and a whopping $6 billion over the next 20 years. Imagine if they had immediate effect. They’d probably be worth three or four times as much.
These are savings that the state sorely needs. After Malloy’s budget veto, the projected two-year budget deficit remains a whopping $3.6 billion.
So, when Malloy and A-to-Z serve the unions, they are doing real damage to the state. What adds insult to injury is that both have been trumpeting the unions’ threat to sue over these very reasonable post-contract reforms alleging that they constitute contract violations.
Don’t fall for such rubbish.
Indeed, don’t fall for the union claim that their pay and benefits aren’t generous, that, instead, their pension fund is underfunded only because the state has been negligent in funding it in the past. It is not one reason or the other. Both are true. The benefits of Connecticut state employees are extraordinarily generous, which is the main reason that they’ve been underfunded in the past.
The GOP budget passed in mid-September only because of Republicans' steadfast refusal to give up on real reform and the brave votes of eight "fiscally conservative" Assembly Democrats.
Now, there's talk of a bipartisan budget.
If it doesn't include these reforms, the voters will wonder about that steadfastness and that bravery.
If it does include them, let's have that court fight with the employee unions.
Red Jahncke is president of Townsend Group International, a business consultancy in Connecticut, and a freelance columnist who writes on public policy issues.
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