Connecticut might see as much as $900M in financial savings as retirement ‘tsunami’ approaches

Photo courtesy of WNPR

State Capitol.

A study by the Connecticut state government in the run-up to an expected wave of retirement next year has identified potential savings of up to $ 900 million for executive agencies with a total budget of $ 14 billion, while dragging the significant barriers to change in one of the most heavily burdened Countries recognized unionized public sector workers in the United States.

The report released Wednesday by Governor Ned Lamont’s government said 8,000 of the executive’s 30,000 employees could retire by July 1, 2022 if retirement benefits are cut under a 2017 concession agreement. A survey found that around 70% of eligible workers were retiring.

The highest percentage of anticipated retirements are for employees responsible for public safety and the care of children at risk, as well as people with intellectual disabilities and mental illnesses. In this respect, the exodus presents enormous challenges to the maintenance of essential ministries and possibly offers unique opportunities for fundamental changes.

“Many of these opportunities will be difficult to implement as they require multi-agency coordination, legislative changes, negotiating with government unions, investing in new technology, and more,” warned the Boston Consulting Group report.

In anticipation of the report, administration included $ 20 million in savings for the fiscal year beginning July 1 and $ 155 million in savings the following year, with much of the savings resulting from the closure of a prison as the number the prisoner sank.

The report confirms the need for ongoing changes, in particular the efforts of the Lamont administration to move the services and interactions of consumers, customers and taxpayers online, which requires a cultural change and the further development of a common information technology platform.

“In some cases, investments in new technology, training or service development can be significant, but those investments will pay off in the long run through improved efficiency,” the advisory group wrote. “The state can reinvest these savings in efforts to improve equity and services for residents and businesses.”

Lamont did not comment on the details of the 127-page document, nor did it comment on how the report and retirement will require material changes in the relationship between his administration and work. Instead, he said in a statement, he looks forward to learning how the government can better serve its constituents.

“The world is changing rapidly and our government needs to act faster to change the way we work and have the greatest positive impact on people’s lives,” said Lamont. “This report will help us with that. I look forward to reviewing these proposals and viewing them as part of our administration’s comprehensive modernization effort. “

The State Employees Bargaining Agent Coalition, which represents most of the unionized government employees, objected to the study and the questioning of its members without union membership. On Wednesday the coalition called it a disappointment.

“At a time when the voices of frontline workers should be raised and recognized for the property they are, they have been pushed aside and silenced,” the coalition said. “The potential loss of thousands of the highest and most experienced government employees is often referred to as an ‘opportunity’ in this report. This opens the door to more austerity and further profound cuts in services rather than recognizing the very real challenges the state is facing. “

The coalition has questioned whether the pension changes would result in as many retirements as planned.

Retired government employees now receive annual cost of living adjustments: a minimum of 2 percent and a maximum of 7 percent, depending on inflation. There is no guaranteed minimum for those who retire after July 1, 2022, and their first potential COLA would occur in 30 months rather than 12 months. Health care could also become more expensive for some retirees.

The study was mandated by lawmakers to save $ 500 million. It cost $ 2 million.

The report marks at least the 10th Connecticut state government study since 1937 and the eighth since 1971, when Governor Thomas J. Meskill ordered a cost-cutting plan in the face of a financial crisis. His successor, Governor Ella T. Grasso, appointed two more in 1976 and 1977. The last study was in 2010.

Common themes in the studies since 1971 have been the growing burden of an unfunded pension obligation, which has led to regular changes in state pension benefits and the need to modernize government, particularly the management of information. The current study began in September amid the turmoil of the pandemic and a movement for social and racial justice.

“The Connecticut state government, work environment, technology, and social conditions have changed dramatically in the ten years since a study of this type was last conducted, and it has been necessary to examine the challenges we face and we are adopting steps to improve, ”said Melissa McCaw, the secretary for policy and management.

McCaw and Josh Geballe, the state’s chief operating officer and administrative services officer, oversaw the study. The position of Chief Operating Officer, created by Lamont in 2019, was first recommended in a 1991 study conducted by DeRoy “Pete” Thomas, Chief Executive of Hartford Insurance Group and ITT.

“Many of the main themes there align very well with what the governor has been talking about for the past three years, and go back to what he advocated – breaking down agency silos, making more strategic and efficient use of what we have done Investments Modernizing our operations, much broader use of technology to improve the services we offer and make us more cost-effective, ”said Geballe.

The report only examined the executive agencies under the governor’s control. They employ around 30,000 people. Another 20,000 people are employed elsewhere in the state government in the public universities, their hospitals, the courts and the legislature.

Boston Consulting Group

The state police are part of DESPP, the department for emergency services and public protection. DMHAS is the mental health and addiction department.

The number of employees has decreased from 59,678 in 2009, which is due to cost savings in difficult budget times and the privatization of some group houses for people with intellectual disabilities. The report indicated that greater use of non-profit social service providers could fill the gap created by retirement. Nonprofits, however, have complained about low reimbursement rates.

Connecticut spends approximately $ 1.4 billion annually on contracting programs with nonprofits to provide programs. The Sum that hasn’t changed much in two decades. The industry puts the inflationary loss it suffers from these payments at $ 460 million a year.

“Nonprofits can do this, and we know it has been recognized,” said Gian-Carl Casa, President and CEO of the CT Community Nonprofit Alliance. “But they have been underfunded for many years, and in order to get the job done they have to be compensated for the cost of providing the services.”

As with previous state government studies, the Boston Consulting report found that Connecticut cannot easily make changes to a new employee due to collective agreements, inflexible job classifications and work rules, and a hiring system that can take up to seven or eight months to hire Board. More than 90% of the workforce is unionized.

“The occupational classes occupied by state employees are organized in a relatively rigid classification system that is geared towards order and justice rather than flexibility. The sheer volume of occupational classes and the associated minimum qualifications are another aggravating factor, ”the report says.

It is difficult to switch people between agencies, even in similar roles. Maintenance workers assigned to a building can be prohibited from working in the building next door.

The largest potential savings identified in the study were more than $ 200 million in the social services department from short-term and long-term changes to Medicaid.

Savings goals included reducing annual expenditures by $ 100 million on government compensation claims and $ 250 million on overtime.

Most of the overtime is logged at four agencies that work around the clock. These are: corrections; Mental health and addiction services; Development services; and emergency services and public protection.

“Some 24/7 agencies are staffed with employees in 35-hour working weeks. Given that these employees work 7-hour days, 3 hours of OT or overlapping hours are required every day, ”the report said.

The report recommends recruiting more state troops and designating the department as understaffed.

State employee compensation benefits are more generous than in neighboring states of Massachusetts and New York.

“A major factor in Connecticut costs higher than comparable countries is that Connecticut workers can receive lifetime benefits for temporary (partial and total) disability,” the report said. “Given the definition of ‘temporary’ disability, the state should go along with its peers and implement a common sense reform by setting time limits on these benefits, which make up 76% of total compensation costs for workers. Those workers who continue to indicate disability should be screened for suitability for permanent disability or appropriately managed. “

Staff writer Keith M. Phaneuf contributed to this report.