Gov. Dannel Malloy, state unions reach accord on framework to save billions

Gov. Dannel Malloy has released a framework for an agreement with the leadership of the state employee unions that will reopen the contract currently in effect through June 30, 2022. Malloy said that the effort is aimed at “creating significant, long-term structural reforms to pension and benefit costs that will help generate large annual savings for many years to come.”

The framework was specifically designed with the goal of implementing structural reforms that result in significant cost-savings over the next biennium and continue generating savings in the out years. The governor”™s office is projecting that the deal would save approximately $710 million in Fiscal Year 2018 and $850 million in Fiscal Year 2019, with the savings continuing to grow annually, ultimately adding up to $10 billion over the next decade and $20 billion over the next 20 years.

The framework includes:

• Implementing wage and increment freezes in three fiscal years that will permanently reduce the cost of projected pensions by more than 10 percent.
• Increasing employee pension contributions by 2 percent of pay.
• Redesigning the health insurance plan.
• Increasing the employee share of health care premiums by 3 percent.
• Increasing the cost of co-pays on prescription drugs and implementation of a standard drug formulary.
• Creating a new Tier IV “hybrid” pension/retirement plan that combines a traditional defined benefit plan with a 401(k)-style defined contribution plan.
• Providing job security protections through June 30, 2020.

“Over the past several months, we have been respectfully meeting together (with the unions) in good faith to discuss ways to help save taxpayer dollars while respecting the contract under which state employees are currently operating,” Malloy said.