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Gov. Malloy: Framework Reached With State Employee Unions That Will Create Significant Structural Reforms, Save Taxpayers Billions in Long-Term

Prioritizes Structural Reductions to Pension and Benefit Costs That Will Produce Over $20 Billion in Savings

(HARTFORD, CT) – Governor Dannel P. Malloy today released a framework for an agreement with the leadership of the state employee unions that will re-open the contract currently in effect through June 30, 2022, in an effort to create 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. It is projected to 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.

Among many other changes, the framework includes:

  • 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 two percent of pay.
  • Redesigning the health insurance plan.
  • Increasing the employee share of health care premiums by three 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.

“Public service is a calling, and an honorable one at that,” Governor Malloy said. “Our current economic reality requires that we revisit and redefine the state’s relationship with employees and I want to thank the leaders of our state employee unions. Over the past several months, we have been respectfully meeting together in good faith to discuss ways to help save taxpayer dollars while respecting the contract under which state employees are currently operating. This framework will surely create more affordable and more sustainable labor costs in a way that generates structural, long-term savings of over $20 billion over the course of the next two decades. I thank all state employees for their continued hard work they put in each and every say serving the people of Connecticut.”

“I want to thank Connecticut state employees for coming to the table,” Lt. Governor Nancy Wyman said. “While we all agree that government must live within its means, finding solutions is a long, difficult process that requires mutual respect and trust. We highly regard the work state employees do every day to provide services to residents and keep our state strong – we appreciate that they are partners in the effort to build sustainability into the budget.”

For a full summary of the framework, click here.

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