OFFICE OF FISCAL ANALYSIS
Legislative Office Building, Room 5200
Hartford, CT 06106 ↓ (860) 240-0200
AN ACT CONCERNING THE BUDGET FOR THE BIENNIUM ENDING JUNE 30, 2013.
LCO No.: 8769
OFA Fiscal Note
The amendment has the following fiscal impacts, discussed below by section.
Section 1 requires freezing of longevity payments for non-union employees as of August 1, 2011 and eliminating longevity for those non-union employees who are not currently eligible for longevity. This provision is estimated to save approximately $1.4 million in FY 12 and $1.8 million in FY 13. In addition, the longevity savings will continue into the out years and savings will increase as eventually the state's liability for non-union longevity will be eliminated as the pool of individuals who receive longevity declines due to retirements, attrition, etc.
Section 2 prohibits negotiation of longevity and sick leave accrual in all future collectively bargained contracts. For union employees subject to a collective bargaining agreement expiring on or after June 30, 2011 the provision requires freezing of longevity payments and limiting the number of sick days accrued in a calendar year. For those union employees who are not currently eligible for longevity as of contract expiration the provision requires eliminating any future longevity.
Reducing sick leave accruals would potentially reduce state costs by reducing the amount of accrual payouts for unused sick days for future retirees. The SEBAC 2009 Agreement extended the contract expiration date for all unions except two. As a result, the longevity provisions may result in approximately $100, 000 in savings for the one union with an expired contract as of FY 12. Additional longevity savings would not be achievable without a renegotiation of those contracts which do not expire until the end of FY 12. The provision is estimated to save approximately $3.3 million in longevity payments in FY 13. In addition, the longevity savings will continue into the out years and eventually the state's liability for union longevity will be eliminated as the pool of individuals who receive longevity declines due to retirements, attrition, etc.
Section 3 makes a technical change and is not anticipated to result in a fiscal impact.
Section 4 and 5 prohibit negotiation of the definition of salary and redefine salary to exclude any other wage payments such as overtime, longevity, fees or other payments. Savings would be achieved by respective pension systems by excluding these wage payments from pension calculations. Additional state savings would accrue to the extent that annual cost of living increases would be based on a lower base pension benefit. Lastly, this would result in a lower annual required contribution; however the extent of the actual annual savings to the pension system cannot be determined at this time as it would require actuarial analysis.
The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.