Report: Retirements an Opportunity for Savings, Streamlined Operations

A pending wave of state employee retirements represents an opportunity to streamline and modernize government operations and save taxpayers between $600 million and $900 million, according to a report released by the Lamont administration.

The administration commissioned the Cliff Retirements Adding Efficiency, Accountability, and Technology to Economize State Government report to “evaluate workforce efficiency and organizational design to generate recommendations about how to best mitigate the risk to service continuity brought about by the anticipated retirements among state employees in 2022.”

The study also responds to a legislative request in the 2017 budget directing the administration to identify efficiency opportunities that will reduce state spending.

Produced by the Boston Consulting Group, the report estimates that 8,145 state agency employees—27% of the executive branch—will be eligible to retire by 2022.

BCG surveyed state workers for the report and found 72% of self-identified eligible employees were “leaning toward retirement,” with the greatest potential impact on the Department of Emergency Services and Public Protection, Department of Correction, and Department of Motor Vehicles.

Recommendations

The report features a series of recommendations for leveraging the opportunities presented by those pending retirements, including:

• Modernize management of the state workforce: Streamline the hiring process, manage overtime and absenteeism, improve management of workers’ compensation expenses, and restore DOC staffing levels
• Streamline services and pool resources: Further centralize shared services, streamline similar human service programs and support functions, strengthen coordination of human service operations via a central office, and integrate agencies with similar missions
• Digitize resident services and internal processes: Expand use of common payment platform, digitize document management, digitize more DMV transactions, complete Department of Revenue Services digitization program, modernize the unemployment insurance system, and adopt new Department of Transportation maintenance and inspection tools
• Optimize sourcing: Expand the use of nonprofit providers, bid out public transit service operations, contract veterans’ convalescent care operations, and review transportation structure and maintenance contracting
• Design services to meet resident needs: Align rail and bus service to resident needs, adopt value-based health payments, control health spending and maximize federal funding, improve tax compliance, and find new transportation revenues
• Rationalize state assets: Increase office colocation, consolidate specialized assets, and match prison footprint to current population

‘Leaner, More Efficient’

 “By implementing the opportunities detailed in this report, Connecticut will become leaner and more efficient while ensuring that 2022 retirements do not disrupt its ability to provide high-quality services to residents,” the report’s authors wrote.

“In many cases, the opportunities identified will help the state improve the quality of the services it offers, simplify access to those services, and provide them more equitably to all residents and businesses.

“The opportunities will help the state improve the quality of services, simplify access to those services, and provide them more equitably.”

Connecticut CREATES Report

“Finally, the opportunities identified could have a net financial impact of up to $1 billion against a total budget of about $14 billion for agencies in scope.”

BCG only studied the executive branch agencies under the governor’s control, which employ about 30,000 people. Public universities, state hospitals, courts, and the legislature employ another 20,000 workers.

Targeted Savings

The study’s targets for potential savings include union-negotiated work rule restrictions, the $100 million spent annually on state employee workers’ compensation claims, and agency overtime costs, which averaged $225 million in each of the last five years.

The report said that while some overtime “is good due to its inevitability as need for workers sometimes varies,” Connecticut “must bring these costs more in line with neighboring states, such as Massachusetts and New York, where the levels of overtime for the same types of services are lower.”

“The scale and power of Connecticut’s unions mean that modernization often happens very slowly, if at all.”

Connecticut CREATES Report

“The work rules restrictions agreed with the unions and legislation can lead to extremely high fringe benefit costs (e.g., for overtime, vacation leave, workers’ compensation, and perks),” the report noted.

“All the elements of state employees’ jobs … are subject to collective bargaining. That means that the state must agree with the labor unions representing state employees before it can make changes to factors like work hours or job responsibilities.

“Collective bargaining is important in protecting state employees, but the scale and power of Connecticut’s unions mean that modernization—which is critical to ensuring that state services meet residents’ needs—often happens very slowly, if at all.”

Blueprint

CBIA president and CEO Chris DiPentima called the report “a detailed blueprint for reimagining the way state government operates and for delivering greater taxpayer value to Connecticut residents and employers.”

“Many of the report’s recommendations align with CBIA’s Rebuilding Connecticut policy pledge, which was designed to drive the state’s recovery from the pandemic and signed by a bipartisan group of 55 legislators,” he said.

“There are a number of recommendations that also reflect policies CBIA and the business community have pushed for a number of years, including expanding the use of nonprofit organizations, reforming the state’s unemployment compensation system, and controlling state employee overtime and healthcare costs.

“A more efficient, modern state government significantly increases the return on investment for each tax dollar paid.”

CBIA’s Chris DiPentima

“Connecticut has tremendous opportunities that we must capitalize on, that we cannot let pass by. A more efficient, modern state government significantly increases the return on investment for each tax dollar paid and is one of our biggest opportunities. 

“While we recognize some of these recommendations may present challenges, we urge the administration to move quickly on prioritization and implementation, collaborating with the legislature as needed to realize major benefits for Connecticut’s economy and residents.”

Review

Gov. Ned Lamont said his proposed two-year state budget anticipated some of the report’s findings and includes savings of $20 million in 2022 and $155 million in 2023.

“The world is changing rapidly, and our government needs to move more quickly to transform how we operate to have the greatest positive impact on people’s lives,” he said in a statement.

“This report will help us do that. I look forward to reviewing these suggestions and considering them as part of our administration’s broad modernization efforts.”

Consultant: Connecticut could see up to $900M in savings as retirement ‘tsunami’ approaches — but little of it will come easily. Rigid work rules, hiring red tape, contracts deemed obstacles. https://t.co/16jE5WcsvC

— Mark Pazniokas (@CTMirrorPaz) March 31, 2021

Josh Geballe, Connecticut’s chief operating officer and commissioner of the Department of Administrative Services, has been a strong advocate for streamlining and modernizing state government since he joined the Lamont administration in 2019.

“The state faces significant risk in our continuity of operations, but also a unique opportunity to reinvent and modernize how we provide services to Connecticut residents,” he said.

“We continue to see significant opportunities to further improve services for Connecticut residents while reducing cost to taxpayers, and we look forward to analyzing the additional recommendations provided in this report.”

Connecticut CREATES Report

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