State employees will receive raises and bonuses boosting pay by 7% this year if the General Assembly approves a contract agreement between the Lamont administration and unions.
Based on some estimates, the wage hikes and bonus payments will add $287 million to state spending this fiscal year, and an additional $403 million next fiscal year.
While the exact cost to taxpayers remains unknown—pending a review by the legislature's Office of Fiscal Analysis—the $3,500 bonuses for 43,000 state employees will total $150 million.
Under the agreement between the administration and the State Employees Bargaining Agent Coalition, workers will receive a 2.5% general wage increase and step increases retroactive to July 1, 2021.
The agreement also includes 2.5% wage increases for July 1, 2022 and July 1, 2023. In 2024, the administration and SEBAC will meet again to negotiate on wages.
Active full-time employees who were with the state before March 21, 2022 each receive a $2,500 bonus this fiscal year following legislative approval.
Those employed on July 15, 2022 receive an additional $1,000, with pro-rated bonuses for part-time employees.
The Appropriations Committee is expected to act on the agreement April 18 following OFA's review of the deal's short- and long-term impact on the state budget.
The agreement appears to signal a strategic shift by the administration for addressing the pending surge in state employee retirements this fiscal year, driven by an aging workforce and a change in benefits that takes effect in July.
In an April 1 media statement, Gov. Ned Lamont acknowledged "the state has to live within its means just like the families and businesses we serve and represent," adding that "this is also a unique situation."
Lamont defended the agreement at a press conference this week, saying he wants "a salary structure that allows me to recruit the best and brightest."
Report: $600-$900M in Savings
More than 8,000 state employees could be eligible for retirement this year. Since Jan. 1, 3,100 workers either filed for retirement or signaled their intention to retire.
Two years ago, the administration commissioned a report by the Boston Consulting Report to evaluate workforce efficiency and recommend steps to mitigate the wave of retirements.
Released in March 2021, the CREATES Report identified 200 opportunities to streamline and modernize state government, realizing between $600 million and $900 million in annual taxpayer savings.
Those recommendations included improving hiring processes, better managing overtime, absenteeism, and workers’ compensation, further centralizing shared services, and leveraging technology to improve service delivery.
"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 noted.
"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 report did identify areas where staffing levels needed boosting, such as the state police and Department of Correction, while supporting work rule restriction reforms, addressing the $100 million in annual workers’ compensation claims, and curbing overtime costs, on track to hit a record $284 million this year.
CBIA president and CEO Chris DiPentima warned that the Connecticut "will lose a major opportunity to streamline state government and improve taxpayer ROI if the CREATES Report is relegated to some dusty shelf."
"The report's recommendations represent a detailed blueprint for reimagining the way state government operates and for delivering greater taxpayer value to Connecticut residents and employers," he said.
"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."