The Connecticut Comptroller’s Office let the latest deadline for a statutorily required SEBAC Savings report pass by again. The report outlines savings tied to a 2017 agreement between the State of Connecticut and the State Employees Bargaining Agent Coalition (SEBAC).
The Comptroller’s Office has been releasing the reports on biennial basis, the latest coming in January of 2022, which encompassed savings from fiscal years 2020 and 2021. Prior to that, the office released savings from 2018 and 2019.
However, according to statute, the savings report is due on December 1 of each year and should outline the savings produced by the 2017 SEBAC Agreement for the prior fiscal year. The Comptroller’s Office has previously indicated they did not read the statute that way, despite the statutory language being included in the report itself.
“Not later than December 1, 2018, and each December first thereafter, until and including December 1, 2027, the Comptroller shall report the amount of labor-management savings realized for the previous fiscal year pursuant to the operation of the agreements,” the statute says.
The requirement was part of the 2017 SEBAC Agreement between Gov. Dannel Malloy and the state employee unions. The deal was estimated to save the state $24 billion over 20 years, largely through wage freezes and changes to state employee healthcare benefits and administration. In exchange, state employees were given raises and temporary layoff protections.
In the SEBAC savings report issued in January of 2022, the Comptroller’s Office indicated that calculating savings from the deal will grow more difficult with time.
“In general savings estimates of prior policy changes become more tenuous the more time passes from the initial policy change. This is especially true for changes with-in complex systems like health care or pensions,” the report said. “As we continue to move further out from the initial implementation date of SEBAC 2017, the accuracy of the savings attributed to such changes related to the agreement will be less certain.”
During the 2022 legislative session, a bill was put forward with a provision eliminating the Comptroller’s responsibility for producing the SEBAC savings report and the CORE-CT report.
The provision was supported by Connecticut Comptroller Natalie Braswell, who testified before the Government Administration and Elections Committee that the report was only required on a biennial basis and that the statutory requirement was “outdated and do not contain useful or relevant data.”
However, the bill was amended to maintain the requirement for annual savings reports through 2027 and never received a vote in either chamber of the General Assembly.
The last savings report indicated taxpayers saved $3.5 billion since the 2017 agreement, with much of those savings coming from wage freezes and a switch to Medicare Advantage for retiree healthcare.
In June of 2022, Braswell announced a new contract with Aetna, which will take over as administrator of Medicare Advantage for the state health plan. The new deal was estimated to save $400 million over the next three years and reduce unfunded retirement healthcare liabilities by $7.5 billion.
“This agreement ensures the retirees covered by the state health plan will continue to receive the care they need while securing tremendous savings, now and in the future, for Connecticut taxpayers,” Braswell said in a press release. “I’m thrilled to see that work pay off with this agreement and I look forward to working with Aetna to give our retired workers the quality and dependable health care they deserve.”
Connecticut’s unfunded OPEB debt stands at $19.5 billion as of the 2022 valuation, down $4 billion from the prior year. Connecticut had not saved for state employee retirement health benefits prior to a 2011 agreement with SEBAC, which required employees to pay 3 percent of their salary toward retirement healthcare for their first ten years of employment. The state began to match that payment in 2017.