Governor Andrew M. Cuomo recently announced that his administration has reached a five-year labor agreement with the New York State Public Employees Federation (PEF). PEF is one of the largest local white-collar unions in the United States and is New York's second-largest state-employee union. PEF represents 54,000 state employees.
The agreement mirrors an agreement reached last month with the Civil Service Employees Association (CSEA) and includes a freeze on base wages for 3 years and a redesign of the employee health care contribution and benefit system, saving $75 million this fiscal year, $92 million next fiscal year, and almost $400 million over the contract term. If adopted by the state's other collective bargaining units, the agreement will reduce workforce costs by over $1.5 billion over the course of the agreement, averting PEF layoffs due to the state’s fiscal crisis.
“This agreement reflects the financial reality of the times. I am pleased that we could avoid these layoffs, protect the workforce and the taxpayer,” Governor Cuomo said.
"This was a difficult agreement to reach, but with our members' jobs in peril and the state’s fiscal hardship we've stepped up and made the necessary sacrifices,” said PEF President Ken Brynien. The agreement will preserve our members jobs and careers while bringing long term fiscal stability to the state. We are confident this is the best agreement that could be negotiated in the current environment."
As a result of this agreement, Director of State Operation Howard Glaser directed agencies to rescind the 20-day layoff notices that were sent out to members.
Base Wages: Under the five year agreement, there will be no general salary increase in Fiscal Year 2011- 12; 2012-13; 2013-14. Employees will receive a 2 percent increase in 2014-15 and 2015-16.
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Savings: The 2011 wage agreement is $2.5 billion less costly to the state than the 2007 agreement, if adopted through the state workforce.
Health Care System Redesign: The agreement includes a series of reforms in the employee health care system which will save $54 million annually and $248 million over the contract term, for PEF alone.
Health Care Contributions: The agreement includes substantial changes to employee health care contributions bringing public employee benefits more in line with the private sector. The contribution for health care benefits have not changed in 30 years, while the cost of the state's health care program has increased 100 percent in the past decade. The agreement reflects a two percent increase in contributions for Grade 9 employees and below, and a six percent increase for Grade 10 employees and above. (Under the agreement, for example, the state will pay 69 percent of family coverage for a Grade 10 employee and above, and the employee will pay 31 percent. The prior split was 75 percent state/25 percent employee. For individual coverage, a Grade 10 employee and above will pay 16 percent and the state share will be 84 percent. The prior split was 10 percent employee/90 percent state).
Savings: The PEF agreement results in $42 million in annual savings from this provision, and $193 million over the contract term.
Health Care Opt Out: For the first time, the state is offering an opt-out option. Health care premiums cost $16,600 for family coverage and $7300 for individual coverage. Employees electing to opt out of the health insurance program must provide proof of alternative coverage and will receive $1000 or $3000 for the cessation of individual or family coverage, respectively. This will save the state thousands of dollars for each employee who opts out.
Savings: The opt-out will save $5.8 million annually and $25 million over the contract term for PEF alone.
Health Benefit Redesign: The health benefit plan system of co-pays, deductibles, and programs has been redesigned to encourage healthy choices and control costs of pharmaceutical products. For example, for the first time the plan will cover the use of nurse practitioners and "minute clinics" and encourage employees to use these services when appropriate instead of hospital emergency rooms.
Savings: The PEF savings for this provision are $8.6 million annually and $37 million over the contract term.
Deficit Reduction Leave: Under the agreement, employees will take a five day unpaid deficit reduction leave during fiscal year 2011-12 and four days unpaid leave during fiscal year 2012-13. The value of the days taken not worked will be deducted from employee pay over the remaining pay periods equally during the fiscal year in which they are taken. Employees will be repaid the value of the 4 days from 2012-13 in equal installments starting at the end of the contract term.
Savings: The furloughs will yield $360 million in savings if adopted by all bargaining units.
Performance advances, longevity and retention payments: Performance advances and longevity payments will continue to be in effect. Current employees who remain active through 2013 will earn a onetime retention payment of $775 in 2013 and $225 in 2014 in recognition of working without a wage increase for three years.
Layoff Protection: PEF employees will receive broad layoff protection for fiscal year 2011-12 and 2012-13 arising from the $450 million budget gap. Workforce reductions due to management decisions to close or restructure facilities authorized by legislation, SAGE recommendations or material or unanticipated changes in the State's fiscal circumstances are not covered by this limitation.
The tentative agreement must be ratified by PEF rank and file members.
Negotiations for the State were led by a special team appointed by the Governor comprising Todd R. Snyder, Senior Managing Director of Rothschild Inc. and Co-Head of Rothschild's Restructuring and Reorganization group; and Joseph M. Bress, former head of the Governor's Office of Employee Relations and former Vice President of Labor Relations at Amtrak, under the direction of Howard Glaser, Director of State Operation