Thursday, March 31, 2011

Voice for Health Benefits

There is much attention on educator and state worker benefits this year. The State and the public employee unions have been engaged in a long and grueling process of exploring and agreeing upon cost saving measures for health care and pension. The final package from this process is close to completion.

Meanwhile, an important bill that gives educators and state workers a voice in decisions regarding their health plan, silently moved forward yesterday. Senate Bill 34 was voted out of the Senate Health and Social Services committee.

Senate Bill 34, sponsored by Senator Blevins, expands the current State Employees Benefits Committee (SEBC). The SEBC is the governing body for the health plan which insures educators and state workers. The SEBC makes decisions about premium rates and the plan benefits. Currently the SEBC has seven members: Director of Office Management and Budget, Insurance Commissioner, State Treasurer, Chief Justice of the Supreme Court, Controller General,Secretary of Finance, and Secretary of Health and Social Services.

SB 34 would take the SEBC to nine members. The Governor will appoint two positions from a choice of four: President of DSEA, President of Delaware State Troopers Association, Executive Director of AFSCME, or President of Correctional Officers Association of Delaware. The terms will be for three years and no one can be appointed for more than two consecutive terms.

Stakeholders deserve a voice and a vote in the governance of their own health plan. Moreover, the public unions in Delaware have demonstrated that they are a responsible partner in the preservation of affordable benefits. Congratulations to Senator Blevins on a fine piece of legislation.

Wednesday, March 23, 2011

Health and Pension Savings

The State Workers United coalition, which includes the Delaware State Education Association has been meeting with representatives from Governor Markell's Administration to see if there could be a meeting of minds around cost savings in health care and pension. The discussions have gone well.

Unfortunately, the details of the discussions were prematurely leaked to the News Journal today. Therefore, we have scrambled to put together a summary of the agreement before people see it in the paper tomorrow. What follows is our attempt to do so.

These proposals have been agreed upon by representatives of the Markell Administration and State Workers United for a Better Delaware, aka, the Coalition. They must still be incorporated into the state’s FY12 Budget, i.e. approved by the Joint Finance Committee and the General Assembly.

The Governor’s budget called for $100 million in savings over five years to the state’s cost of employee benefits. The Coalition’s interest was to protect pension and benefit plans so that the benefits are not diminished and are sustainable for the career state employees and their families.

The savings these changes represent amount to $128.06 million over the next five years. And these savings will continue to increase incrementally into the future.

New state employees only:
Move from 3% to 5% for employee contribution towards pension
Vesting to qualify for pension after 10 years, up from five
Increase the penalty for retiring early from .2% to .4% (the penalty that existed in the early 2000’s)
Change the normal retirement age to age 65 with 10 years of service; age 60 with 20 years of service; 30 years of service at any age (Current is age 62 once vested; 60 years with 15 years of service; and 30 years of service at any age)
Eliminate “double-state share” where the state provides full health care benefits for spouses when both are state employees. For new employees, one spouse will be primary.
Lengthen the time to qualify for state share of health care in retirement from:
50% state paid at 10 years of service; 75% at 15 years; and 100% at 20 years to –
50% at 15 years of service ; 75% at 17.5 years; and 100% at 20 years (same as now).

Pension health care changes for current state employees and future state employees:
Future retirees will pay 5% of the Medicare Medigap coverage provided by the state, or approximately $21/month. At present, the state pays 100% of this coverage, resulting in a more robust benefit for Medicare retirees: pre-Medicare retirees pay the employee share of health care costs as well as co-pays and deductibles. Once retired, Medicare recipients pay nothing for the state health care supplement, nor do they pay for co-pays and deductibles.

Health care cost increases for current and future state employees:
While the group is still fine tuning the specifics, the consensus proposal regarding establishing a cost share for employee health would likely increase the employee cost share on the basic plan from 0% to 5% of the premium. With respect to the PPO plan – the state’s most generous plan – this proposal would increase the employee cost share from approximately 12.7% of the premium to around 13.5%.

First State Basic Plan – Currently only 560 state employees (less than 1%) are enrolled in this plan.
This plan will no longer be free but will cost $25.73/month, or 5% of its cost.
Aetna HMO – Plan cost will increase between $1.43/month for single employee to $5.19/month for Family.
BlueCARE HMO – Plan will increase between $1.46/month for single employee to $5.47/month for Family plan.
Comprehensive PPO Plan – Fifty-three percent of state employees are enrolled in this plan.
This plan’s cost will increase $4.59/month for single employee; $9.73/month for employee and spouse; $7.76/month for employee and children; and $12.17/month for Family.

27th pay for FY2012
As you have most likely heard, the Governor has put in his proposed budget funds for a 27th pay period for next year, thanks to the anomalies of our pay calendar. It should be noted that school districts may object to paying the local portion of the additional pay.

The group is also recommending to the JFC and the General Assembly to include in the state budget language providing for a 2% pay increase effective 2012-2013 – keeping part of the money from the 27th pay in the state budget for salary. This would offset the increase in pension contribution from new employees and provide current employees with a 2% raise.

Other considerations – More savings are being discussed
Finding savings – The Coalition recommended that the State review its contractual arrangements with insurance providers to maximize discounts it can obtain. The State has acknowledged savings $9.26 million in savings over the next five years in prescription drug discounts alone.
The Coalition also suggested that it could realistically and without causing any harm adjust some of its actuarial assumptions regarding pension costs. These recommendations will be considered by the Pension Board at its March meeting.
The Coalition suggested that these savings be used to continue to fund the OPEB Trust Fund, the fund that pays for pension health care costs. Unlike one’s pension, retiree health care is not guaranteed by the state. The OPEB Trust Fund exists to help the state prepare for future pension liabilities. The state has committed to using a portion of any savings from adjusting actuarial assumptions for OPEB.

Monday, March 21, 2011

Items of Note

Representatives of State Workers United have been meeting with Governor Jack Markell's office about saving money in employee benefits. State Workers United is a coalition of 13 unions representing educators and state workers. The group selected from State Workers United to engage in these discussions are from the coalition's "Big 4": Delaware State Education Association; American Federation of State County and Municipal Employees; Corrections Officers Association of Delaware; and Delaware State Troopers Association.

Both sides of the discussion have been pleased with the results and will be communicating to members and legislators in the near future with details.
The Legislature returned to session on March 15th after a long break during which the Joint Finance Committee worked on the budget. At the current time three big challenges face the legislature. First, the budget remains daunting in spite of some revenue improvement. Second, this is a redistricting year. Every ten years, following a census, state representative and state senate districts are redrawn to reflect population changes. Politically, this can be a highly charged exercise. Districts can be redrawn not only to reflect population, but also Party affiliation. Finally, once again, gambling venues will be on the agenda. For the third straight year, lawmakers will try to decide if they wish to increase the number of sites for gambling in Delaware.
Mark your calendar for Monday, April 4th. Unions have designated this day as a national solidarity day. April 4th, 1968 is the day Martin Luther King was murdered in Memphis, Tennessee. King was in the city that day to support a strike by sanitation workers. Given the full-scale attack on public employee unions across the country, and given King's own commitment to Labor, this day was chosen to bring attention to places like Wisconsin, Michigan, and Ohio where basic rights are being taken from public employees. Local union leaders will be receiving ideas for observing April 4th.

Wednesday, March 9, 2011


Tonight in Wisconsin Governor Walker just went all the way over the line into the territory of petty dictator. After weeks of insisting that denying workers collective bargaining rights was all about the budget, he took the disgusting legislation out of the budget and had the Senate Republicans pass it without the super majority which would have required the absent Democrats.

This is not only a day of infamy, but a day of awakening as well. There is only one way to win now in Wisconsin; out in the streets. Workers in Wisconsin have had their legal vehicle taken away from them. There is nothing left but civil disobedience, direct action and strikes.

The Labor movement was born in the streets. If we have to die, it should be in the streets.

Monday, March 7, 2011

Coffee Catastrophe??

I'm not a coffee drinker, unlike my wife and many friends. However, I'm aware of what is happening with coffee prices. They are up. Coffee is more costly than it has been for fourteen years. Since the summer, commodity coffee prices have nearly doubled.

The reasons for coffee prices are a combination of events intersecting in the proverbial "perfect storm": Bad weather caused poor harvests; China and India both have new middle classes for which coffee has become a fad; and Brazil has attempted to corner the market and hoard coffee.

So why all the coffee talk?

Because of what's not being said. No one is predicting a coffee bankruptcy. No one is assuming that the critical coffee conditions remain unchanged. No one is suggesting an austerity plan for coffee drinkers.

For those who really care about coffee, they can look back over the years and know that the coffee price rise is not a never-ending inflationary trend. The situation is acute, not chronic.

Now, compare that with what is going on around the country with public employee pensions. In too many states lawmakers are looking at pension contributions coming off the bountiful 1990s when investments carried the cost of the plans, and comparing it to the contributions following the 2008 financial collapse when states had to increase their share. By looking at a snapshot of pensions that establishes a baseline year around 2000 or 2001 and an ending year of 2010 or 2011 one gets a very high inflation rate for the costs of pensions.

However, pensions are designed to withstand bad years and even bad decades. That's why it is more telling to look at pensions in twenty or thirty year increments. When viewed for the long run, America's public employee pensions are healthy. We should not drastically change pension policy to adjust for the current downturn.

Coffee prices go up for a few months or even years, then they go back down. Don't stop drinking coffee. Don't stop public employees from earning a fair pension.

Friday, March 4, 2011

Labor's Biggest Enemy is Jealousy

Labor has had many enemies in my lifetime and has been prematurely declared dead a couple of times. As an organizer in the 1980s I saw a lot of simple injustice. For example, unionized janitors making one dollar above minimum wage would be terminated for a non-union crew willing to work for 25 cents above minimum wage. Or health care workers who wanted to unionized would have a professional union prevention firm run a campaign of psychological intimidation against them.

In my young years with the Service Employees International Union we fought these battles in the streets. We became experts in direct action, civil disobedience, big rallies and big marches. In Los Angeles we won the Century 21 organizing campaign after LA riot police attacked and beat a group of peaceful marchers. It seems the parade permit didn't account for much.

However, the less obvious enemy of Labor was more harmful. One of Ronald Reagan's first moves against unions was to break the Professional Air Traffic Controllers Organization (PATCO). The less obvious enemy here is not President Reagan, but the jealousy of the American public including many union members. Reagan saturated the public with information about the high wages and good benefits of PATCO members. Remarkably, this message appealed to the most base element in people. Many, too many people, including many people from other unions, were jealous of these white collar professionals. The result was that the federal government was able to utilize replacement workers for the air traffic controllers, breaking their strike, with no public outcry, and little solidarity from the rest of Labor.

The next major union to be broken by jealousy was the United Auto Workers (UAW). In the 1980s and 1990s every yahoo from California to Maine had an anecdote about a guy their cousin knew who worked in an auto plant, making big money, and sleeping on the job every day. So, when the automakers begin to break down the UAW through foreign outsourcing, too many people didn't care.

And so it has gone with union after union, and the refrain of the jealous, "I don't get paid that well! I don't have health care or a pension!"

For several decades public employee union workers were ignored by the green eyed monster, jealousy. After all, who wanted to make the sorry wages of a public employee, or heaven help us, do their jobs: teaching, social work, law enforcement, etc.

Public service jobs no longer look so bad.

To explain what changed, let me digress with yet another anecdote. During the George W. Bush Administration the historic wage gap between men and women narrowed. What a surprise! Was Bush a feminist? No. What actually happened was not that the wages of women had risen, rather the wages of men had dropped. Thus the gap between the two narrowed.

Now, getting back to public employees today. Public employees are no more well paid than they ever were. Public employees have benefits, not rich benefits, just benefits. HOWEVER, other American workers had been pushed down so low with bad pay and simply no benefits, that now public employees seem to be living in high cotton.

If public employees and their unions go the way of other union workers. The country will sink even deeper into this recession. We must have spending power back at the main street level and that means decent wages and benefits for public employees who make up a sizable portion of workers in all states. If my dear readers do not believe this, watch what happens to the so called economic recovery after the public sector sheds another 250,000 jobs this year. We are due for yet another economic setback.

Americans must put aside petty jealousy that comes with rampant individualism and instead adopt a sense of community with other workers, their neighbors, the teachers of their children, the cops who keep them safe at night, the people who repair their bridges, who care for their aged parents, who counsel the mentally ill, and who make their water safe to drink.