Jonathan Kantrowitz

Mike Fedele has a plan.

Here’s his plan it its entirety – hard to believe some of these ideas are practicable, especially changing existing contractual arrangements with state employees, and even if he accomplishes all, (including $3 Medicaid co-pays!) it won’t come near covering the $4 billion deficit – but read his lips – he’s promising no new taxes:

 Imposing a Four-Year Hiring Freeze. Institute a hiring freeze for every department and every agency with no exceptions or exemptions without my written approval. There are currently approximately 80,000 full and part-time state government employees.

 Proposing legislation to bring oversight of UConn/CSU hiring practices under executive control. A majority of all new State hires since July 1st have been in higher education. We simply cannot afford unlimited and unrestricted hiring in public higher education. We’ve made significant investments in UConn 2000, 21st Century UConn and a similar program for the CSU system. We need to bring their hiring practices under Executive oversight – and hold them to the same “essential-hires-only” standards as other Executive branch agencies; for example, restricting new hires to classroom-only staff.

 Imposing a Four-Year Spending Freeze. Our government must live within its means just like Connecticut families do. Most families in Connecticut have seen their incomes decline during this recession, while state government costs have grown to unsustainable levels. We are at a tipping point. We cannot continue to ignore the fact that government’s expenses exceed its revenues.

 Proposing a Two-Year Moratorium on All But Essential Borrowing. The budget put in place last fall by the Legislative majority raised taxes and required borrowing of nearly $1 billion. This prompted Connecticut’s credit outlook to drop – potentially costing Connecticut taxpayers $80 million per year. I will prohibit all but essential state borrowing for two years and thereafter approve only what the state can afford to pay back. Only essential bonding – for public safety, health, education and borrowing necessary to complete prior multi-year projects – would be permitted, in addition to economic development projects that create net new jobs.

 Eliminating all Earmarks. I will replace local pork projects with a competitive process that requires demonstration of state-wide benefits and jobs. We should not be borrowing funds and paying them back over twenty years for municipal skate parks, community festivals, gazebos and other local projects. These projects should be funded more appropriately with local resources. Long-term bonding should be reserved for water treatment facilities, school construction and similar large infrastructure projects that demonstrate their benefits over the twenty year period of the bonding.

 Eliminating “Discretionary” Funds in the State Budget. I will take steps to make sure that projects for local legislators are no longer doled out by legislative leaders because they have “discretionary” money from a budget deal. Discretionary funds belong to the taxpayers not the politicians.

Restructuring State Employee Pensions, Salaries and Practices Can No Longer be Deferred

As Governor I will negotiate state employee benefits so they are more in line with those in the private sector. Quite simply, state employees should not enjoy benefits that far exceed those available to the average working person in our state.
Pensions, salaries and practices are important issues to state employees and as Governor I will assure that restructuring efforts are justifiable, equitable, and workable and have a meaningful influence on the state budget.

 Pensions. The state employee pension system is dangerously underfunded by $9.3 billion, while $1.26 billion is being paid annually to 42,414 state retirees. Connecticut was ranked the fifth-worst state in the nation for underfunding its state pension. If left unchecked, unfunded pension liability will have significant consequences for taxpayers. It’s the equivalent to a ticking time bomb – and the clock is ticking.

As a result, I propose that all new employees be enrolled in a defined contribution plan (401k) as opposed to the current pension plan. For existing employees:

o Cap current defined benefits at $150,000 of salary that can be used toward the defined benefit calculation. Any salary over $150,000 would go toward a defined contribution plan (401K). Some state employees earn in excess of $400,000 per year.
o Prohibit the use of overtime and longevity pay in calculating salary for purpose of defined benefit pension payout.
o Require that pension calculations be based on the three last year’s employment, not three highest years.

 Health Care. Connecticut currently spends $1 billion on active and retiree health insurance. The state is also responsible for future health insurance and other retiree benefits totaling $24.6 billion. The following cost-savings actions should be implemented:

o Retiree health insurance should be available only to those who reach full normal retirement while working for the state – not those who serve for 10 years and then leave for another job.
o Reform plan benefits to be aligned with private sector benefits
o Reform plan benefits to be more encouraging of healthy lifestyles and disease prevention.

 Work Practices/Schedules. Changes to state government work practices and schedules should be implemented to reduce payroll costs. Examples include:
o Change correctional officer schedules to match common practices in other states across the country. This alone will achieve estimated savings of $39 million annually.
o Reduce number of paid state holidays – which drives up overtime costs. Eliminating just one of the state’s 12 holidays would save $3.2 million annually (Lincoln’s Birthday, for example).
o Eliminate the mandate to use state police on road construction sites.

 Salaries. Modifications to state compensation programs and benefits should be reviewed for cost reducing potential including:
o Require coalition bargaining for salary increases (move unions onto same schedule and comparable percentage for increases. Also forces the state and arbitrators to deal with the full costs of increases for all full-time state employees as opposed to the current piecemeal approach).
o Eliminate longevity payments for State employees – which are bonus payments based on working for the State for ten years. State employees already get merit increases and cost of living increases each year that far outpace the rate of inflation. (State spends $43 million annually on state employee longevity payments).
o Reform sick and vacation accrual and payouts so retiring state employees don’t get windfall payments for unused sick and vacation time.

 Labor Process Changes. Contract negotiation methods and related issues should to be reassessed so that outcomes reflect a sound strategy for the long term and not a temporary fix that becomes an even bigger problem just a few years later:
o Require both chambers of the General Assembly to vote up or down on union contracts and provide the Governor the authority to veto them.
o Require arbitrators to consider the State’s ability to pay as a paramount concern in deciding contract awards.
o Require that arbitrators cannot factor in the Rainy Day Fund when considering the State’s ability to pay.
o Require arbitrators to consider the state’s constitutional spending cap in considering state’s ability to pay.
o Increase state’s ability to transfer and retrain people in a layoff situation in order to reduce workforce through attrition and avoid layoffs.

Making our Government More Efficient

As Governor, I will examine every aspect of state government to reduce wasteful spending and streamline state agency operations.

 Merge State Agencies. Many state agencies have similar missions and could be merged to achieve reductions in staff and leased office space – all state agencies should be evaluated for consolidation. Some examples include:
o DECD, CDA, CI – combine into one agency offering all existing programs through one point of contact. All of these agencies offer financial and technical assistance to employers.
o Agriculture – merge with Tourism (CT Grown), Consumer Protection (milk and farm regulation) and DEP (aquaculture –shellfish).
o Banking and Insurance – move to new “Department of Business Regulation.” While regulated industries pay costs of these agencies, the merger would reduce the cost of doing business in Connecticut and reduce the size of government.
o Combine Department of Education and Department of Higher Education.
o Eliminate the CSU central administration. All four state universities have presidents and individual administrations.

 Eliminate Inefficiencies in Government. Every common sense measure to eliminate inefficiencies in state government should be explored. The days of “this is the way we always did it” will be over. And the mindset that it’s too hard to do will have to change. Some examples include:
o Adopt best practices. For example, Corrections Re-entry programs to reduce recidivism enabled the closing of one prison. Connecticut still has statutory authority to send prisoners out of state to save money.
o Use technology to improve services and save money – government is the only entity that adopts new technology and then hires more people. The exact opposite should occur – technology is implemented to reduce staff.
o Approve master contracts with technology companies that offer one-stop shopping which will allow government to keep pace with changing technologies.
o Eliminate expensive office space leases. State government spends more than $60 million per year on leased properties. As the size of government is reduced, eliminate expensive leases by consolidating employees into state-owned space.

Reforming our Approach to Big Ticket Items Like School Construction and Human Services

Closing budget deficits will require systemic and fundamental changes to the structure and delivery of state programs.

 School Construction Process. The state’s local school construction program has been an important component in maintaining schools and has given towns the ability to construct schools for the 21st century. School construction accounts for 75 percent of all annual bonding (higher education and local school construction).
In FY 2009, the state borrowed $639 million for this program and is expected to borrow another $688 in FY 2010. I propose to make practical cost-saving changes to modify the program. While the following efforts will not have an immediate influence on the state budget, they will begin to drive down the state’s long term indebtedness.
o Require the Department of Education to develop standard architectural and engineering plans that can be adapted easily to different sites and sizes. This will avoid the state repaying for these services every time a town constructs a new school. Any additions or modifications to the standard plan would be the sole responsibility of the town.

Place a cap on how much the state can bond for school construction in any given year. No one can argue that a cap of $450 million is unreasonable and it will help restore our bond rating.

A cap may mean we can only afford to build fewer schools in a given year – the schools last in the pipeline would have to wait to start construction until the next year.

 Human Services Programs. Connecticut has a substantial social services network that provides services to the needy. A large percentage of the state’s budget is dedicated to these services and cannot be excluded from consideration of reducing budget expenses. Our Medicaid budget alone is close to $4 billion.

As mentioned earlier, the approach of being tough-minded must always be tempered by being responsible to those genuinely in need and I have no intention of harming elderly or poor individuals with high co-pays on prescription drugs.
Having said that, we should require cost sharing for certain Medicaid services as allowed under federal law. Forty-five states require $3 co-pays for certain medical services or prescriptions – or both. Connecticut is one of just five states that requires neither.

We should also identify where Connecticut is more generous than other states and determine if that is affordable. For example, Connecticut is one of only a few states that provide over-the-counter drugs to Medicaid recipients – a benefit that not even the best private health plans offer.

Just like we need to bring state pensions and benefits more in line with the private sector, we should review Medicaid services and bring them more in line with what other states provide.

One other example: private sector providers deliver quality services at half the cost of state-run services – group homes – and other facilities.

If we truly care about serving those in need – we should serve them as cost-effectively as possible so we can serve more of our neediest citizens with the scarce dollars we have.

I will also examine the budget to remove all earmarks in social services budgets. While these are well intentioned services, we cannot afford to provide certain towns with special benefits that are not available statewide. An example is the LEAP program, a $1 million earmark to provide youth services – an admirable goal – but is only available to one town. While these dollar figures are small, we must evaluate all possible budget cuts during this budget crisis.

New Haven will be thrilled to lose its great LEAP program just because no other city has it.