Do state workers have it too good? (continued) BY BRIAN C. JONES

HIGGINS IS more emphatic when it comes to fringe benefits — and especially medical insurance. "I think the benefit package of state employees is clearly out of line in what can be afforded and also when compared to other public and private sector plans," Higgins says in an interview.

Only a handful of states provide full payment of premiums by the government, he says. The majority require some level of "co-share" of the monthly bills.

The administration commissioned a study by a consulting company, Hewitt Associates, which found that Rhode Island’s kind of insurance plan (a network of health services known as preferred provider organizations) costs the state $8300 per worker, versus just under $7000 for other PPOs in the Rhode Island area.

Further, within the labor market, employees may kick in 19 percent of the cost of the plans, through co-sharing premium costs and user fees such as "co-payments" when patients visit a doctor’s offices. The Hewitt report says the Rhode Island plan has workers paying just five percent of the cost through co-payments.

Higgins won’t say how much the state will ask employees to pay.

Seven of the 39 unions that represent state workers have contracts that will be negotiated for the new fiscal year. The other unions have a year to go before the cost-sharing question is put to them. Reed, the social service union president, and Cenerini of Council 94 — whose contracts expire next year — were noncommittal on the issue.

But Reed points out that the state’s medical insurance plan was negotiated between the administration of former Governor Lincoln Almond and Blue Cross & Blue Shield of Rhode Island for 2002-2004.

That plan was a change from previous years in which employees were offered choices of three different types of health plans. Employees weren’t responsible for the cost of the plan, Reed says: "That was the choice they [the administration] made in the deal they cut with the health insurer."

In fact, the Blue Cross plan has been controversial, because it generally requires the state to pay the actual costs of healthcare, even if they are higher than expected. Blue Cross administers the plan.

One of the plan’s features has been low "premiums" or monthly state payments for the first 18-months of the plan, which helped the state hold spending down at the time. After the first year-and-a-half, the state is to be billed the actual cost not covered by the nominal premiums. Carcieri has budgeted an extra $13.6 million for that retroactive payment.

Higgins says that state will review the plan when the Blue Cross contract is up and will ask unions and workers to offer input. He said if they share in the cost of the plan, they should have a say in how it works.

A University of Rhode Island economist, Richard McIntyre, contends that the whole debate about co-sharing costs is beside the point and misses the real question underlying rising healthcare costs. "Everyone knows this, but nobody wants to talk about it," McIntyre says. "We need a national system of healthcare in which everyone will be insured. Unless that question goes front-and-center, we are going to be fighting over the crumbs."

THE CARCIERI administration also contends that the pension system is a great deal, which justifies the proposal to take money out of the workers’ paychecks next year to reduce the state’s contribution.

It developed a hypothetical case in which a state worker retires early at 55 years of age after earning up to $50,000 at the end of 28 years of service. A Rhode Island worker would collect $30,000 a year, compared to $21,000 for the Massachusetts worker and $17,184 for a Connecticut worker, the worksheet shows. Cost of living adjustments then would boost the Rhode Island worker to $38,003 after 10 years, the Massachusetts worker to $24,600, and the Connecticut worker to $20,540.

Carcieri proposes two changes, which would affect both state workers and school teachers (we are discussing only the state workers’ part here):

• Next year, the state would increase state workers’ contributions from 8.75 percent of salaries to 10.75 percent. Then, it would reduce the state’s share by the same amount to 7.6 percent, instead of the 9.6 percent it is now scheduled to kick in.

• Also, the state would rewrite the annual cost-of-living increases granted retirees. Now they get three percent. Carcieri would allow them three percent or the actual rate of inflation, which ever is lower. He says lately, inflation has been running less than three percent.

Carcieri says unless his plan is adopted, the state’s share is about to jump from 7.68 percent of salaries this year to 9.6 percent next year. He says his proposal will maintain the state’s share at the current level, saving taxpayers $12 million. It’s a straight shift of money from the workers’ pockets to the state, with no increase in retirement benefits.

The unions are incensed.

Reed and Cenerini say that Rhode Islander workers already contribute among the highest amount of any state workers in the country, a contention backed up by state retirement director Frank Karpinski. But as to whether the plan is among the best in the country, Karpinski and others say that’s difficult to tell. Hundreds of plans differ so much that comparisons are hard to make. And Karpinski says comparing one "component" of a plan against another doesn’t give the full picture.

The administration’s hypothetical case showing a $30,000 a year benefit is much higher than the average $16,509 pension now being paid to state workers, according to the state retirement board. The board’s average figure is close to one cited by the Council of State Governments, which lists Rhode Island’s benefit at about $16,944 yearly, compared to $22,452 for Connecticut (Massachusetts figures weren’t listed). The national average is about $15,756.

"We have reasonable benefits at the end," says union president Reed. "But we paid for them."

Reed says the law was changed in 1995 to increase the employees’ contributions by one percentage point. Since then the workers’ share has remained constant at 8.75 percent, but the state’s share has fluctuated. In fact, the state Budget Office says the state’s contributions have gone from 9.85 percent in 1999, to 8.57 the following year, to 7.99 in 2001, 5.59 the next year and 7.68 percent this year.

Cenerini, of Council 94, says, "When you examine the actual human cost on our members, it’s going to do a number on their families, and that is something, one principle, we cannot agree with."

Higgins, the administration director, says Rhode Island’s pension terms are generous for those who want to retire before age 65, and so are the medical benefits granted retirees. "Pensions are complicated," he says. "There are two sides to every story and at least eight sides to pensions. Yes, their share of pensions is high relative to other states. Their benefits are higher than other states."

DO STATE WORKERS fare better than those in the private sector? Hard numbers can be used to bolster both sides of the argument.

"Overall, salary and fringe benefits cost taxpayers more than $668 million a year and comprise nearly one-quarter of Rhode Island’s entire budget," Carcieri said in remarks prepared for a May 9 State House "rally" to press his case. Calculating a 50 percent increase in worker benefits in four years, Carcieri said: "Regrettably, we can no longer afford this level of generosity."

Nee, the AFL-CIO official, cites figures from the Rhode Island Public Expenditure Council, the business-run group that does extensive research on government operations, in arguing that personnel costs have dropped proportionally. In 1996, spending for the state workforce was 26.5 percent of the total state budget, Nee says; Now, it’s down to 23.8 percent.

State budget documents indicate that the state’s workforce is equivalent now to about 15,400 workers, a decline of more than 1000 workers since 1995.

Nee said a reduced workforce has meant substantial spending for overtime, which RIPEC puts now at about $53 million. In addition, Nee says the use of outside contractors has risen — a cost pegged at $142 million in the proposed budget.

Journal editorialist Achorn sneered that state workers last year got a 4.5 percent raise, but "the private sector confronted wage freezes and layoffs." Yet Reed, the social service workers’ union leader, says that in a 10-year period, state workers endured four years of zero pay raises.

A state Budget Office compilation shows that since 1978, pay hikes have ranged from a high of seven percent to five instances of 0 percent. During 27 periods listed, workers’ salaries lagged behind the cost-of-living 13 times and beat the cost of living index 14 times.

McIntyre, the URI economist, believes that if state workers do have somewhat better conditions, it’s in part because labor unions have a strong presence in government, while their influence has generally dwindled outside of government. "The real social issue is the weakness of the private sector," McIntyre says. "People tend to compare themselves with local teachers or local firefighters, not with the CEOs making all kinds of money."

Higgins says that the governor’s proposals are meant to "share the pain" in difficult financial times, and avoid layoffs. He notes that front-line workers are hard-pressed because of the reduction in the overall workforce. "State government today is pretty well stretched. We’ve got a top-heavy organization," Higgins says.

The administration director hopes that Carcieri’s ongoing analysis of state operations, the so-called "Big Audit," will result in savings and efficiencies that will benefit workers.

Cenerini, the Council 94 legislative aide, says the vast majority of his union’s members earn less than $40,000 and are hardly overpaid for the difficult work they do caring for disabled people in group homes, sweeping floors in office buildings, and doing plumbing at URI.

Among those members is Darlene Golomb, who says she joined the state’s workforce 15 years ago largely because of the medical benefits.

Golomb is a housekeeper — the updated term for janitor — at URI, where she has responsibility for Ranger Hall, a classroom, laboratory and office complex used by botany, food services and nutrition programs, and is on call for assignments at the university president’s house, Green Hall and Edwards Auditorium.

Arriving at 5 a.m. — a starting time she chose because the building is empty and "it’s the most efficient time to get the work done" — she waxes floors, washes floors, strips the wax off floors, sweeps outside walks, empties trash, and cleans the restrooms before leaving at 1:30 p.m.

During her time with the state, she’s seen the workforce shrink, and remaining workers’ workloads increase; she been through "bumping," in which workers bid on jobs based on seniority during workforce reductions; she’s seen a health program that drew her to state work substantially changed.

Golomb says she’s never tried to compare what workers make in the public and private sectors (she puts her average annual earnings over the last two years at $31,000). But she figures both she and the state have received a fair deal during her tenure. "I feel it’s a two-way street. I do my job, which I feel I do a good job, and if people want to see, I welcome anybody to talk to people in my area," she says. "I’m performing a service. I feel I provide a good service that I feel is definitely needed."

"I know what we used to have and what we have now. I do know the workload has changed. I’m still providing the university, even though it’s 15 years later, with the quality and dedication I did when I first started."

Brian C. Jones can be reached at brijudy@ids.net