HARRISBURG – Gov. Edward G. Rendell today said his administration has reached a tentative agreement with some of the state’s largest employees’ unions that eliminates the immediate need for rolling furloughs of employees in those unions to help close the state’s budget gap.
The agreement to temporarily reduce the commonwealth’s health care benefit contribution rate by 20 percent will generate up to $200 million in savings over the next 15 months. The agreement also assures no changes in health care benefits for employees that are members of participating unions.
“This agreement is truly a win-win for employees and the state,” said Rendell. “The temporary reduction in our health care contribution rate will provide us with enough savings to eliminate the immediate need to consider rolling furloughs for participating unions. This ensures that state government will keep running at the same pace for the people of Pennsylvania.”
The unions participating to date are the American Federation of State, County and Municipal Employees (AFSCME), Service Employees International Union 668 (SEIU) and United Food and Commercial Workers (UFCW). The agreement must be ratified by members of each union. The commonwealth is in discussion with other unions and seeking their participation as well.
The agreement requires maintaining a minimum reserve of one-month’s worth of health care payments.
The commonwealth has kept average annual employee health care cost increases to less than three percent over the past five years – far below the growth in private sector health care costs.
“Prudent planning and smart management has produced a fiscally sound employee health care fund that has about $248 million currently in reserve,” Rendell said. “As a result of a lot of hard work by the PEBTF trustees, we are in a good position to defer full contribution payments. This agreement gets us one step closer to balancing our budget and requires no one to lose any money out of their paychecks.”
The commonwealth is committed to paying back the fund in monthly installments starting as early as September 2010.
As part of the collective bargaining agreement between the commonwealth and employee unions that became effective in July 2007, state employees currently contribute up to 1.5 percent of their pay for health care costs. Employees continue to have the option to cut their contribution in half by participating in the “Get Healthy” wellness program.
The governor has issued a pay freeze for all managers and non-represented employees, including the elimination of two step increments and a general pay increase scheduled to take effect between January 2009 and January 2010, a measure projected to save nearly $140 million through fiscal year 2010/11.
“I sincerely appreciate the incredible sacrifice by the commonwealth’s management and non-union employees and their daily dedication to serving the citizens of Pennsylvania without any increase in their pay,” said Rendell. “These public servants often go unrecognized, but because of their hard work and efforts to continue to do more with less, Pennsylvania is in better shape than many other states.”
