AFSCME and Governor Agree to New Two-Year Contract

On Monday, February 24, state employees belonging to the American Federation of State, County and Municipal Employees (AFSCME) union ratified a new two-year collective bargaining agreement.  A simple majority of the union’s 20,000 members is required to ratify the new contract.

In November, AFSCME asked for a five percent raise in FY 04 and another in FY 05, plus numerous benefit increases.  The Governor counter-offered a one percent raise for both years plus benefit increases. 

The final agreement ratified by the union is a two percent across the board increase from the current pay plan, plus step increases for those eligible equal to 4.5 percent in FY 04.  It calls for another two percent increase in FY 05 plus a two percent increase in the maximum salary of the pay plan.  This means those employees who are currently at the maximum pay level will receive an additional increase of two percent.

While the two percent increase seems reasonable, when the steps are added in the average increase will be 6.5 percent.  By comparison, the last contract called for a three percent across the board increase and a four percent step increase, for a total increase of seven percent.  However, that contract was negotiated before the state began having severe revenue shortfalls.  Negotiating a 6.5 percent raise when revenue is projected to grow by only 0.3 percent this year and 1.6 percent next year is fiscally reckless.

However, the more troublesome part of the contract is the health insurance benefit package.  Before the contract was agreed to, it was estimated that the state employee health insurance costs would grow by 15 percent. In the contract, the state increased its share of the employee health insurance costs from 80 percent to 82 percent in FY 04 and from 82 percent to 85 percent in FY 05 for those employees on the family plan.  Employees that have the single plan do not pay anything – the state picks up 100 percent of the cost.

At a time when the private sector is requiring the employee to pick up a larger share of health insurance costs, the Governor’s agreement goes in the opposite direction and will cost taxpayers millions.  Even the 80 percent employer share is generous considering that, according to LFB, the average private sector employer share is 72.7 percent.

Two provisions that were added into the contract are sure to bring about a debate on Chapter 20.  Chapter 20 is the part of the Iowa Code that sets up the framework regarding the labor negotiations.  When Chapter 20 was written, the Legislature gave up most of its authority over the negotiations in exchange for eliminating the union’s right to go on strike.

The new contract agreement eliminates the Legislature’s ability to furlough employees and provides benefits for domestic partners.  These two items clearly violate the intent of the Legislature. 

The unions may claim otherwise, but the domestic partner provision clearly pertains to homosexual relationships.  In the “Affidavit of Domestic Partnership” used by the University of Iowa (which pays benefits for domestic partners), the employee must verify that the employee and domestic partner are of the same sex.  The Legislature has debated this issue in the past and has not approved the change.

AFSCME negotiated a provision that outlaws furloughs and instead provides for temporary layoffs, (which is interesting because under an old Department of Personnel ruling, furloughs were referred to as temporary layoffs).  Under the new contract, a temporary layoff is at least 30 days.  This is important because it means that (a) the employee must receive a 60-day notice prior to the layoff and (b) the employee will be eligible for unemployment benefits.

The advantage of a furlough to the state is that it only requires a 24 hour notice and the employee is not eligible for unemployment compensation.  The advantage of a furlough to the employee is that while the employee loses a small portion of salary, the employee still has a job.  By outlawing furloughs the unions have plainly stated that they would rather lay off their own members than have them keep their jobs and be furloughed.

It is obvious that it is the intent of the Legislature to use furloughs, considering $33.6 million in furlough savings was built into the FY 2003 budget.  This provision, along with extending benefits to domestic partners, is clearly against the intent of the Legislature.

The Department of Management (DOM) estimates that the cost of the AFSCME contract from all funds is $28.4 million in FY 04 and $45.9 million in FY 05.  The cost of the AFSCME contract to the general fund is roughly one-half of those amounts.  However, a package similar to the package negotiated by AFSCME is usually given to all state employees, meaning the cost of the package to the general fund in FY 04 will be between $65 million and $70 million. 

The Governor can fund this package in his budget because of all of the revenue transfers he makes into the general fund.  The Legislature is not likely to go along with all of these transfers and therefore won’t be able to fully fund the salary bill.

In Minnesota, Governor Tim Pawlenty has proposed a two-year, across-the-board freeze on the wages of state, local government and school district employees as a way to limit job losses.  In New York, Governor George Pataki is asking state workers to contribute five percent more to their health insurance plans.  The bottom line is, at a time when the Polk County Board of Supervisors (controlled by Democrats) asked the county employees to accept a wage freeze and the unions agreed to it, the package negotiated with AFSCME is just too generous.  Spending over $125 million in two fiscal years on state employee salary increases is not a good way to get the state back on a sound financial footing for the future.

The Allowable Growth bill has passed both houses and will be on its way to the Governor’s desk.  This bill means that Iowa school districts will receive $42 million more in state aid in FY 05.

Some of the visitors that I had this week were Tom & Kay Huston, Col. Jct., Brian Tapp form SEIRP and Bill Price an abstractor from Burlington.  There were several groups visiting the capitol this pas week, but I was not able to make connections.  I did run my first bill out on the house floor with great success. 

I will be in Muscatine March 1 at 9:00am and Col. Jct., 1:00 at the La Reyna Restaurant.  Next week I will be at the Supervisors Office at the Louisa County Court House

Until next week,

Tom Sands