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Concessions on benefits accompany 13% pay hike
Wednesday, February 21, 2007 • BY JOE DONOHUE AND DEBORAH HOWLETT • Star-Ledger Staff

The Corzine administration and state worker unions last night closed in on a contract agreement that would provide 13 percent in wage increases over four years but require workers to make major concessions on health insurance and pensions, saving the state hundreds of millions of dollars.

Union and administration officials involved in the final stages of negotiations, which continued late into the night, said the proposal would for the first time require workers to contribute from their paychecks to the cost of their health benefits. Under the plan, employees would chip in 1.5 percent of their annual salaries, in addition to the co-pays and deductibles they currently pay.

If finalized, the officials said, the agreement also would raise from 55 to 60 the minimum retirement age for workers to receive full benefits. The higher retirement age would apply only to new employees. That was one of several recommendations for cutting fringe-benefit costs that were made by the Legislature during a recent special session on reducing government spending and property taxes.

State workers also would contribute 5.5 percent of their salaries toward their pensions, up from 5 percent in the current four-year contract that expires June 30. In addition, the deal would impose a $97,200 cap on the total salary on which an employee can earn pension credits each year. This first-ever cap would eliminate situations where workers can amass huge retirement benefits by working several public jobs, or collecting large overtime payments.

Any tentative deal worked out by the negotiators would have to be ratified by members of the three unions that represent state employees. Robert Master, political director of the largest of the three, the Communications Workers of America, predicted that members will approve the deal.

"It's a fair contract which provides fair raises in every year of the contract and protects the pensions of all of our employees while recognizing that steps have to be taken to address the rising cost of health care," Master said.

However, leaders of two locals within the CWA denounced the proposed agreement and said they would urge their members to reject it.

If ratified, the deal described by officials last night would provide a clear political victory for Gov. Jon Corzine. In December, Corzine asked Democratic leaders of the Legislature to hold off on legislation that would scale back pension and health benefits so he could seek such concessions through the contract negotiations, which began last September.

Corzine spokesman Anthony Coley would not comment last night.

While the governor backed off some demands, such as a two-year wage freeze and givebacks of holidays, the plan would secure many concessions that Democrats had been advocating.

It also would help him balance a new budget he will unveil tomorrow with several hundred million dollars in savings.

On the other hand, union officials pointed out that for the first time in 15 years, they would have a contract with a wage increase in each year. Workers would get raises of 3 percent annually for two years, then 3.5 percent in each of the final two years.

In addition, the Corzine administration has agreed to shift the health plan to a preferred provider plan that has a national network and does not require pre-approval for care.

Corzine, who pushed hard to secure a deal before his budget speech, backed off a proposed formula that would lower average pensions. And the administration has tentatively agreed to a contract that would not force new workers into a 401(k)-style pension plan instead of the traditional plan the state offers.

In addition to the CWA, which represents 39,000 state workers, the administration is bargaining with the American Federation of State, County and Municipal Employees, representing more than 9,000, and the International Federation of Professional and Technical Engineers, which represents nearly 5,000.

Leaders of two of the largest and most vocal locals of the CWA -- Locals 1033 and 1034 -- said they would not support the deal.

"This is the most anti-state-worker contract proposal ever. As much as we'd like to see the contract settled, we will absolutely not do it on the backs of current and future workers," said Carla Katz, president of Local 1034, which represents 10,000 CWA members. "Our members are willing to continue to fight."

Rae Roeder, president of Local 1033, which represents 6,000 CWA members, shared her concerns. When health contributions are deducted, she said, workers will be getting raises lower than the increase in the cost of living.

"This is not the right thing to do and Mr. Corzine has not respected collective bargaining. What he's done is tried to pull the wool over our eyes, and we're not going to stand for it," she said.

But Master, the CWA political director, strongly disagreed.

"To call this an anti-worker contract is one of the most ridiculous statements I have ever heard," he said. "I am 100 percent confident that when the members of CWA look closely at the details of the deal, they will see that their economic health care and retirement security have been well protected."

If ratified by the unions, the deal would be the earliest contract accord between a governor and state workers in memory.

The higher retirement age -- which would have been taboo before chronic deficits and soaring benefit costs battered the state budget -- would not have big immediate dividends. But it would provide greater savings as more workers are forced to work longer before retiring. Under current rules, a state worker with 25 years of service can retire at age 55 without financial penalties.

A legislative task force that recommended sweeping cutbacks in pension and health benefits said the costs of those benefits had grown from 8.8 percent of the state budget four years ago to 14 percent last year. By year 2010, these costs were projected to be 20 percent of the state budget without further concessions.

State nears deal with unions on a contract

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