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September 22, 2023

CT businesses challenge Lamont to rein in overtime spending

Contributed Gov. Ned Lamont answers questions from Chris DiPentima, CEO of the Connecticut Business & Industry Association, at an association-sponsored event .

State agency spending on overtime has risen nearly 50% in the past six years, and Connecticut’s chief business lobby is urging Gov. Ned Lamont and the legislature to slam on the brakes.

But given that officials shrank Connecticut’s workforce for more than a decade prior to the coronavirus pandemic — and have struggled to fill vacancies since — a hefty overtime bill may be an issue for years to come.

The $305.4 million in overtime that departments spent last fiscal year is nearly 50% higher than the $204.4 million OT bill they ran up in 2017, according to the legislature’s nonpartisan Office of Fiscal Analysis. 

But while that’s a concern, it hints that state officials are losing their focus on two larger issues: Connecticut’s massive debt and the long-term viability of the state’s budgetary spending cap, said Chris DiPentima, president and CEO of the Connecticut Business and Industry Association. 

“I think some people in the legislature do take their foot off of the pedal,” DiPentima said, noting that Connecticut remains one of the most indebted states, per capita, and has many years of tough choices ahead to fix the sins of its fiscal past. “That’s very scary if anyone is putting up a ‘mission accomplished’ sign.”

State officials frequently tout Connecticut’s record-setting $3.3 billion rainy day fund and the $7.7 billion in supplemental pension payments that — by later this fall — it will have made since 2020.

But those numbers pale in comparison to the $88 billion in unfunded pension and retiree health care program obligations and outstanding bonded debt the state faced entering 2023.

And DiPentima noted that for many state employees, excluding administrators, overtime earnings are factored into pension calculations.

State employee labor unions note that pensions, retiree health care or both were whittled down through concessions deals in 2009, 2011 and 2017. Meanwhile, eroding staff levels have many employees pushed into working excessive, mandatory overtime, including triple shifts on some occasions.

The Executive Branch workforce shrank more than 10% from 2011 through 2018 — more than 3,200 positions — as Lamont’s predecessor, Gov. Dannel P. Malloy, often used attrition to mitigate budget deficits.

State agency employment continued to shrink modestly in 2019 and 2020, Lamont’s first two years in office, according to data from the Office of Policy and Management. And more than 4,400 senior workers retired between Jan. 1 and June 30 2022, roughly double the retirements of an average year. Many workers stepped down then to avoid new pension benefit caps that took effect in the second half of 2022.

Total authorized positions across state government rose by about 100 in the last two-year budget cycle, but the administration has struggled to find workers in several key areas.

“Overtime remains high year over year because the demand for essential services continues to increase while agencies remain critically understaffed,” said Drew Stoner, spokeswoman for the State Employees Bargaining Agent Coalition. SEBAC includes all major employee unions in Connecticut government excluding the state police.

State government has been far more effective than the private sector at reducing hiring and wage inequalities along racial and gender lines. 

And Stoner added that with another large state surplus projected for this fiscal year — the administration estimates nearly $1 billion will remain after June 30 — “Gov. Lamont has the opportunity to make the necessary investments in state service to meet this moment and secure his legacy as both a steward of the economy and one for working families.”

But DiPentima said the potential to inflate pension obligations isn’t the only concern tied to rising overtime.

The 2017 legislature ordered an analysis on how state government could cut its payroll costs significantly and enhance services by replacing people with technology. The goal was to save $500 million per year.

Lamont released the Connecticut Creates Report in 2021, which said the state potentially could secure up to $900 million in savings. Not all of that was tied to a smaller workforce, but projections in this area included a $250 million savings in overtime and $100 million in workers’ compensation expenses.

Since then, though, the study has drawn little attention from the legislature, and overtime continues to rise.

“I’m afraid it’s another valuable study that was done … that’s being put on the shelf and forgotten about,” DiPentima said. The goal of this study was to find hundreds of millions of dollars in annual savings that Connecticut could redirect either to programs in need or to tax relief for households and businesses.

But some state officials say the CBIA is lacking perspective.

Total compensation last fiscal year, according to the Office of Policy and Management, was about $2.5 billion. (Neither that total, nor OFA’s overtime tally, includes the University of Connecticut, which uses a different human resource/payroll system from the rest of state government.)

That’s well below the $3.4 billion annual payroll from the first fiscal year of the Malloy administration, 2011-12, once its $2.7 billion price tag is adjusted for inflation using the U.S. Bureau of Labor Statistics inflation calculator.

Lamont’s budget spokesman, Chris Collibee, said overtime expenses last year were skewed somewhat by a calendar anomaly. Every 10th year, the state — which pays workers every two weeks — faces an extra 27th pay period. New union contracts also required retroactive raises and overtime pay.

Overtime hours were down 13% during the first six pay periods of this fiscal year, which began July 1, he said.

And Collibee added that the administration is trying to attract more workers to government service.

“State government, much like the private sector, faces a highly competitive hiring market for skilled individuals, and we have taken steps to speed up and simplify the hiring process,” he said.

Sen. Cathy Osten, D-Sprague, longtime co-chairwoman of the Appropriations Committee, said the presence of the coronavirus since March 2020 has radically changed the demand for public services statewide.

Osten also said she disagrees with some of the assumptions made in the Creates report, adding that certain government services simply cannot be performed by artificial intelligence.

People reporting abuse of a child or of an elderly nursing home resident, or the state’s failure to deliver approved unemployment benefits, need to speak with another human being, she said. Department of Transportation staff recently had to inspect three bridges washed out during heavy rains.

“These are things that cannot be done by a drone,” Osten added.

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