pef-307x400-2346855Gov. Andrew Cuomo faced two public-sector labor relations challenges when he took office.  The first was to negotiate contracts with state employee unions that would produce both short-term and recurring savings to help stem the flow of red ink in his state budget.  Saturday’s tentative deal with the Public Employees Federation (PEF), coming on the heels of Cuomo’s nearly identical tentative agreement a few weeks ago with Civil Service Employees Association (CSEA), means the governor is another step closer to accomplishing that.

However, Cuomo has yet to tackle a second big labor relations challenge — on behalf of taxpayers at the local level, where unions have substantially greater leverage over their employers. County executives, mayors and school boards have been clamoring for relief from state collective bargaining provisions, such as the Triborough amendment, that make it harder for them to successfully press their unions for concessions.  The governor, so far, has turned a deaf ear to this.

Cuomo did recently propose further reductions in pension benefits for future employees, which he has indicated will be a priority next year. However, his approach fails to include fundamental reform to the fatally flawed defined-benefit pension structure.

In the meantime, the governor’s five-year CSEA and PEF deals set a pattern local officials can at least try to emulate.  Base salaries (but not “step” increments) will be frozen for three years, followed by 2 percent base pay hikes in the final two years.  PEF members will temporarily give back a portion of their last pay hike in the form of five unpaid furlough days in fiscal 2011-12 and four furlough days in 2012-13,  but will be reimbursed for that second round of furloughs in the form of a cash payment in 2013-14.  The employee share of health insurance premiums will rise for the first time 30 years, from current levels of 10 percent for individual coverage and 25 percent for family coverage to a maximum of 16 percent and 33 percent, respectively, for the highest paid PEF members. Other “design” changes in health benefits also are expected to generated recurring savings.

From management’s standpoint, furloughs are a better option than lag pay, which was the way similar temporary savings were achieved in the early 1990s.  The permanent increase in the health insurance share for employees is a real plus, which will reduce the state’s fast-rising outlays in this category by about 10 percent for the two union memberships.  The health care redesign changes may also be significant, but details right now are too sketchy to say for sure. It’s also significant that Cuomo’s no-layoff promise does not preclude staff reductions related to agency consolidations or facility closures.

For PEF, as for CSEA, Cuomo’s hard bargain represents an inevitable day of reckoning. PEF members, like their CSEA brethren, had sailed virtually unscathed through a severe recession and fiscal crisis, receiving 14 percent base pay hikes plus longevity increments and increased geographic pay differentials under their last four-year contract.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

82 Questions Hochul’s Pandemic Report Should Answer

This is the month when New Yorkers are due to finally receive an official report on the state's response to the Covid-19 pandemic, one of the deadliest disasters in state history. T Read More

How a Medicaid ‘Cut’ Could Lead to More Unionization of Home Care Aides

A money-saving maneuver in the newly enacted Medicaid budget could end up increasing costs in the long term – by paving the way for more unionization of the state's burgeoning home health workforce. Read More

New Jersey’s Pandemic Report Shines Harsh Light on a New York Scandal

A recently published independent review of New Jersey's pandemic response holds lessons for New York on at least two levels. First, it marked the only serious attempt by any state t Read More

Hochul’s ‘Straight Talk’ on Medicaid Isn’t Straight Enough

Arguably the biggest Medicaid news in Governor Hochul's budget presentation was about the current fiscal year, not the next one: The state-run health plan is running substantially over budget. Read More

DeRosa Is Still Hiding the Truth About Cuomo’s Pandemic Response

As the long-time top aide to former Governor Andrew Cuomo, Melissa DeRosa ought to have useful information to share about the state's pandemic response – especially about what went wrong and how the state could be better Read More

One Brooklyn Health’s Money Troubles Raise a Billion-Dollar Question

A brewing fiscal crisis at One Brooklyn Health, which has received more than $1 billion in turnaround funding from the state, raises the question of whether that money has been well spent. Read More

Beware of Medicaid’s Spending Swings

The state's Medicaid spending is becoming increasingly volatile from month to mo Read More

Pols Craft More Handouts for Sinking Construction Unions

New York’s construction unions, facing a decades-long decline, are employing a time-honored tactic: getting state government to stop people from competing with them. Read More