Oped: The significant impact of small reforms
One of the key principles of my “Promise to Pennsylvania” is improving state government openness, transparency, and accountability. That’s why I’m pleased one of my reform measures (Senate Bill 644) was signed into law as Act 15 of 2016.
This law focuses on the costs — not the details — associated with the Commonwealth’s collective bargaining agreements. The goal is to ensure both elected officials and taxpayers have information on the costs before these agreements are signed. It does this by empowering the Independent Fiscal Office to provide cost analyses of each proposed agreement 20 days prior to their execution. Previously, whatever was negotiated by a governor was ultimately covered by budget appropriations paid for by taxpayers.
The first of the Independent Fiscal Office’s analyses was recently released for two of the largest state unions, AFSME Council 13 and SEIU Local 668 (http://www.ifo.state.pa.us/Releases.cfm).
These reports analyze both contracts, which have the same basic changes:
- 2.75 percent pay increase October 1, 2016;
- 2 percent pay increase effective July 1, 2017;
- A biweekly increase in the employer healthcare contribution (from $455 to $473) in July 2017;
- An increase in the employee contribution rate for healthcare benefits from 2 percent to 2.25 percent in July 2017;
- 2.25 percent step increase effective January 1, 2018;
- A biweekly increase in the employer healthcare contribution (from $473 to 486) in July 2018;
- An increase in the employee contribution rate for healthcare benefits from 2.25 percent to 2.5 percent in July 2018;
- 2.5 percent pay increase effective July 1, 2018, and;
- 2.25 percent step increase effective January 1, 2019.
Over the next three years, these changes will total $525.2 million: $53.2 million this fiscal year, $167.1 million next fiscal year, and $304.9 million the budget year after that.
The reports also note benefits paid to employees result in about 40 percent in indirect costs (40.7 percent for AFSME and 40.2 percent for SEIU): employer pension contributions, Social Security and Medicare taxes, and Workers’ Compensation payments. So, for each $1 increase in wages, there’s an additional 40 percent in additional indirect costs.
Thanks to Act 15, the General Assembly and the general public have more information on the potential impacts these agreements will have.
I look forward to future Independent Fiscal Office analyses for the other collective bargaining agreements and I thank them for their efforts to bring more openness, transparency, and accountability to state government actions.
Prior to passage of my legislation, opponents claimed these changes were not broad solutions to reforming state government. I disagree; every effort to improve openness, transparency, and accountability helps to ensure government is being a better steward of taxpayers’ money.
I also look forward to advancing additional reforms during the 2017–2018 legislative session.
State Sen. Mike Folmer represents the 48th Senate District in the Pennsylvania State Legislature. Reach him at www.senatorfolmer.com.