Who is Looking Out for the Students?

August 8, 2013

Only two months into the fiscal year, the University of Connecticut is reporting a deficit. Those in charge are tapping emergency reserve funds to pay the $28.5 million budget gap, brought on by an increase in pension, healthcare and other costs. More troubling is that this dip into the emergency fund is coming at the same time that students are facing a four year tuition increase.

According to the CTMirror.org, the budget the system’s governing board adopted last month initially used $18.7 million from the reserves to balance the budget, but officials had to look to the fund again for more money after the state comptroller warned the university to raise its contribution to current and retired employees’ health and pension benefits.

The primary cause of this increase is the state’s long history of underfunding pension obligations. Next year, union and non-union employees will receive a 5 and 3 percent pay raise respectively, which will also necessitate increases in required pension contributions. For every $1000 UCONN expends in salary and wages, it must pay $547 per employee in fringe benefits.

An official in the Comptroller’s office told the CT Mirror that the high rates are partially the result of Gov. Dannel Malloy’s agreement with the employees’ unions to increase the state contribution to the pension fund to compensate for years of underfunding.

This agreement highlights one of the major differences between Connecticut and other states. In other states like Massachusetts, higher education entities conduct their own contract negotiations for staff allowing them more autonomy and control over costs. In Connecticut, contract negotiation falls not to UCONN’s governing board and University President, but directly to the Governor’s office. This effectively ties the hands of the administration in each of our state colleges when it comes to controlling their largest expenditures; salaries and benefits.

University employees, like other state workers, are covered under the State Employees Bargaining Agent Coalition (SEBAC) agreement, which the governors’ office negotiated. This triangle of a governor who negotiates on behalf of the voters with a public sector union puts UCONN in a difficult position. The Governor’s office sets the employee contract that the university has to follow, then has to up the ante (which hurts the students) when the administration says we need more money.

This arrangement is the true driving force behind the financial woes at UCONN and in our state as a whole. UCONN’s budget problems are evidence of President Franklin Roosevelt’s belief that the collective bargaining tactics of private sector unions, which he favored, should not be applied to the public sector. In a little-known written letter to the president of the National Federation of Federal Employees in 1937, Roosevelt reasoned:

“… Meticulous attention should be paid to the special relationships and obligations of public servants to the public itself and to the government. All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations … The very nature and purposes of Government make it impossible for … officials … to bind the employer … The employer is the whole people, who speak by means of laws enacted by their representatives …” (2)

But what if the employer (the taxpayer) and its elected representatives are not involved in the process? Although the contract that the governor’s office negotiates with the public sector unions is supposed to be approved by the General Assembly, the contract goes into effect automatically if the majority party does not bring it before the legislature for a vote.

That is exactly what happened after the SEBAC agreement was made between Governor Malloy and the state unions in 2011. There was no challenge from the legislature and our students are now suffering the consequences of that inaction.

The reason for this is clear. Since Connecticut taxpayers both fund and benefit from the services of our university system, cutting taxpayers and their elected representatives out of the negotiation process removes the incentive to control costs and improve services.

Unlike in the private sector, contract negotiations in the public sector are usually not highly adversarial. Most government-agency mangers have little personal stake in such negotiations. Unlike executives accountable to shareholders and corporate boards, government managers generally get paid the same — and have the same likelihood of keeping their jobs — regardless of whether their operations are run efficiently.

They therefore rarely play hardball with unions like business owners and managers do; there is little history of “union busting” in government. (1) Requiring a vote on the union contracts is necessary.

This complicated structure (again think triangle: public sector union, governor negotiator and taxpayer) has become one of the biggest challenges facing our state as well as many cities. i.e. Detroit. Unless conditions dramatically improve, this triangle of turmoil will dominate our landscape for years to come.

Source: (1) DiSalvo, Daniel. (2010, Fall). The Trouble with Public Sector Unions.
National Affairs, Issue, Number 5.

Source (2) Sherk, James, (2011, September 16). F.D.R. Warned Us
[Editorial] – New York Times