Your Money, Your State: Six-figure salaries, soaring fringe benefits [Hearst]

In a state where the median income is about $73,000, there are 689 state employees who make more than $200,000 a year. There are nearly 2,000 state workers with salaries more than $150,000.

Aside from the usual big-payday suspects — name-brand UConn basketball and football coaches — nearly 500 people who make more than $150,000 work at the University of Connecticut Health Center in Farmington, an occasional, but until now a failed target for cost cutting, including an attempt to close the facility in the 1990s, and layoffs in 2003.

As its budgets escalate and its nearly 1,700 employees receive higher pay and benefits, a potential buyer or partner remains elusive because of total spending there that may top $900 million in the fiscal year that started July 1.

Twenty four of the state’s Top 30 earners are faculty and staff at the hospital and medical school, which in 2018 cost taxpayers $437 million in salaries and overtime, according to the state’s payroll site.

State salaries in recent years*

2015: $4.76 billion

2016: $4.71 billion

2017: $4.57 billion

2018: $4.57 billion

2019: $3.15 billion (through August)

*Source: Open Payroll CT

Top state agency salaries, 2018

University of Connecticut: $563.1 million

Department of Correction: $440.1 million

UConn Health Center: $437.5 million

Judicial Branch: $313.6 million

Dept of Children and Families: $270 million

Dept of Transportation: $241.5 million

Dept of Developmental Services: $199.3 million

The average cost per medical student is about $200,000, at a time when some of the nation’s most prestigious physician-training programs, such as the Harvard Medical School, are kept separate from hospitals.

While there have been on-and-off again attempt to privatize the health center, it’s the additional fringe benefits – which totaled about $279 million during the 2017-18 fiscal year – that are scaring away possible purchasers or the partners envisioned by the General Assembly two years ago in the latest attempt to stop the financial hemorrhaging at the Farmington campus.

The new budget includes more than $33 million in state taxpayer contributions to the under-funded state employee retirement plan.

“The fringe benefits are scaring off investors,” said state Senate Minority Leader Len Fasano, R-North Haven, who in recent years has closely monitored expenses at the UConn Health Center as well as the University of Connecticut and its secretive Foundation. “We’re talking a lot about how fringe benefits costs are killing our state” since they don’t count in calculations for federal matching funds. “They may eventually bankrupt our state.”

The $279 million included the cost of group life insurance, unemployment compensation, FICA and Medicare taxes and the various state retirement plans for employees.

A 2017 law passed in a special legislative session directed the health center’s board of directors to establish public-private partnerships with hospitals or other organizations, and report back to the General Assembly in 2018. As recently as three months ago, unionized faculty, employees and doctors asked the board not to sell the state’s only public hospital.

According to the June minutes of the board, Dr. Kevin Claffey, president of Faculty Union of the American Association of University Professors, said the health center should remain public because “any private entity that comes in both operationally and financially has a conflict with academic activity.” Claffey makes about $172,000 in salary.

During the same meeting, Dr. Audrey Chapman, a professor of medical ethics who makes $149,000, said faculty members “are concerned with the impact of establishing a private public partnership, and although have been assured it would not affect education, a significant change in culture of the institution could contradict efforts to promote an ethical and public service orientation in our medical students.”

Sanford Cloud Jr., a real estate and business executive who is chairman of the board, said, “It is evident that each speaker is dedicated to UConn Health,” according to the minutes.

In recent years the state Auditors of Public Accounts have found violations of state regulations on controlling costs, no-bid contracts, and even failures such as the embarrassing continued payments to a professor for months after his 2017 murder, allegedly at the hands of his wife.

“The problems of the health center have more to do with economics and sustainability that the public health issues,” said state Rep. Jonathan Steinberg, D-Westport. “The efforts to find a deep-pocketed partner have failed, and a lot of it is because of its economic viability,” said Steinberg, who noted that many medical schools are attached to top-ranked hospitals including New York University.

“There are a lot of benefits to a teaching hospital,” Steinberg said, stressing the availability of federal support. He recalled that about a year ago UConn Health Center officials visited the State Capitol for a meeting on its future. Since then, nothing has happened.

“It’s not viable,” Steinberg said. “It undermines basic economic rules. They’re heading to some sort of crossroads, where the benefits put them in jeopardy. Closing it is on the table, along with those ramifications. Unless they find new revenue streams, they may have to cease all or some services that have health implications. It’s on prime real estate.”

“This has to be in a world that’s affordable,” Fasano agreed. “State employees work very hard. The fringes have a cascade effect on everything. UConn Health can’t find a partner.”

On Thursday, Dr. Andrew Agwunobi, UConn Health Center’s CEO, wrote a letter to Fasano declaring that the facility is working hard to find partners, while making ends meet.

“Even though the outcome is uncertain, we are committed to this exploration, and although a public private partnership will not address the state unfunded liability costs charged to UConn Health, we are determined, as good stewards, to continue to explore this opportunity to create value and further grow revenues,” Agwunobi wrote. “We have also implemented annual cost-cutting and revenue-generation initiatives for five years in a row.”

Senate President Pro Tempore Martin M. Looney, D-New Haven, said that while the number of state employees fell by as many as 9,000 positions under former Gov. Dannel P. Malloy, pre employee costs went up. “It’s a problem we’ve been grappling with for years,” Looney said, stressing that there is value in having the hospital and medical school together.

The unfunded liabilities certainly makes the health center less competitive, particularly the way federal grants are structured. If the hospital could demonstrate an ability to acquire more federal support, a better argument could be made for more state help.

“There is a real need to find a solution,” Looney said. “The argument has to be made to keep it or close it.”