Joe Markley, Ed Dadakis and Dan Quigley have sent letters to the editor to set the record straight about state employee compensation in response to attacks by state employee union apologists upon columns on The Red Line. The Red Line is grateful to Messrs. Markley, Dadakis and Quigley for their defense of fact-based journalism.
The Fraudulent Claim of $9.7 Billion In Future Savings in State Employee Wages
In a lengthy recent letter to the editor (entitled “Taxpayers Are Getting a Bargain with Public Employee Compensation”) Sean Goldrick charges that a February column by Red Jahncke (“Lamont’s Budget: A Game of ‘Caps,’ Except for The Privileged Few”) presents “a fallacy based on falsehoods.”
In fact, the fallacies and falsehoods are in Goldrick’s own piece. One I can rebut from direct experience. I was serving in the Connecticut state senate in 2017, when then-governor Dannel Malloy claimed that the state employee contract he negotiated that year saved the state $24 billion, including $9.7 in wage savings. Jahncke’s column focused on that $9.7 billion.
Goldrick asserts that the state’s official actuaries, Cavanaugh McDonald, “estimated that unionized state workers agreed to give-backs under Democratic Governor Malloy that will total more than $24 billion over a 20-year period.” That is simply not true: Cavanaugh McDonald offered no such estimate. The claimed $9.7 billion in wage savings was a figure arrived at by Malloy’s own Office of Policy and Management.
In a column which appeared in this newspaper last summer under the headline (“Claimed $24 Billion in Savings on State Compensation Based on Outrageous Assumption”), Jahncke explained the spurious method by which Malloy concocted his outrageous claim of wage savings. I quote from Jahncke’ column:
The falsity in Malloy’s claim is not buried in complex numbers. It rests upon an outrageous assumption, namely that if employees don’t actually get a raise, the raise they don’t get is called a “saving.”
So, who established the amount of the “raise they didn’t get” in 2017? Malloy did. In his budget proposal, he proposed hundreds of millions of raises. Then, he negotiated wage freezes and called the difference “savings.”
How do we know this? From the documentation that OPM published in support of Malloy’s claimed savings. On page 1, entitled “Source of SEBAC Agreement Savings Estimates,” under a sub-header of “Wage Estimates were developed by OPM,” it states “Elimination of potential FY 2017, 2018, and 2019 increases: Removes all of the proposed RSA increase in the Governor’s recommended budget: $300.6 million in FY18 and $486.2 million in FY 2019.” [Emphasis added.]
The raises which state workers “didn’t get” were simply figments of Dan Malloy’s imagination – they were “potential,” “proposed” and “recommended.” There was no existing wage contract between the state and state employees under which workers were legally entitled to actual raises that, then, they gave up in negotiations with Malloy.
Not only did Malloy claim over $700 million of wage savings in his ultimate budget for the fiscal 2018-2019 biennium, but he claimed almost $9 billion more by claiming that the annualized amount ($492 million) of the “raises they didn’t get” constituted savings in every one of the next 18 years.
Obviously, Malloy’s $9.7 billion claim was fraudulent, and Goldrick’s criticism of Jahncke is simply wrong.
Joe Markley is a former State Senator, District 16, and Republican candidate for Lieutenant Governor in 2018
Decades of Overcompensation of State Employees
Sean Goldrick got it wrong with his letter last week under a headline of “Taxpayers Are Getting a Bargain with Public Employee Compensation” in response to a recent column by the esteemed Red Jahncke, entitled “Lamont’s Budget: A Game of ‘Caps,’ Except for The Privileged Few.”
Goldrick states Jahncke offered no source for his true statement that, “for more than a decade, state employee compensation has exceeded compensation in Connecticut’s private sector by about 40 percent, the biggest gap in the nation.”
Then, Goldrick says that Jahncke’s statement “likely came from” a 2015 study by the Yankee Institute. Goldrick is wrong on both counts.
Jahncke has multiple sources to support his statement, and never cited Yankee’s 2015 study.
Had Goldrick done a little research, he would have seen Jahncke’s Greenwich Time column last April entitled “Lamont should demand givebacks during coronavirus,” in which Jahncke provided three sources supporting his statement.
The first is a 2010 study by Connecticut’s Commission on Enhancing Agency Options, which found average state employee compensation of $105,498 versus average private sector compensation of $74,174, a 42 percent gap.
The other two studies are comparisons of all 50 states, which found Connecticut to have the biggest or near-biggest gap of all 50 states, 42 percent in a 2014 study and 51 percent in a 2019 study. These are whopping gaps.
Goldrick’s second error was claiming Jahncke used a Yankee Institute study in his analysis. False. Not only did Jahncke not cite that 2015 Yankee study, but he did not for a specific reason. The study analyzes Connecticut alone, and the results of single-state studies often vary based upon differing pension analysis methodologies employed.
Indeed, Jahncke provided public testimony before the Connecticut General Assembly in January 2020 in which he cited the two 50-state studies and then explained why he relied upon multi-state studies rather than single-state studies: “when you are being compared to 50 other states, there is no way that anyone can complain that somebody is jimmying the numbers about Connecticut… these are across-the-board, level playing field [results.]”
Goldrick is just such a complainer, seeking to discredit Yankee’s 2015 study, by stating that “Yankee is not a reputable source of research but rather a right-wing, dark-money fueled, propaganda outlet…”
Then, Goldrick cites “meticulous analysis” supposedly “debunking the Yankee Institute report” – analysis conducted by the Economic Policy Institute, which even The New York Times calls “a left-leaning research group.”
Goldrick’s extreme bias has colored his view of Jahncke’s column and led him to make baseless criticisms while omitting important facts supporting Jahncke’s argument.
The fact remains, employee costs and pensions is what is driving Connecticut toward fiscal insolvency. It must be fixed.
Growth in the State Workforce Under Former Governor Malloy
Sean Goldrick got a lot wrong in his letter “Taxpayers Are Getting a Bargain with Public Employee Compensation,” written in response to Red Jahncke’s recent column entitled “Lamont’s Budget: A Game of ‘Caps,’ Except for The Privileged Few.”
I’d start with a subject that Jahncke did not even address: private sector employment. Mr. Goldrick says that, under Governors Malloy and Lamont, “private sector employment hit new all-time highs.” True, it hit 1,467,000 in December 2018, topping the previous high of 1,461,700 in March 2008 – yes, Malloy created a stunning 5,300 new jobs over an entire decade! There has been no growth under Lamont, even before the pandemic.
Mr. Goldrick attacked a statement that Jahncke did make: “state employees have enjoyed a decade-long no-layoff guarantee, while hundreds of thousands of private sector workers have lost jobs.” Mr. Goldrick did not dispute this fact. Instead, he offered a misleading comeback: “the state workforce contracted 14% during the Malloy administration.” The contraction was obviously a function of attrition. There’s a world of difference between leaving your job on your own initiative (attrition) and being laid off.
There are some other problems with Mr. Goldrick’s claim. First, he leaves out the actual headcount numbers behind the claimed 14% decline, namely a decline from 29,556 in 2010 to 25,830 employees in 2017.
Here’s why. According to the 2018 Valuation Report of the State Employees Retirement System (page 3) by actuaries Cavanaugh Macdonald, the overall unionized state workforce was 47,778 on June 30, 2011, just a few months after Malloy first took office and increased to 49,153 on June 30, 2018, six months before Malloy’s retirement.
How does Mr. Goldrick turn a headcount increase into a workforce reduction? And why are the Cavanaugh Macdonald numbers about twice as high?
Where are the approximately 23,000 employees that the actuaries counted that Malloy and Mr. Goldrick did not?
It turns out that Mr. Goldrick omitted important qualifiers to the claim that Malloy himself was usually careful to note whenever he made his workforce reduction claim.
Here’s the relevant sentence from page 72 of The Malloy-Wyman Record, the 283-page paean to Malloy’s glory that the former governor had state staffers prepare on the tax payers dime, as he was leaving office: “At the end of calendar year 2017, there were 25,830 permanent full-time employees being paid from appropriated funds in the executive branch (excluding higher education).” [emphasis added]
Malloy never explained how many of the “missing” 23,000 were non-permanent, how many were part-time, how many were paid from non-appropriated funds or how many were employed in higher education. But, at least, he acknowledged them – albeit without owning up to their significant numbers.
In contrast, Mr. Goldrick hid the ball completely.
As Jahncke outlined in his column, it is state employees who are getting the bargain. Taxpayers are being fleeced. Mr. Goldrick has distorted and hidden the facts, either by error or by intent.
Dan Quigley is Chairman of the Republican Town Committee in Greenwich
Red Jahncke is a nationally recognized columnist, who writes about politics and policy. His columns appear in numerous national publications, such as The Wall Street Journal, Bloomberg, USA Today, The Hill, Issues & Insights and National Review as well as many Connecticut newspapers.