Overgenerous Connecticut state employee compensation is attracting increasing attention. After a 33% wage increase under Governor Lamont, Republicans led by Senate minority leader Stephen Harding are calling for a two-year wage freeze.
The GOP is not stopping there. Senator Rob Sampson has proposed a bill eliminating overtime from the calculation of state employee pensions, thereby preventing “overtime spiking,” a pension abuse examined in a just-released Yankee Institute study conducted by The Townsend Group which I head. Representative Tom O’Dea has entered a bill capping pensions at $150,000 per year; many overgenerous pensions result from OT spiking.
The full court press on overgenerous state employee wages is not surprising, after six consecutive annual wage increases under Lamont – compounding to a stunning 33%. An employee making $100,000 when Lamont took office in 2019 is making $133,000 today, while a comparable private sector employee has seen an increase from $100,000 to only $123,000.
Issues of fairness aside, no organization, public or private, can continue paying such enormous annual wage increases and survive.
Happily, the current contract with state labor unions (so-called “SEBAC”) is being renegotiated – unhappily by union-friendly Ned Lamont – and, unhappily, it will likely be approved by union-friendly Democrats holding supermajorities in the Senate and House.
Nevertheless, Republicans are preparing to put up a fight.
O’Dea’s bill was cited in a Hartford Courant article, reporting that 3,244 state retirees received more than $100,000 in pension payments in Fiscal 2023 (together more than $324 million) – up from just 378 in 2010. Four received more than $300,000.
Yet, once a worker has retired (there are more than 57,000 retirees today), his benefit becomes his legal right, but not necessarily the COLAs which increase benefits every year. However, an attempt to limit existing pensions would likely face a difficult battle in court.
The Sampson bill eliminating OT spiking would have greater impact. First, some background. Many state agencies suffer from high levels of overtime costs – statewide, a total of $376 million in 2024, according to the Open Payroll database maintained by the State Comptroller.
In 2020 Governor Lamont hired Boston Consulting Group for millions in fees to study state agencies. BCG found that widespread absenteeism led to rampant overtime as many employees worked overtime to fill in for their absent colleagues. It is five years later, and the situation persists due to Lamont’s negligence: aggregate overtime pay has grown to $376 million from $299 million in 2019.
The situation is particularly bad in the Dept. of Corrections where over 5,000 of the department’s approximately 7,000 employees work overtime, earning over $110 million in overtime pay in 2024. Corrections work is extremely difficult, frustrating and unpopular work, especially in the context of the supposed “mass incarceration” injustice alleged by progressives – while modern-day Hannibal Lecters are released from jail.
Nevertheless, that does not excuse mismanagement that transforms the conventional pay system of salary and wages into a regular regime of salary, wages and overtime. High overtime, paid at “time and a half,” obviously balloons the current payroll, but, pensions are based upon wages (currently including overtime), so it also leads to excessive pensions.
While Lamont has been negligent, some employees are abusing the pension system by OT spiking, which entails working many hours of overtime during the final years before retirement to increase pension benefits. This abuse has been eliminated for post-2017 hires whose pensions are based on average annual overtime over an employee’s entire career. Yet, there are still over 28,000 active pre-2017 hires entitled to pension benefits that include overtime worked in the last 3 to 5 years prior to retirement.
The Yankee–Townsend study identified Mr. X, a Corrections employee, who was hired in 2001 and retired in 2024. Mr. X had a final annual salary of about $116,000; he retired with an initial annual pension of $90,780, or about 78% of final salary. On salary alone, he was entitled to a pension of only about $63,000.
How did Mr. X earn such a ginormous pension? According to Open Payroll data, he earned only $3,400 in overtime pay in FY 2020, and only $10,900 in in FY 2021.
But then, with a pension based upon his last three years’ earnings, he logged unbelievable hours of overtime, earning $70,750 in OT pay in FY 2022, a whopping $299,400 in FY 2023, and, in the stub of FY 2024 before he retired, OT pay equal to 176% of his salary.
There are 28,000 potential Mr. Xs still active on the state payroll, so Sampson’s proposal is critically important and should be adopted. Given that OT spiking only occurs in the last few years of work, most workers have not yet logged such hours, so changing the rules would not deny them “a benefit that they have already earned.”
Harding’s proposal would impact all 49,000 active employees, limiting their current pay and their eventual pensions. Republicans should rally behind both Harding’s two-year wage freeze and Sampson’s bill eliminating OT spiking, which would likely make O’Dea’s bill unnecessary.
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.