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Can Illinois afford its deal with AFSCME?

How balance sheet shakes out is unknown

Published: Monday, March 4, 2013 1:15 a.m. CDT

Thursday morning, a surprise announcement: Gov. Pat Quinn and the state’s largest public employees union had struck a tentative deal on a new contract.

After more than a year of negotiations that included court fights, noisy protests, and strike threats, the two sides had reached an agreement.

Our first question, drawn from miserable experience: How much will the proposed, 3-year pact cost taxpayers?

That answer is frustratingly elusive. Quinn and representatives of the American Federation of State, County and Municipal Employees aren’t laying out the details. AFSCME’s 35,000 members will vote on the contract [this] week. In the meantime, both sides are handling the agreement as they would a grenade, fearful that any jostling might blow it to pieces.

That’s how union contracts get finalized: Behind closed doors, in secret.

What we’ve been told so far:

State retirees would no longer get free health care coverage. About 90 percent of retired state employees, university workers, judges and lawmakers now pay nothing toward their insurance premiums. Instead, the state pays nearly $800 million a year for retiree coverage.

Lawmakers passed a bill last year ending the freebie, but Quinn’s lawyers insisted the issue of how much retirees would pay had to be bargained with AFSCME. Depending on how much retirees end up paying – if, for example, their contributions keep pace with the rising costs of health care – the state could see significant savings going forward. That would be good news.

Also good news: State workers who are not yet retired would pay more toward their current health care costs. Those workers pay roughly $300 a month in premiums for top-notch family coverage, a better deal than what most private-sector workers get.

So what did AFSCME get at the bargaining table? We’re told its members would receive no wage increase the first year. In 2014 and 2015, they would receive 2 percent each year for an average of 1.3 percent each year of the 3-year contract.

Sounds like an austerity plan. But there’s a potentially costly catch. Unionized employees work under a “step” system that rewards them with automatic promotions based on years on the job. Not all state workers will be eligible for step increases during the life of the contract. The roughly 40 percent who are eligible would receive step increases, in addition to their wage hikes.

So: Is this a contract the state can afford? Yet to be determined. Remember, Illinois will end this fiscal year roughly $8 billion behind in paying its bills. Unfunded pension obligations? An additional $96.8 billion and counting. Total debts and obligations? The state treasurer says $200 billion.

But Quinn evidently bargained harder than his predecessor did.

In 2008, under then-Gov. Rod Blagojevich, AFSCME members were promised average raises of 3.8 percent for 4 years. Halfway through the contract, however, the union agreed to defer (not surrender) members’ scheduled raises due to the state’s financial problems. Union members also agreed to take unpaid furlough days.

The state may have to catch up on some of those raises under the new, tentative contract. Again, taxpayers deserve to see the details.

Quinn has managed to close 54 state offices, prisons and institutions, despite AFSCME’s protests. He refused to extend the union’s contract last fall when negotiations hit yet another snag. Things grew so intense, AFSCME leaders warned their members to put off big-ticket purchases and to start saving their money in case of a strike.

This contract, if ratified, ends those theatrics.

But how the balance sheet shakes out for taxpayers remains an unknown.

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