State employees another casualty of bad Walker budget

Another item that'll come up in the jam-packed list of issues that Wisconsin's Joint Finance Committee will take up his week regards how much to set aside for state employees over the next 2 years. And as you will see, they are another group of people that are looking at even leaner times as a result of this Administration's fiscal recklessness.

As it stands today, Governor Scott Walker's budget counts on state employees getting very few bumps in pay over the next two years, with barely more than $29 million set aside in the Compensation Reserve for cover potential increases in wage and benefit costs. As the Legislative Fiscal Bureau's paper on Compensation Reserves and Employee Health Insurance Costs shows, even a menial pay increase would go over what's set aside in the budget for increased pay.

If a 1% general wage increase was to be provided to state employees (represented and non-represented) in each year of 2015-17, additional GPR funding of $21.1 million in 2015-16, and $42.4 million in 2016-17, would need to be reserved (this figure includes state agencies and the UW System). If a 1% general wage increase was to be annually provided to state agency employees only (represented and non-represented), additional GPR funding of $11.1 million in 2015-16, and $22.4 million in 2016-17, would need to be reserved.

In addition, the budget that Gov Walker submitted already counts on over $37 million in savings related to health care costs, and the paper goes over how this would happen.

With respect to health insurance costs, certain assumptions are made in the reserve calculations regarding health care inflation for 2016 and 2017. In addition, the budget bill would reduce reserve funding that would otherwise have been provided to offset estimated increased health care costs during the upcoming biennium to reflect two recommendations: (a) permitting full- and part-time state employees who are eligible to receive health care coverage, other than graduate assistants, to elect not to receive health care coverage and instead receive a $2,000 annual payment (this issue is addressed in a separate budget paper); and (b) unspecified programmatic modifications to the state group health insurance program which provides health insurance to state employees in order to generate $25 million GPR in savings over the biennium.

That move of paying state employees $2,000 a year to NOT take the state's health insurance plan is estimated to save another $12.5 million (click here to read more about that idea), but given that these savings are "baked into the cake", the danger is that if they fail to materialize, this creates even more budget holes that have to be filled.

That being said, the LFB says it appears that the budget will indeed see enough of a benefit from these moves not to have to worry about that gap opening up, but with a catch- it'll result in state employees (again) losing take-home pay and shelling out for increased out-of-pocket costs.

20. In its March 25, 2015, report Segal Consulting recommended: (a) introducing a $250 annual deductible and increasing the annual maximum out-of-pocket limit for single health maintenance organization (HMO) policies from $500 to $1,000; (b) introducing a $500 annual deductible and increasing the annual maximum out-of-pocket limit for family HMO policies from $1,000 to $2,000; (c) increasing the annual deductible from $200 to $500 and increasing the annual maximum out-of-pocket limit from $500 to $1,000 for a single policy under the standard plan; (d) increasing the annual deductible to $1,000 and increasing the annual maximum out-of-pocket limit to $2,000 for a family policy under the standard plan; (e) increasing the annual state contribution to health savings accounts (HSAs) for state employees under the high deductible health plan (HDHP) from $170 to $750 for a single policy; and (f) increasing the annual state contribution to HSAs for state employees under the HDHP to $1,500 for a family policy. Segal estimates that these changes, including increased deductibles and copays for state employees, could reduce state agency health care expenditures by $34.5 million annually.

21. Segal Consulting recommended for certain prescription drug levels shifting from fixed copays to a coinsurance approach where employees pay a percentage of the costs of prescription drugs up to specified caps. Segal estimated that this change could reduce state agency health care expenditures by $7 million in 2016. The consultant indicated that doubling the out-of-pocket limit for prescription drugs for employees could reduce state agency health care expenditures by $10 million annually.

22. It may be noted that the annualized value of the above changes identified by Segal Consulting would total $51.5 million. If the recommended opt-out payments would not generate reduced health care costs for the state group health insurance program, the combined total all funds reduction to the group health insurance program in 2016-17 under the budget bill totals $54,789,000. Further, increased costs to state employees above and beyond these recommendations may also occur as this does not account for health care inflation costs which will likely be passed on, in part, to state employees.

And you thought Act 10 meant that there would be no more concessions imposed on state employees? HAH!

Between the schools, state employees, local governments (who aren't seeing any extra shared revenues), unionized workers, and the poor, there aren't a whole lot of other people and entities that aren't looking at some kind of damage from what State Rep. Andy Jorgensen accurately called a "dumpster fire of a budget." It seems like the only people that don't end up with an extra burden in Scotty's budget are corporations (who are still keeping their M&A giveaway), the Road Builders (with the continuing funding of expressway megaprojects), WEDC recipients, and other members of the Governor's inner circle.

Funny how that works.