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State Asks Employees' Union to Shoulder More Costs

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DES MOINES, Iowa - Gov. Terry Branstad's negotiators are asking the state's largest employees' union to take a wage freeze for the next two years, pay a greater share of their health insurance costs and make major concessions that the union's leader called "appalling," politically motivated and a "slap in the face" to rank-and-file members that will not be accepted.

The state's proposal sought to freeze wages across the board for two years, freeze step increases for qualifying workers for two years, and require all state employees to pay 20 percent of their health insurance premiums along with higher deductibles, higher maximum out-of-pocket expenses, higher dental insurance premiums and higher co-payments for prescription medications.

In making the state's counter offer to representatives of American Federation of State, County and Municipal Employees Council 61, Leon Shearer, a Waukee attorney and top Branstad administration negotiator, praised AFSCME for its past successes before laying out a proposal that seeks to undo much of the current contract language in a new two-year pact that would run from July 1, 2013, to June 30, 2015.

"Over the last decade I think your union and your leadership has done an outstanding job of negotiating on your behalf," Shearer said. "You've got management rights that should have not been given to you but they were. You've got a health plan and a compensation plan that is the envy of the private sector and the contiguous states, and you negotiated it and you did a good job.

"On the other hand, in that past decade, I think management has not done its job to look out for the best interests of the state of Iowa and our challenge today on our behalf is to try to address some of these management rights issues and to address the alignment of our compensation with the comparative group," he added. "And, I don't for a minute think that it's anything but a difficult task."

Shearer then spelled out details calling for state employees to shoulder more of the cost for their health-related benefits, diminish or eliminate some workplace rules governing grievances, bumping and transfer rights, discipline and discharge issues, stop collecting dues for the union's political action committee, delete four additional holidays for employees eligible for overtime, and increasing the state's share of employee life insurance coverage.

Shearer said the proposed health-related changes were in line with recommendations of a consultant hired by the state Department of Administrative Services that identified a potential "cost avoidance" of $116 million if all state workers would pay 20 percent of their health insurance premiums. The study indicated that 88 percent of state workers currently do not contribute anything toward their health insurance premiums.

Two weeks ago, AFSCME negotiators made an initial offer that requested a 1 percent across-the-board pay increase in the contract's first year and 2 percent in the following year for the roughly 20,000 workers it represents. The union also asked to maintain annual 4.5 percent step increases for employees who qualify based on their date of hire. The AFSCME proposal did not include any changes to its health-care coverage.

State Department of Management officials calculated that AFSCME's initial offer would cost the state $122 million more in fiscal year 2014 and $159 million more in fiscal year 2015 if the union proposal was accepted and applied to all state employees including noncontract, management and confidential classifications.

However, AFSCME Council 61 president Danny Homan blasted that report as inaccurate and misleading because the cost of providing the AFSCME request solely to the union's employees would be significantly less. He also said the calculation included health insurance and retirement costs that state negotiators could not explain because they said the information came from the Department of Management, not them.

"This governor has put a proposal across the table today that takes away rights and benefits that employees have had in this state for over three decades. It is a clear indication to me, and it will be to our union, that he is attempting to take away both benefits and money out of their pockets," Homan said in an interview after Friday's bargaining session.

The AFSCME leader said the state's attempt to "steal away benefits out of our contract" was based on an invalid comparison of wages and benefits with other employees in the private and public sectors, and the proposal to freeze step increases was an effort to "take away stuff now that existed during Terry Branstad's entire term of office the first time he was governor."

Likewise, he said, the state proposal tried to change discharge and discipline provisions that date back to 1977 and, if deleted or modified, would leave employees vulnerable to the whims of supervisors with the only recourse for fired, demoted or aggrieved employees to sue the state without provisions for "just cause" discipline.

"We gave up money to get the health insurance we currently have. We gave up across the board (wage raises), we modified plans to get to where we're at today. This governor now wants to say, I don't care what you've done for the past three decades, you're just going to give up your insurance and you're going to take a wage freeze," Homan said. "I've never seen an employer that has done this" in his 25 years with the union, he added.

Homan said Friday's developments made reaching a voluntary settlement "extremely tougher than what I first thought."

"This proposal is a complete slap in the face to every hard-working state employee in this state," the AFSCME president said.

"If any of this happens, it's going to be a huge setback. This is a big deal. This guy is attacking basic union rights that have existed in this country for decades," Homan added. "This is politically motivated. They can say it isn't but what they're doing strongly indicates to me that it's politically motivated."

Talks between the two sides now move behind closed doors. If there's no agreement reached by January, a mediator will come in. Negotiations are subject to binding arbitration for both sides if the mediation fails to work out a deal. A tentative arbitration date is set for Feb. 11 and arbitration has to be completed by March 1 and a new two-year deal signed by March 15.

Shearer acknowledged in an interview that the state's counter offer "is not going to make it quicker" to reach a settlement. "We will get it done within the time frame, one way or another. We're optimistic. There'll be work. We're going to give it a hard effort and we know the union will. We're optimistic we can give it a real try."

Homan said he was "appalled" by the state's position after presenting "a serious, modest" proposal to the state on Nov. 16. He said his union would bargain in good faith but expected it would be more difficult to reach a voluntary agreement, adding "I believe they're going to have a very hard time prevailing with their proposal in front of a third-party neutral."

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