GOER and Employee Fringe Benefits

The Executive Budget recommends (analysis as of January 29, 2004):

• The Executive Budget does not propose another Early Retirement Incentive (ERI) program in SFY 2004-05.
• The Executive does propose major reforms in the manner in which employer contributions are made to the State Retirement System. Baseline projections from OSC show an employer pension contribution rate of 12.3 percent of payroll for the Employees Retirement System (ERS) in SFY 2004-05 that would produce an annual State pension cost increase of $664 million (a 136.8% increase) in SFY 2004-05.  The Executive Budget proposes a series of pension reforms that will moderate these costs and produce a total employer pension contribution of $669 million, an annual increase of $184 million (37.9% increase) and a contribution rate of 6.5%, a 2% increase over last year’s contribution rate.  According to DOB, these reforms would save the State $500 million in SFY 2004-05, $60 million of which is in the Judiciary budget.  The Comptroller believes that several of these reforms are unconstitutional or inconsistent with proper fiduciary management of the pension fund.
• The Executive Budget does not propose any changes to State employee or retiree health insurance benefits or assume any savings in State employee or retiree health insurance program in SFY 2004-05.
• DOB also pointed out that the SFY 2004-05 Executive Budget does not include any funding for any prospective across-the-board raises for State employees.
• Reappropriations associated with the PS&T Collective Bargaining Agreement indicate that $2.6 million of the $4.2 million appropriation (leaving $1.6 in reappropriations) for the Professional Development Committee was spent compared to only $700,000 expended during the previous fiscal year.  In addition, $360,000 of the $575,000 appropriated for the Professional Development and Quality of Work Life Committee was expended (leaving a reappropriation of $215,000) compared to only $20,000 expended during the previous fiscal year.  Finally, $23,000 of the $50,000 allocated for Contract Administration was expended (leaving a reappropriation of $27,000) compared to none expended in the previous fiscal year.
• There are also limited reappropriations available from 2001 in the amounts of $350,000 for the Professional Development Committee and $235,000 for the Professional Development and Quality of Work Life Committee.
• The maintenance undistributed appropriation of $125,000 associated with the Pre-tax Transportation Accounts is not included in the proposed SFY2004-05 Executive Budget.  The State asserts that lack of an appropriation will have no adverse impact on the program.