Iowa collective bargaining costs overstated, Culver aides say

Key leaders of Gov. Chet Culver's administration say the projected cost of a tentative collective bargaining agreement with the state's largest employees' union has been significantly overstated and they question whether contract changes proposed by Governor-elect Terry Branstad actually could be achieved.

Dick Oshlo, director of the state Department of Management, said the proposed two-year deal reached with the American Federation of State, County and Municipal Employees (AFSCME) Council 61 likely would cost the general fund $34.4 million in fiscal 2012 and nearly $36 million in the second year. Within the fiscal 2012 figure, only about $15.7 million would be associated with an across-the-board wage hike while the rest would be automatic “step” pay increases and costs associated with benefits that would not change under the new agreement, he said.

Oshlo said cost estimates ranging from $78 million to more than $100 million in the fiscal year beginning next July 1 are “phony” and assume that Branstad and the 84th General Assembly will spread the proposals pay increase negotiated with members of AFSCME and the State Police Officers Council to all state employees, which has not been the case recently in tight-budgeting years.

The proposed agreements call for covered employees to receive a 2 percent increase in base wages on July 1, 2011, and a 1 percent increase on Jan. 1, 2012, in the first year of the agreement, and a 2 percent increase on July 1, 2012, and a 1 percent on Jan. 1, 2013, in the contract's second year. The proposal would not change the current 4.5 percent “step” increases in wages for state workers who are not at the top of their pay scales.

The nearly 21,000 AFSMCE members covered by the proposed two-year agreement will participate in ratification votes at 31 locations around Iowa beginning Dec. 16 and concluding Dec. 22.

Jim Hanks, a Des Moines attorney who is under contract as the state's lead labor negotiator, said the proposed wage boost is lower than comparable awards paid to public employees at the city and county levels in Iowa, while the step increases are in line or on the low side of comparable groups and have been automatic since former Gov. Robert Ray approved the provision in 1977.

“The public needs to appreciate the fact that the steps were voluntarily bargained in the contract by Gov. Ray and Gov. Branstad. They were inherited by Gov. Vilsack and Gov. Culver and there was no realistic prospect that there would be any change in that. It's not fair to say there is realistic prospect for changing that because there isn't,” Hanks said.

“The simple reality is that when people understand the process they know that there's no realistic prospect of doing this,” he added. “The only reason you ever do that is for purely political reasons, which is OK.”

Branstad and legislative Republicans have criticized the proposed settlement as a package the state cannot afford given its fiscal 2012 budget outlook, but Hanks said the cost likely would go higher if state negotiators gambled on efforts to scale back contract provisions in binding arbitration given comparable labor agreements with public employees in Iowa and the lack of items the state could offer in return for wage or benefit concessions during negotiations.

Branstad, who is slated to begin his fifth term Jan. 14, has said he wants to resume contract talks with unionized state employees to discuss a two-year pay freeze like President Obama has proposed for federal workers as part of a new effort to reform state spending. He indicated during the campaign that he would like to renegotiate contract provisions that provide for automatic step pay increases and require state workers covered by single health-insurance options to pay a share of the premium costs.

“The idea that one party could simply reach in and remove the steps or substantially alter a provision that's been there since 1977 is odd,” said Jim Larew, Culver's chief of staff. “It's posed as a unilateral demand made in the context of a campaign with the assumption that the incoming governor if he were allowed to intervene would change that unilaterally. There's no basis in historic fact that that has ever occurred. One party doesn't just go in there and say I campaigned, I'm governor now and I'm taking this off the table."

Larew said state negotiators were surprised by the AFSCME offer, calling it “quite an astonishing development” since the proposal to only change the wage component of the existing labor pact was unprecedented in the state's collective bargaining history.

“It's not like we predicted or plotted this. We have no way of knowing how these things are going,” Larew said, but once confronted with the option it became the best course of action for the state to reach agreement on a contract that provided a fairly modest pay increase.

“This governor had the power. He accepts the responsibility. He thinks he made the right decision for Iowans and he thinks over time that history will bear that out,” Larew said.

Projected costs for tentative, two-year collective bargaining agreement between the state of Iowa and employee unions:

American Federation of State, County and Municipal Employees (AFSCME) Council 61

State General Fund Fiscal 2012 Fiscal 2013

“Step” pay increases $ 9,137,393 $ 8,664,517

Across-the-board pay increases $15,724,602 $16,249,897

Benefits $ 9,545,955 $11,060,894

Total $34,407,950 $35,975,307

State Police Officers Council

State General Fund Fiscal 2012 Fiscal 2013

“Step” pay increases $ 654,734 $ 424,848

Across-the-board pay increases $ 916,465 $ 901,392

Benefits $ 283,223 $ 120,846

Total $1,854,423 $1,447,086

Source: Iowa Department of Management