Harrisburg, PA – Secretary of Administration Sharon Minnich today announced details of a new three-year labor agreement which is in the final stages of being voted on by members of the American Federation of State, County and Municipal Employees (AFSCME) Council 13 that will save approximately $13.6 million in health care costs.
In addition to the savings in the proposed contract, the Pennsylvania Employees Benefit Trust Fund (PEBTF) has approved further changes to active employee health care that will save $59 million over the next three years, strengthen the financial stability of the fund, preserve high quality benefits for employees and mitigate increases in employer contributions. The commonwealth also applied plan design changes to the retiree population which also resulted in savings of $121.2 million. The Retiree Employees Health Program (REHP) currently provides health benefits to approximately 64,000 retiree state employees and an additional 40,000 dependents. There are no increases to retiree contributions.
The AFSCME agreement covers the majority of union-represented employees under the Governor’s jurisdiction. “The modest wage increases in the proposed AFSCME agreement, coupled with greater contributions for health benefits, represent a package that is fair to employees and responsible to taxpayers, and I would like to thank AFSCME for being a partner in these negotiations,” said Secretary of Administration Sharon Minnich.
Key provisions of the AFSCME contract include:
• A 25% increase in the minimum employee health care contribution from 2% to 2.5% of salary;
• A 7.25% increase in employee base pay over the life of the three-year agreement.
• A reduction in the health benefit entitlement for those on extended leaves without pay.
The increase in AFSCME employee health care contributions will save approximately $13.6 million over the life of the contract. Extending this savings to all employees results in approximately $31 million in savings. In addition, changes to the extended leave without pay provisions in the AFSCME contract will save an additional $3 million.
In accordance with Act 100 of 2016, signed into law by Governor Wolf earlier this year, the administration has provided a copy of the proposed collective bargaining agreement and required cost analysis to the Independent Fiscal Office (IFO). This transmittal details the costs and savings associated with the AFSCME contract and other agreements collectively bargained under Act 195, as well as savings achieved through collective bargaining and the PEBTF. When combined, all savings associated with employee contributions and health care plan design changes result in approximately $214.2 million over the next 3 years.
3-Year Savings
(amounts in millions) All Funds
Collective Bargaining
Employee contribution change ($31.0)
AFSCME length of benefit change ($3.0)
Total Collective Bargaining ($34.0)
Health Plan Design Changes
PEBTF Active Plan Design ($59.0)
Retiree – Non-Medicare Plan Design ($62.7)
Retiree – Medicare Plan Design ($58.5)
Total Plan Design ($180.2)
Total ($214.2)
3-Year Costs
(amounts in millions) All Funds General Fund
Collective Bargaining
AFSCME wage & employer benefits $292.4 $96.9
Act 195 Pattern $135.8 $59.8
Total $428.2 $156.7
Negotiations with other unions whose contracts expired on June 30th are continuing.
