State workers see some benefits erode as governor tries to rein in spending

Health care costs increase, and jobs are being eliminated

February 21, 2005|By Ivan Penn | Ivan Penn,SUN STAFF

Over the past three years, state police aviation worker James Anastasion has watched his benefits erode.

Just as with all state employees, the 25-year worker began paying more for health insurance Jan. 1 while struggling, on his salary, to keep up with inflation. He no longer receives the annual $500 to $600 contribution to his retirement given to state workers in the past. And the yearly bonus that put as much as $1,000 a year in his pocket is gone.

"They're trying to take more and more away from us," said Anastasion, 52, of Sykesville. "Now you've got people thinking, `Maybe I might want to venture somewhere else.'"

Across Maryland, state workers are feeling the pinch of fiscal belt-tightening as Gov. Robert L. Ehrlich Jr. tries to rein in spending and balance the budget. The workers say they have shouldered a significant part of the fiscal burden in the process, including:

Wage freezes during fiscal years 2003 and 2004.

The loss of the annual bonuses that as many as 68 percent of the state work force received as recently as five years ago.

Increases in health insurance premiums and co-pays, which rose $5 to $50, for visits to primary-care physicians, specialists, emergency rooms and physical therapists.

Notices to 137 workers last month that their jobs would be eliminated June 30 and they have no guarantee of another position with the state.

Shareese N. DeLeaver, an Ehrlich spokeswoman, said the governor understands some of the hardships that employees are facing.

"As a family man, the governor shares the concerns of the working-class family and will continue to work openly with our state employee unions," DeLeaver said. "However, as a chief executive of the state, the governor must work within the constraints of Maryland's budget and negotiate in the best interest of all Marylanders in a fiscally responsible manner."

Employment experts say Ehrlich's decisions to increase employee contributions to health insurance and to cut other benefits mirror those of other chief executives - public and private - in an economy that has struggled over the past three years.

"Companies that are having financial problems are taking actions like this, if there's a big state deficit or performance for competition," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas Inc., a Chicago-based outplacement consulting firm.

"Health care costs have been rising at double-digit premiums for the last two or three years," he said. "More companies are canceling their health insurance. The number of uninsured people is growing."

The same is true for state governments.

Arturo Perez, a fiscal analyst with the National Conference of State Legislatures, said his group's latest survey showed many states struggling at the beginning of the fiscal year that began July 1. Higher education has been the favorite target for budget-balancing, he said.

But Perez said Maryland was one of just four states to use layoffs and reduced employee benefits in balancing this year's budget, and one of nine to impose travel bans or hiring freezes.

Some state employees say they are working one or two other jobs to meet living expenses.

Disabled, retirees

Disabled state workers complain that cuts in health care benefits such as visits to physical therapists and a rise in co-pays are making life harder.

Some workers who have reached the age of retirement plan to continue working because they fear their retirement benefits won't give them enough to maintain their standard of living - a situation that many retirees are facing.

"Some classes of people just won't be able to afford these cuts," said Del. Talmadge Branch, an East Baltimore Democrat and vice chairman of the House Appropriations Committee. "It's a real problem."

Ehrlich gave workers a flat $752 raise for this fiscal year, which began July 1, and he proposes a 2 percent cost-of-living increase and a 2 percent "step" or merit increase.

But workers such as Anastasion say the salary increases are being offset by increased health insurance costs as of Jan. 1. And workers could see health insurance costs rise again July 1 when new policies go into effect.

The administration projects health insurance costs increasing as much as $128 million during the current and next fiscal year, state and union officials said. Part of that includes $58 million needed from state general funds to ensure health care is fully funded.

Union officials said the state is looking to the workers to meet the increase.

"A hundred and twenty eight million dollars is a lot for state employees and retirees to swallow," said Sue Esty, legislative director for the American Federation of State, County and Municipal Employees.

Esty and other union officials are negotiating with the Ehrlich administration to ease the burden.

`Pay more for less'

David Harding, president of AFSCME's Local 1535, said the state's actions are forcing workers "to pay more for less health care but also at a time when they're losing other benefits."

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