Scope of union backpay issue depends on impasse ruling

The state owes 24,000 state employees millions of dollars in backpay for failing to pay raises, but Gov. Bruce Rauner’s administration is pushing to the limit how much it will have to pay amid a contract dispute with the state’s largest public-sector union. 

The Rauner administration says whether taxpayers are on the hook for more than $400 million to state employees in raises from a contract that expired more than three years ago depends on the ultimate outcome of whether there’s an impasse.

The Illinois Labor Relations Board ordered the Rauner administration to issue reports on paying step increases for 24,000 state employees by Oct. 1. The raises are based off a contract that expired June 2015, shortly after Rauner took office.

Rauner’s office has previously estimated it will cost taxpayers $412 million for the four years of higher pay if the state is forced to pay all of the past years’ frozen step increases in the fiscal 2019 budget.

In a filing this week, the Rauner administration told the board plans to comply with the order, but whether the administration owes back pay from January 2016 to present depends on if there was an impasse during negotiations, as the state declared more than two years ago.

“Although the state was not able to provide all of the information requested by October 1, it has made significant strides towards the outstanding items,” the administration’s filing said.

While the Illinois Supreme Court has declined to hear an appeal over the step increases, the Rauner administration is still awaiting word whether the high court will take up the issue of whether the AFSCME union and the administration are at impasse.

“The State believes its obligation to pay step progressions ends on January 8, 2016, the date impasse occurred,” the filing said. “The Labor Act permits the State to implement its last, best, and final offer once impasse occurs, and that offer did not include steps. There does not appear to be any genuine dispute between the parties about this legal principle. The only dispute is when and whether impasse occurred.”

To that, the administration said it’s got three different reports it’s running: Report 1: assumes step progressions are owed through January 8, 2016, which is the date that impasse occurred; Report 2: assumes step progressions are owed through December 13, 2016, which is the date that the Board ruled on impasse; Report 3: assumes step progressions are owed through the time the report was produced, as if no impasse occurred at all.

The AFSCME union says there’s no impasse and said Gov. Bruce Rauner is playing games.

“Bruce Rauner will do everything in his power to rob state employees of the money they are rightly owed, including running up costs to taxpayers in the form of interest payments that will eventually be due,” AFSCME Council 31 Executive Director Roberta Lynch said.

Public finance analysis website Wirepoints President Ted Dabrowski said regardless, the state must be deliberate.

“We need to make sure one, we get it right and No. 2 we have to keep hoping that taxpayers won’t be burdened with this additional payment,” Dabrowski said.

In its filing, the state also said it needs to take its time to get the step increases it owes right, citing problems of overpayment and subsequent clawbacks that happened during Gov. Pat Quinn’s pay spat with the union.

“AFSCME employees grieved the state’s attempts to recoup miscalculated overpayments at least 100 times,” the filing said.

The Rauner administration also gave an example of how not getting it right could hurt employees.

“In at least one instance, a bargaining unit member was incorrectly overpaid, and had sought financing for a house based on the higher pay,” the filing said. “Once the mistake was corrected, she was unable to maintain the house payments and lost the home.”

Even though that pay dispute was from five years ago, the state said the “fallout from the … errors continued into calendar year 2018. Thus, the importance of getting this correct, the first time, cannot be overlooked.”

The administration also said lawmakers did not budget for the step increases, further complicating the matter.

Whatever is owed will squeeze taxpayers, Dabrowski said.

“I think it’s going to put pressure on the taxes and we’re going to see tax hikes again to pay these kinds of benefits,” he said. “It’s going to push up the pensions and just lead to the continued degradation of Illinois.”

He said Illinois state workers are already the second-highest paid in the country.

The Rauner administration said it’s looking forward to resolving the issue and for the next administrative hearing.

Comptroller Susana Mendoza chimed in with an official office communication saying the governor is dragging his feet.

“I believe that workers are owed over three years of raises denied by Governor Rauner and that the sooner he acknowledges this fact, the better,” Mendoza said. “He has no excuse for failing to identify the costs associated with this issue in a timely manner,” the comptroller said.

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