Saturday, August 13, 2011

Actuarial Doubts

There are three kinds of lies: lies, damned lies, and statistics” – Benjamin Disraeli

Actuarial figures supporting claimed budget savings in Plan A2 -- son of Plan A, a slightly revised budget that Governor Dannel Malloy months ago submitted to the General Assembly for approval -- have been called into doubt for some time.

The Malloy budget approved by the Democratic controlled General Assembly early in May, for instance, contained a savings line that could not be actuarially verified. The Malloy budget simply assumes a savings of $270 million arising from a commitment from state workers to devise ways of saving money.

When Republican leaders -- who have been successfully cut out of the budget negotiation process by Mr. Malloy and Democratic leaders in the General Assembly – questioned the assumptions that underpinned the projected savings, Malloy communications director Colleen Flanagan intemperately responded that the figures had been verified by their actuaries and they were accurate – “period!”

But there are few periods in politics, and one budget exile, House Minority Leader Lawrence Cafero, has now bravely questioned what Mr. Disraeli most certainly would call a damned lie.

Period? Seems more like a question mark, Mr. Cafero mused after a letter written by Malloy budget chief Ben Barnes began to circulate through the political grapevine.

Mr. Cafero noted  that “Office of Policy and Management (OPM) Secretary Ben Barnes contradicted claims that savings included in the $1.6 billion state employee union concessions package had all been verified by actuaries” in a letter Mr. Barns sent to State Senator Andrew Roraback.”

In his letter to Mr. Roraback, Mr. Barnes sought to “correct what must be a misunderstanding about Ms. Flanagan's statement.”

The review conducted by Mr. Malloy’s actuaries, Mr. Barnes wrote, centered upon “the health benefit plan design changes, and the changes to plan design and eligibility for the State Employee Retirement System (SERS)… Other savings in the agreement reflect commitments between SEBAC and the State to identify operational, contractual, and efficiency‐related savings in the areas of technology, healthcare contracting (under the terms of the existing plan of benefits), and other operational savings. These particular commitments to achieve savings were not actuarially determined, because they are not savings of an actuarial nature [Italics mine]. Nevertheless, they reflect a commitment between the State and our employees, and more importantly between the Governor and the people of Connecticut, to reduce the cost of government this year and into the future.”

Noting that Mr. Barnes “rather clearly states only two areas of the plan were verified" by Malloy hired actuaries, Mr. Cafero offers a “period” of his own: “This means two things, and they are both important: First, the governor's office has been less than factual in their wholesale assurances of actuarial reviews. Second, the question still persists - how will we achieve these projected savings, and what will we do if they can't be realized?”

The Democratic controlled General Assembly last May approved over the protestations of Republicans a budget that was dependent upon an affirmation from SEBAC, the union coalition authorized to negotiate contracts with the Malloy administration, that never materialized. State union worker rejected Plan A. Leaders of SEBAC, yielding to strong suggestions made by the Malloy administration, then unilaterally changed union by-laws to insure that a future vote would not incommode Mr. Malloy, his administration or supportive Democratic leaders in the General Assembly – principally Senate President Don Williams and Speaker of the House Chris Donovan, who recently announced he is running for the U.S. House in the 5th District.

And now, on the eve of what some consider a fixed vote, rank and file union members are poised to affirm a budget that relies on savings that cannot be verified by the General Assembly’s own Office of Fiscal Analysis.

Responding to Mr. Cafero’s concerns, Malloy senior advisor Roy Occhiogrosso was every bit as terse as Ms. Flanagan. None of Mr. Malloy’s agents can rightly be accused script deficiencies; they are always on the same page.

“Let's be honest,” Mr. Occhiogrosso retorted, “What's bothering Rep. Cafero and his Republican colleagues is that if all this comes to pass it'll be a Democratic Governor who achieves this historic restructuring of the relationship between the state and its workforce, not a Republican. It's sour grapes on their part - nothing more, nothing less.”


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