Pay raises are part of state employee contracts passed by a divided House

When labor contracts began to be negotiated last year between the state and 11 unions and associations, along with five compensation plans for unrepresented employees, nobody foresaw a pandemic that would essentially clean out state coffers.

Now, DFL and Republican House members are battling whether to honor the collective bargaining agreements.

Neither side of the aisle disputes the good work done by the estimated 50,000 state employees, including many — like nurses, epidemiologists, other health care workers and those processing unemployment applications — on the front line of the COVID-19 pandemic. Nor is there disagreement the state needs to keep its top talent.

The problem is money — more so the lack thereof — which proved to be point of contention in the House Monday.

In the end, HF2768 was passed 74-60 and sent to the Senate. The lone member to not vote with their party was Rep. Paul Marquart (DFL-Dilworth), who joined all Republicans in voting against the bill.

Rep. Leon Lillie

“These were negotiated in good faith, they’re part of our team and they’re out there doing good work,” said Rep. Leon Lillie (DFL-North St. Paul), the bill sponsor. “I think we should be pretty proud of our state workers, and a good way of showing that is by passing this bill.”

“[State workers] shouldn’t be punished now that this pandemic has gone on because these are people that work hard and are stepping up and making sure our state continues operating the way it should,” said Rep. Michael Nelson (DFL-Brooklyn Park).

Most contracts with groups such as the Minnesota Nurses Association, Minnesota State College Faculty, Middle Management Association and a trio of AFSCME units, including corrections officers, call for a 2.25% raise in July 2019 and a 2.5% bump this July. Additionally, annual merit-based increases generally vary between 2.75% and 3.5%; however, on average, about half the employees are eligible for these increases. An increase to the employees’ share of health insurance costs, such as co-pays and deductibles, is also included.

[MORE: View the contracts summary]

Traditionally, these agreements are valid for two years and coincide with the state biennium. But there is a gamble associated with Minnesota’s process. Contracts ratified and submitted to the Legislative Coordinating Commission Subcommittee on Employee Relations that are not voted down, mostly took effect retroactively, meaning employees have been paid since July 1, 2019 under terms of the agreements. However, state law requires ratification of the contracts by the House and Senate, otherwise the agreements become void, and thus, the increase would need to be repaid.

Minnesota Management and Budget estimates the increases will cost the state just over $444.3 million this biennium, which ends June 30, 2021, and $756.6 million in the next biennium. Contract costs were built into the state budget passed last year.

House Majority Leader Ryan Winkler (DFL-Golden Valley) said one-time wage increases total about $90 million for the remainder of the contract; however, because of the employees’ increased health care contributions, the net cost increase is actually about $58 million.

“In a deficit year, in a budget of $50 billion in the General Fund, is the first $58 million that we would cut, the money that would come directly out of the hands of nurses and epidemiologists and corrections officers? Seems to me that should not be the first $58 million we pull out of this budget,” he said. “… We have the resources, the people and the talent to face this crisis. We just need the will to act.”

Six days after it was announced the state’s projected budget deficit for the current biennium is estimated to be $2.43 billion, Republicans again argued for fiscal responsibility.

House Majority Leader Kurt Daudt (R-Crown) said the state cannot afford the more than $1 billion cost of these agreements over the next three years.

Daudt hopes new agreements can be worked out whereby the raises that began last summer remain, but upcoming raises disappear.

“What do we tell the Minnesotans that are out of work? Do we tell them we’re all in this together? Does this bill say that we’re all in this together? … This literally is about our world getting turned upside down and we are all in this together,” he said.

State worker salaries make up about 7% of the state’s budget, Gov. Tim Walz said last week. Walz and his 24-member cabinet are each taking 10% pay cuts the rest of the year. The Senate has implemented a salary freeze for its employees.

There is no direct companion bill in the Senate. However, Senate President Jeremy Miller (R-Winona) sponsors SF4006, and Sen. Jason Isaacson (DFL-Shoreview) sponsors SF4543, both of which would ratify some contracts in the House bill. Each awaits action by the Senate State Government Finance and Policy and Elections Committee.