Murphy Gives Raises, Gets Savings in N.J. Public Union Deal

(Bloomberg) -- Governor Phil Murphy negotiated a contract with New Jersey’s largest public-workers union that includes four years of raises in return for health-care cost cuts.

Communications Workers of America New Jersey, with 32,000 state-worker members, would be paid 2 percent more annually from fiscal 2020 to 2023 under a labor agreement that’s up for a ratification vote this month, according to Hetty Rosenstein, the union’s area and organizing director. Some employees at the maximum pay step, ineligible for boosts, instead would get bonuses of as much as $750, she said.

The CWA agreement, expected to go into effect on the July 1 start of fiscal 2020, would save the state $70.4 million in each of the four years if the union finalizes it and a few smaller ones follow suit, according to treasury officials. Even with the raises, the state would save $133.6 million over the contract’s life because of the health-insurance changes, according to the administration.

Murphy, a Democrat who won the 2017 election with public-employee backing, said the deal shows a departure from the days of his predecessor, Republican Chris Christie, who battled unions and changed benefits through legislation instead of bargaining.

“Together, we’re turning the page from the failed approaches of the past toward a new chapter of mutual respect and dialogue with our workforce,” Murphy, 61, a former Goldman Sachs Group Inc. senior director, said in a statement announcing the agreement.

Murphy said in his $38.6 billion budget address on March 5 that he expects to save more than $800 million in medical costs through insurance negotiations. New Jersey’s health and pension costs historically have left little room for new spending in annual budgets.

The insurance savings would result mostly from a change in out-of-network reimbursements, Rosenstein said. CWA members themselves would save an amount equal to as much as 3 percent of annual pay, she said.

“Our members’ health-care costs are going down, and that’s the heart and soul of this agreement,” Rosenstein said.

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