OPM undersecretary outlines tentative SEBAC 26 state employee deal; lawmakers press on costs

Under Secretary David Kryki of the Office of Policy and Management told the Appropriations Committee that a tentative agreement between the state and the state employees’ bargaining agent coalition would establish a wage pattern for 32 bargaining units and include a 2.5% general wage increase plus a step or equivalent for fiscal years 2026–28.

Kryki said the first year increase would be effective and retroactive to July 1, 2025, and apply to employees on the payroll at the time of legislative ratification and to employees who transitioned directly from active employment into retirement after that date. “The SEBAC 26 agreement establishes a wage pattern framework for each of the 32 collective bargaining agreements that includes a 2 and a half% general wage increase and a step or its equivalent for fiscal years 26, 27, and 28,” Kryki told the committee.

He described several health‑care provisions that negotiators say will reduce costs while preserving benefits: an incentive for employees to waive employer coverage when they have viable alternative coverage, expanded Medicare‑wrap options for retirees who prefer a traditional Medicare wrap rather than a Medicare Advantage plan, digitized health‑enhancement payments, fertility‑services information, and deeper partnerships with local providers (listed in testimony as “Yukon Health”) to shift care such as infusions into lower‑cost outpatient settings. Kryki told members he used a conservative waiver assumption — roughly 2.5–5% take‑up in Connecticut versus 10–20% in some other jurisdictions — and said the health changes yield an estimated annualized savings of about $31 million, with a $26 million line tied to anticipated waiver behavior.

Representative Tina Corpus and other lawmakers pressed OPM on design details. Corpus asked whether the proposed waiver incentive would be pensionable and how large the per‑paycheck incentive might be; Kryki replied the incentive has not been finalized and said OPM’s analysis modeled a payment in the range of $50 to $150 per paycheck depending on coverage tier, and that the healthcare cost‑containment committee will finalize the mechanics. "We analyzed it at a payment between $50 and $150 per paycheck," Kryki said; on whether it would be pensionable he said, "that has not been determined."

Kryki also told the committee the tentative agreement includes pension administrative fixes intended to reduce time‑consuming appeals and to correct cases where employees were placed in the wrong pension system, and that telework policy — currently codified through prior negotiation and arbitration — will be revisited ahead of the contract’s 2027 expiration via a work group to consider agency needs, training and collaboration goals.

Budget questions focused on the Reserve for Salary Account (RSA) and higher‑education costs. Multiple legislators cited the Office of Fiscal Analysis fiscal note showing significant impacts for constituent units and asked how those costs will be funded. Neil of OFA, joined by Bill Linderman, told the committee their projection is that appropriated RSA, carry‑forwards and the appropriated amounts in the biennial budget would be adequate to cover the appropriated personnel costs for FY26–27, but they drew a distinction between appropriated costs and non‑appropriated costs (for example, employees funded by federal grants, research funds, or certain constituent‑unit accounts) that are not budgeted as general‑fund appropriations.

OFA said non‑appropriated components — the fiscal note’s $82.7 million in FY26 and $174.8 million in FY27 examples — would generally be paid from the underlying non‑state sources that fund those positions, not from RSA. OPM and OFA representatives told members they would continue to work with institutions and the legislature to limit negative impacts on services and students.

CBAC negotiators and union representatives who testified framed the agreement as restoring pay closer to inflation after years of constrained raises. Danny Livingston, chief negotiator and general counsel for CBAC, said state workers remain behind earlier pay levels when adjusted for inflation and urged support for the tentative agreements while noting the parties sought “win‑win” efficiencies where possible.

Procedure and next steps: the committee moved to advance the House and Senate resolutions that would approve the tentative agreement; votes were taken by roll call and the clerk left votes open to allow remote members to cast ballots later. Committee members also considered a slate of unrelated bills and placed several on a consent calendar; votes on multiple items were held open until the announced cutoff time.

What remains unresolved: final incentive amounts and whether any incentive payments will be pensionable, the precise allocation of non‑appropriated costs for constituent‑unit employees, and final budget adjustments once the legislature acts on the governor’s biennial budget and any supplemental RSA appropriations. OPM, OFA and the negotiating parties said they will provide follow‑up detail to answer those outstanding technical questions.

The committee left votes open (the clerk announced votes would remain open until the posted cutoff) and scheduled further procedural steps for final consideration.