My Aug. 1 column, “State’s nonprofit-contracting system broken”, and this newspaper’s Aug. 22 editorial, “CT’s fiscal crisis presents reform opportunities,” both addressed the need for foundation-level reform of the state’s social services delivery system using the Department of Developmental Services (DDS) as a case in point. I am circling back to this topic because of new information that casts the state-employee union’s involvement in the matter in a negative light — suggesting that it owes someone either a credible explanation or an apology.
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My Aug. 1 column, “State's nonprofit-contracting system broken”, and this newspaper's Aug. 22 editorial, “CT's fiscal crisis presents reform opportunities,” both addressed the need for foundation-level reform of the state's social services delivery system using the Department of Developmental Services (DDS) as a case in point. I am circling back to this topic because of new information that casts the state-employee union's involvement in the matter in a negative light — suggesting that it owes someone either a credible explanation or an apology.
Here is the background: DDS has a $1 billion budget and provides care to approximately 16,000 people with intellectual disabilities — either directly (with its employees) or indirectly (by contracting with IRS-approved nonprofits whose mission is to care for the disabled). DDS is planning to lay off 605 employees and to outsource the work to nonprofits in the state. The estimated savings ($70 million annually) is attributable to the fact that the nonprofit employees are paid approximately half as much as the state employees.
The SEIU is trying to stop the outsourcing. In my August editorial, I rebutted ridiculous union assertions that nonprofits were in it to “make a profit” and paid “their workers close to half of what the professional union caregivers earn.” Simply put, the IRS prevents the nonprofits from operating on a for-profit basis, and the employees make so little not because their nonprofit employers want to make a bigger profit, but because our social-service system has been rigged to produce this result.
The rigging is simple in form and devastating in its effect. The nonprofits are functionally 100 percent cash dependent on the state (under a one-sided contract system) and they can't pay their employees with money the state won't give them. The state has used its leverage over the nonprofits to shortchange them for over a decade — which is why their employees' wages have fallen so far relative to their counterparts at the state. People with lifelong involvement in the field have told me that before the shortchanging started, the wage scales were roughly equivalent — so we (and the union) know whose employees got the better deal in the meantime.
Here's the new information I mentioned above: I did not realize until recently how large a percentage nonprofit employees are also union members. I knew there were some, but recent information from some nonprofits suggest it could be as high as 50 percent. To be fair, the precise data seem unavailable, but the point is that the percentage is high enough to be troublesome simply because the union has as much of an obligation to protect the interests of the nonprofit employees in the union (helping them get a raise) as it does in protecting the interests of the state employees (helping them keep their jobs).
Here is another way to look at it: The nonprofit employees pay union dues too, such that if I were one of them I might ask if my dues are being used to pay for efforts to save the jobs of my higher-paid comrades at the state; or, why isn't my union not lobbying hard to get more state money to my nonprofit employer so it can give me a raise? There is more: My sources tell me the union hinders a nonprofit's ability to reward excellent performance monetarily unless it gives all employees of the same rank the same reward — so no reward is given.
Since August, the union has taken its campaign on behalf of the state workers to court (Mathews v. DDS filed in September and SEIU Local 2001 v. DDS filed in October). Litigation is very expensive and if I were a union member working for a nonprofit, I'd wonder if that's how my dues are being used.
This newspaper's Aug. 22 editorial gets right to the heart of the problem by invoking a 2011 legislative Program Review and Investigations Committee report, which concluded “that it is on average about twice as costly for residential care in public settings, with little to no difference in the quality of care provided.” The report recommended “an accelerated pace of moving away from a 'dual service system' to a private sector service model.”
The two things I would add to this are that in this context the phrase “private sector” means privately governed, but not private ownership — because nonprofits have no shareholders and are “owned” by the communities they serve. Second, there is plenty of room in the middle between the compensation of state workers and that of nonprofit workers to ensure fairness while still saving the state some much-needed money.
John M. Horak is a retired lawyer and the director of TANGO Nonprofit Education and Consulting in Farmington.
