The Council 94 Collective Bargaining Agreement

Last week, State employee Council 94 ratified a collective bargaining agreement with the State that included what was described as a “vaccine incentive.” In the days that followed, I received emails from you asking questions about the contract and the bonus, and asking what role the Senate has in this matter. When I was on the Providence City Council, the Home Rule Charter required that we review and approve collective bargaining agreements. At the State level, however, the General Assembly does not have this responsibility or authority. With that said, as I will discuss below, this feature of the contract raises issues and concerns that are appropriate for the Senate’s attention, and which I look forward to working with my colleagues on the Senate Finance Committee and the Senate more generally to address.

In the version of the ratified contract posted online by the Providence Journal, the incentive in question appears in Paragraph 19. In summary, Paragraph 19 calls for two payments of $1,500. The first $1,500 will be issued immediately to all currently vaccinated employees (or those with a medical or religious exemption), while the second $1,500 will be issued in July, 2022 to the same group of employees plus those who are not currently vaccinated, but who become so before the date of the second payment.

The Providence Journal reported that the administration estimates the cost of these payments to be $9.6 million. As reported by the Boston Globe, the Governor stated that these payments would be funded with federal money. While we do not know the exact source the Governor referenced, my thoughts immediately went to the American Rescue Plan Act (ARPA), which allocated $1.1 billion to the State as part of ARPA’s “state fiscal relief fund.” As described in my November 14 letter, Congress prescribed four ways in which the State can use this money. I will now explain why I believe the only permissible category is “revenue replacement,” and I will then explain why the use of funds for this purpose amounts to the same as using State money.

Two categories can be eliminated quickly. The “vaccine incentive” is not being used for broadband/sewer infrastructure (the fourth ARPA category). While another ARPA category allows for premium pay for “essential workers doing essential work” the payments are not limited to Council 94 employees who worked at great risk of exposure to the coronavirus, through such front-facing positions as staff in hospitals or nursing homes.

Two permitted ARPA categories remain. The first allows expenditures to respond to the public health emergency. I will now explain why I believe this category does not apply.

The Treasury Department has issued guidance in the form of answers to frequently asked questions regarding the permitted use of ARPA funds to respond to the public health emergency. FAQ 2.12 addresses the issue of vaccine incentives, stating the following:

2.12. May recipients use funds to pay for vaccine incentive programs (e.g., cash or in-kind transfers, lottery programs, or other incentives for individuals who get vaccinated)?

Yes. Under the Interim Final Rule, recipients may use Coronavirus State and Local Fiscal Recovery Funds to respond to the COVID-19 public health emergency, including expenses related to COVID-19 vaccination programs. See 31 CFR 35.6(b)(1)(i). Programs that provide incentives reasonably expected to increase the number of people who choose to get vaccinated, or that motivate people to get vaccinated sooner than they otherwise would have, are an allowable use of funds so long as such costs are reasonably proportional to the expected public health benefit. (Emphasis added.)

If the administration is proposing to use ARPA funds in this manner, it would need to show that this expenditure is “reasonably proportional to the public health benefit.” I do not believe the first $1,500 payment provides any incentive for employees who are not currently vaccinated to get the vaccine, as those employees are not eligible to receive this first “incentive payment” at all, regardless of whether they are vaccinated in the future. I also am puzzled by the inclusion of vaccine-exempt employees among those eligible for the first $1,500 payment.

The second $1,500 payment appears to be structured more like an incentive, but still raises questions as to targeting. More specifically, I would like to know if the administration determined how many Council 94 employees have yet to be fully vaccinated (and for whom the second $1,500 payment could serve as an incentive) as compared to the number of employees who already are fully vaccinated or have medical or religious exemptions (for whom the payment would not be an incentive). As a result, I am skeptical as to whether this program qualifies for federal funding as a vaccine incentive with costs that “are reasonably proportional to the expected public health benefit.” I believe there is a risk that if the State claimed to use the federal funds in this way and we were audited, we would be required to refund most or all of the money to the federal government. 

There is one ARPA category left, namely the one that permits the use of federal funds to replace State revenue lost as a result of the coronavirus. These “government services” funds (which are limited in amount to roughly one third of the $1.1 billion total) can be used for almost any purpose (with a few limited exceptions such as pension payments and “rainy day fund” deposits). If this is indeed the administration’s plan, then the Governor’s statement that the “incentive” will be paid for with federal funds is essentially meaningless, as those funds are functionally the equivalent of State funds. In addition to being meaningless, this chosen use of federal funds is inconsistent with the goals announced by the Rhode Island Foundation, the General Assembly and the administration itself, all of whom have said the money should generally be used to invest in the State’s long-term interests, rather than squandering it on a short-term “vaccine incentive” which in reality is not a meaningful incentive at all. It also is worth noting that the Council 94 contract may set a precedent for other State employee compensation agreements and arrangements, producing ramifications that go beyond this week’s developments, compounding this imprudent use of taxpayer funds.

It is possible the administration is planning on using a federal funding source other than ARPA. If so, I would like the administration to identify that source and explain why this expenditure meets those federal requirements.  

This is not the first incident which has demonstrated the importance of legislative oversight of this administration’s decisions that affect public finance and policy. I look forward to working with the Finance Committee and the Senate more generally to learn more about these issues and exercise proper oversight, I will report back to you as this work progresses.