OFM warns budget strain as it readies for 2027–29 collective bargaining

The Office of Financial Management told lawmakers May 8 that preparing for 2027–29 collective bargaining will require balancing worker priorities with a tight fiscal outlook.

"The core issue is not how do we maintain or grow the workforce, but how do we sustain service delivery with a constrained hiring environment," said Jenny Sheehan, Labor and Policy Strategy Officer, Office of Financial Management, during a presentation to the Joint Committee on Employee Relations. Sheehan outlined workforce composition, bargaining timelines and likely union demands ahead of the next bargaining cycle.

Why it matters: tentative agreements must be submitted by Oct. 1 for OFM to cost them into the governor's budget and for the Legislature to consider funding. Sheehan said OFM will use the June and November forecasts and the October submission to test financial feasibility; failure to meet timing or feasibility can force a return to bargaining, as occurred in the last cycle.

Sheehan said roughly 77% of the executive-branch workforce is covered by collective bargaining agreements, about 5.5% are at-will and roughly 5.2% are nonclassified employees covered by CBAs. OFM expects bargaining on compensation, benefits and non-economic working conditions to intensify from June through September, with negotiators focused on proposals that the legislature could ultimately fund.

Unions are already emphasizing several non‑pay subjects, Sheehan said, including restrictions on the use of artificial intelligence in personnel actions, expanded leave (holiday, bereavement, disaster or critical-incident leave), immigration‑related safety and training, and restored access to members in hybrid workplaces (posting, email and in-person outreach).

On funding, Sheehan cited estimated costs from the prior 2025–27 cycle: about $1,200,000,000 in general funds and approximately $1.7 billion in total funds (those figures exclude WPEA because their tentative agreement was not part of the Oct. 1 feasibility submission). She noted the legislature in the prior cycle had initially declined funding a late submission, which required renewed bargaining before a funded agreement was reached.

Senator King asked how paid family and medical leave (PFML) factors into bargaining. "We don't actually bargain anything about the leave itself because we just let the law and the rules that apply to paid family and medical leave control that," Sheehan replied, adding that OFM ensures contract language is consistent with statutory PFML rules administered by the Employment Security Department.

Next steps: OFM staff will continue to assess costability in June forecasts and develop bargaining proposals; negotiators expect an active summer of bargaining and, if necessary, interest arbitration hearings that must still meet OFM financial feasibility review before being included in budget requests.