All union contracts for the upcoming 2027-29 biennium were finalized by the October 1 deadline and were either ratified by union members or awarded through third-party interest arbitration decisions. The next step is to evaluate and determine financial feasibility of the agreements and awards in relation to the broader state budget.

Agreed to, not yet funded

All tentative agreements and interest arbitration awards are subject to the state’s budget and legislative process. That means funding for contracts isn’t guaranteed, whether agreements were reached at the table or awarded by a third-party arbitrator.

Steps to funding contracts

  1. Agreements are reached at the table or awarded by a third-party arbiter by October 1.
  2. Details and estimated costs of the awards and tentative agreements (if ratified by union membership) are submitted to the OFM director by October 1.
  3. The OFM director evaluates if the tentative agreements and awards are financially feasible, with limited exceptions.
  4. If found financially feasible, the contracts are included in the governor’s budget in December. If not, parties can return to the bargaining table.
  5. If contracts are included in the governor’s budget proposal, the Legislature considers the funding request during the 2027 legislative session.
  6. If the Legislature votes to approve the contracts, they are funded in the biennial budget when session wraps up in April 2027 and will take effect on July 1, 2027.

What is interest arbitration – and how did it impact this cycle?

If agreements can’t be reached between the unions and state at the bargaining tables, state law sets out a process for independent third-party arbitrators to make a decision for certain contracts.

These arbitrators do not work for the union or the state. They also make decisions independent of each other – which means some arbitrators may grant wage increases while others do not. We saw these variances occur in the 2027-29 bargaining cycle – although each arbitrator was given the same information about the budget situation, some awarded wage increases and some didn’t.

What is “financial feasibility”?

Agreements – whether they come about through negotiation at the bargaining table or interest arbitration – are subject to the state’s budget and legislative process and must be deemed financially feasible by the OFM director, with limited exceptions.

This determination by the OFM director happens after the caseload and revenue forecasts come out in November. At that point, the OFM director will look holistically at the budget picture and decide if the state can afford to fund the agreements and awards reached during the bargaining process.

A few key factors the director considers for financial feasibility include the revenue projections from the November forecast, expected costs for state services (caseloads and other expenses), and any legal obligations the state budget carries.

The OFM director submits this determination to the governor to be included in the proposed budget, and the determination is usually announced when the governor’s budget proposal is released in December. The Legislature convenes in January and considers the funding request as part of the budget if the contracts are determined to be feasible and included in the governor’s budget proposal. If the Legislature does not fund the contracts, state law provides additional options to move forward, including reopening all or part of the agreement or award or returning to agreed-to impasse procedures.

Read more about the collective bargaining process.