Tom Farkas, the communications and training coordinator for the Maine Service Employees Association, hangs a banner during the Central Maine Labor Council Labor Day BBQ in Skowhegan on Sunday. Anna Chadwick/Morning Sentinel

The Mills administration will give thousands of state workers a one-time payment of $2,000 as part of an agreement that also includes a new review of state employee compensation.

The agreement announced by the administration Thursday is expected to cost $23 million, the state said. It comes in response to a complaint the largest union of state employees filed with the Maine Labor Relations Board in February.

The administration had balked at the demand for a new pay classification study by the Maine Service Employees Association, SEIU Local 1989, noting that state employee pay had risen by more than 24% under Gov. Janet Mills – more than the previous 16 years combined.

But union leaders argued that the administration’s 2020 pay study was outdated and accused the administration of ignoring a legislative mandate to update that study to account for what had been historic levels of inflation. The union, which represents more than 9,000 state workers in the executive branch, argued that Maine state employees had fallen behind comparable public and private sector workers despite the increases under Mills.

“While this resolution and the forthcoming classification study are important steps in addressing long-standing issues with our compensation and classification system, a lot more needs to be done,” union President Mark Brunton said in an email to state workers.

In response to the complaint, a spokesperson for the Department of Administrative and Financial Services, which oversees contract negotiations, said at the time that the union’s case “rests on faulty legal claims and factual inaccuracies” and ignores steps the administration already had taken to close the pay gap.

But in a statement issued Thursday, DAFS Commissioner Kirsten Figueroa said that she was “proud and happy” with the agreement, saying it “embodies the governor’s long-standing belief that conversation is better than litigation.” She also pointed to the administration’s efforts to improve pay and benefits for state workers.

“This new study, bolstered by another generous lump sum payment, will advance our support of state employees and allow us to continue to focus on parity within our classification system,” Figueroa said. “Our goal, from the beginning of the governor’s time in office, has been for state of Maine government to succeed as an employer of choice, which includes providing competitive wages and benefits that can match the reward provided by serving the people of Maine.”

House Minority Leader Billy Bob Faulkingham, R-Winter Harbor, accused the Mills administration of not negotiating in good faith with employees.

“This new agreement is another attempt by Mills to kick the can down the road and yet again betray Maine workers,” Faulkingham said in a written statement. He did not specifically address the $2,000 checks.

Full-time state workers will begin receiving their one-time payments of $2,000 in October. The administration said payments for part-time, seasonal and occasional workers will be prorated and some exceptions would apply for contractors and temporary employees. Limited-time positions would be eligible, the state said.

The payments are a recognition that the new study, which will be conducted by a third party, will take time to complete.

The study will look at whether state pay is competitive enough to attract and retain qualified workers and ensure that positions performing similar work with similar knowledge, skills, abilities and accountability are grouped fairly and consistently.

The deadline for the report is Dec. 31, 2025. Once available, the state will bargain over the report’s findings and recommendations beginning in May of 2026. DAFS is required to submit a report to the Legislature by Sept. 1, 2026.

The administration said the pay study is “the next logical step” in efforts to close the gap in pay between state workers and the private sector, which the union says is making it difficult to fill open positions.

In addition to increasing pay, the administration noted that half of all state employees are eligible for a new salary bracket that brings their overall pay increase to about 29% in the last six years. Officials also noted that they have strengthened longevity pay for people employed more than five years, guaranteed promotion pay of 7% (from 5%), merit increases and various stipends, shift differentials and allowances.

The union’s complaint was filed just after the administration concluded a difficult round of contract negotiations, which required mediation after the state and the employees union were hundreds of millions of dollars apart in terms of compensation.

The union ratified four contracts last December that included a 6% raise in January, an $800 payment in February and an additional 3% pay bump in July. It also included a child care reimbursement of up to $2,000 for certain workers, increased mileage reimbursement and increased longevity pay after five years of employment.

Brunton said in a written statement to the Press Herald that the state needs to do more to address the pay gap and “the staffing crisis in state government” that’s contributing to wait lists for children’s behavioral health and developmental services, disruptions in ferry service and inadequate services for young people in state custody at the Long Creek Youth Development Center, among other things.

“The reality is that despite the pay increase for state workers over the last few years, many other employers have competed much harder than the state for workers and offered wages that are more competitive than Maine state government,” he said. “The state simply hasn’t kept up in terms of competitive wages, and we see it in every state department.”