Minnesota's public employee unions have cut a tentative deal with the state that could save taxpayers millions in the event of a government shutdown next month.

The proposed agreement, which still must be approved by state union membership, would not give laid-off workers payouts for their banked time off or severance packages. But their insurance benefits would continue during a shutdown and they would be able to return to work after the shutdown with all their benefits intact.

The deal would also solve a tricky problem. In a shutdown, the state might not have been able to even write severance checks until the government was up and running again.

State officials have not come up with an exact estimate for how much the severance packages would have cost, but it could easily have run into the tens of millions.

"They are broke, so they don't have any money to pay that," said Keri Nelson, a registered nurse and director of collective bargaining for the Minnesota Nurses Association.

The expected change to the contract language is just one more sign that the state -- and its 36,000 union workers -- are making preparations for a shutdown to start on July 1 even as they hope that Republican legislative leaders and DFL Gov. Mark Dayton will reach a budget deal.

The unions and the state said the agreement is much like arrangements made in 2001 and 2005.

Eliot Seide, executive director of the American Federation of State, County and Municipal Employees Council 5, said the agreement would "protect the rights of unionized state employees during and after a shutdown." With about 18,000 members at work for Minnesota, AFSCME is the largest state employees union.

"The agreement addresses several issues of concern to both the employer and employee," said John Pollard, spokesman for Minnesota Management and Budget, the state's finance agency.

The deal means laid off state workers would not get big severance or vacation checks as soon as a shutdown started. For some more senior employees or those with large stores of unused time off, that could mean a loss of thousands of dollars upfront.

But the agreement also means that employees could begin collecting unemployment insurance quickly after they are laid off rather than having to wait for their banked vacation time to run out.

The state unions have set up dozens of meetings across the state in hopes of winning members' approval for the plan negotiated by their leaders over the past week.

Until winning the workers' OK, the state and its largest unions were reluctant to talk about the deal in detail. The Star Tribune obtained a copy of the document spelling it out under the state's open records law.

"Results and details will be announced June 29 after all seven state unions complete ratification voting," Seide said.

Rachel E. Stassen-Berger • Twitter: @rachelsb