When psychiatrist Gertrudis
Agcaoili retired last year from a state mental hospital in Napa, California,
she took with her a $608,821 check for unused leave banked in a career that
spanned three decades.
She wasn’t alone. More than
111,000 people who left jobs as employees of the 12 most populous U.S. states
collected $711 million last year for unused vacation and other paid time off,
according to payroll data on 1.4 million public workers compiled by Bloomberg.
California
employees accounted for 39 percent of that total. Since 2005, the state’s
workers collected $1.4 billion for accumulated leave, calculated at their last
pay rate, regardless of when the time was accrued. New Jersey Governor Chris
Christie calls such payments “boat checks” because they can be large enough to
buy yachts.
“The people making decisions
are clearly letting this happen,” said Steven Frates, research director of
Pepperdine University’s Davenport Institute on public policy, based in Malibu, California. “It starts with the governor
and the legislature and wanders down the line. These people are playing with
the taxpayers’ money.”
The lump-sum retirement
payments, seldom granted in private industry, mirror a broader trend in which
California’s public employees receive far more than comparable workers
elsewhere in almost all job and wage categories, from public safety to health
care, base salary to overtime. California, the world’s ninth- biggest economy,
has set a pattern for lax management, inefficient operations and out-of-control
costs, the Bloomberg data show.
Routine Accumulation
Managers and employees
throughout California government routinely ignore a rule limiting accrued time
off to 640 hours, or 16 weeks. The accumulation of vacation hours accelerated
in California from 2005 through 2010, fueled by a state policy forcing workers
to take unpaid time off, or furloughs, before using paid leave.
That requirement helped reduce
short-term payroll costs and balance budgets under former Governor Arnold
Schwarzenegger, a Republican, and current Governor Jerry Brown, a Democrat,
while deepening the state’s future obligation.
Unused leave grew to $3.9
billion in 2011 from $1.4 billion in 2003, according to state financial
reports, partly because of staff shortages and around-the-clock needs at
agencies such as prisons that forced employees to put off vacations.
‘Last Resort’
“Furloughs were never meant to
solve the state’s structural budget problem or save money in the long-run,”
Schwarzenegger said in an e-mail. “They were a drastic, last- resort option to
conserve cash in the short-term and keep state programs up and running.”
Since 2005, more than 1,390
full-time California state workers collected “boat checks” that were greater
than their annual base pay, data compiled by Bloomberg show. Those workers were
paid a total of $141 million, or an average of $101,274.
“The cumulative effect of
these numbers is going to spur voter outrage,” said Dan Schnur, director of the
Los Angeles- based Jesse M. Unruh Institute of Politics at the University of
Southern California. “Californians just voted to raise taxes on everyone who
makes over $250,000 a year, and the prospect of state employees making much
more than that isn’t likely to sit well with them.”
New Jersey caps lump-sum
payments at $15,000 per state employee, and such limits are common at private
companies. No other public employee in the 12 states providing data to
Bloomberg took a lump-sum payment greater than $190,000 last year, while 22 in
California did.
Fiscal Burden
The payments add to the fiscal
burdens facing deficit- plagued states such as California, where voters last
month agreed to pay more taxes to avoid deep cuts to schools. Four public
employees got separation checks of more than $300,000 last year, even as lawmakers
andBrown slashed funding for the needy.
More than 19,000 lump-sum
payments totaling $275 million were issued in California last year, an average
of $14,110 each. The average payment in the other 11 states was $4,764.
In California, recipients
included a pair of prison dentists who cashed out $784,000 combined, and a
highway patrol chief who took a $280,258 check when he retired.
Lottery Winner
Employees in agencies that
operate around the clock with staffing shortages and overpopulation, such as
prisons and mental hospitals, collected some of the largest checks. Yet
engineers, lawyers, agency managers and executives, an air pollution specialist
and a lottery agent also cashed out with six-figure payments, the data show.
Of the 100 biggest payments in
2011 in the dozen states, all but 10 went to California state workers. The
average payout for the top 100 was $178,267, in addition to regular wages.
Outside California, Pennsylvania ranked second in lump-sum
payments, including 33 state police officers receiving more than $100,000 each.
The executive director of that state’s lottery retired with a $107,000
separation check, the data show. In contrast, the biggest payment in Texas was
$69,271.
In Pennsylvania, accrued and
unused sick time for most employees is paid on retirement after 25 years of
service or in the event of death with seven years of service, said Dan Egan, a
spokesman for the state’s Office of Administration. In general, the maximum sick
days that can be carried over is 300, except for state troopers, who can accrue
up to 410, he said.
Pays Nothing
Texas doesn’t pay for unused
compensatory time or holiday time, and unused sick time is paid only in the
case of an employee’s death, to the worker’s estate, said R.J. DeSilva, a
spokesman for the state comptroller’s office.
Ohio pays 55 percent of
accrued sick time to employees who retire and 50 percent to those who resign,
Molly O’Reilly, a spokeswoman for the Ohio Department of Administrative
Services, said by telephone.
In California, Agcaoili, now
79, cashed out 2,893 hours of annual leave when she retired in August 2011.
That meant she had accumulated the equivalent of 72 weeks’ worth of time off.
Her lump-sum payment brought
her total wages for the year to $770,870, according to the controller’s office.
Since 2005, she had been paid $2.4 million as a state worker. She now receives
a $199,000 annual pension, according to the California Public Employees’
Retirement System.
‘My Prerogative’
“It was my prerogative,”
Agcaoili said in a brief telephone interview from her home in Napa. “I did not
go on vacation.” She declined to comment further.
Because California has been
reducing its workforce and frozen hiring, state managers have been deterred
from forcing employees to be away from work long enough to use up accumulated
leave, said David Gay, a spokesman for the Human Resources Department.
“Requiring employees to take
all of their leave would have increased overtime costs at state prisons and
hospitals, lowered reimbursements in tax collection and other fee-generating
programs, and reduced services in other settings,” Gay said in a statement.
“Governor Brown is developing
policies to cut leave balances at the same time that he’s stabilizing the
state’s budget,” Gay said. “A balanced budget will lessen the need for
furloughs and similar programs that have provided short-term fiscal relief but
that have imposed longer-term obligations in the form of deferred employee
compensation.”
Less than 10 percent of state
workers exceed the limit for accrued leave, according to data from the
California Human Resources Department.
New Deal
Still, Brown approved a new
two-year contract with prison guards in 2011 that allows them to accrue an
unlimited amount of unused vacation as well as granting additional days off.
Brown at the time said the 640-hour cap had to be removed because the furlough
policy under Schwarzenegger meant correctional officers were exceeding the cap
anyway.
According to the state’s
nonpartisan Legislative Analyst’s Office, the average prison guard has
accumulated 19
weeks of unused vacation, a liability estimated at $600 million.
State employees can choose to
be paid for the unused vacation or simply stop working while continuing to be
paid until the leave time is exhausted, the analyst’s office said.
Workers who accumulate
vacation days over many years and then retire are paid at their last rate of
pay, rather than what they were earning when they accrued the time.
Bruce Blanning, executive
director of the Professional Engineers in California
Government, a union of 13,000 workers, said lump-sum payments come at no added cost
to taxpayers because the state pays for those hours regardless of whether the
person takes the time or cashes them out at retirement.
‘Time Earned’
“It is time earned, and the
fact that the employee when they retire is using up vacation that they could
have used some other time, and not been at work, has no real extra cost to the
taxpayer,” Blanning said in an interview.
“It’s true they get paid for
their vacation buyout at the salary at the time they retire, which may or may
not be higher than when they earned it,” he said. “If it’s higher, it’s
probably because of inflation. But because of furloughs and added pension
costs, it may not be higher when they retire.”
The state’s mental hospitals
and prisons have been ordered by federal courts to improve medical, dental and
psychiatric care while grappling with staff shortages and cost-saving furlough
days that forced workers to accumulate vacation.
Since 2005, four state
agencies -- prisons, highway patrol, mental health, and forestry and fire
protection -- accounted for more than half of the $1.4 billion paid for accrued
leave and vacation. Prisons accounted for a third, or $490 million in payouts
in the last seven years.
Dental Gold
Nolan Nelson retired last year
as the chief dentist at a maximum-security psychiatric hospital in Atascadero. He
collected a $274,999 lump-sum check even though he always used his 30 days of
leave each year, he said.
Nelson said he was able to
claim the money because the state awarded him five hours of vacation credit
every time he worked as the on-call dentist. Over 15 years, he said, he
accumulated so much extra vacation that he couldn’t burn it off fast enough.
Had he tried to use more of the time off, he would have left the department
understaffed and required another dentist to work overtime, he said.
“I worked for that,” the
74-year-old Nelson said in an interview. “It’s hours that I worked in overtime
during a period of 15 years. It wasn’t just accumulated in one year. It took me
15 years to accumulate that money.”
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