Vacation Accrual Without Caps Costs California Taxpayers Hundreds of Millions of Dollars
County Employees in Similar System
State employees are receiving hundreds of millions of
dollars in payouts for unused vacation days upon
retiring, the San Jose Mercury News reported yesterday.
California does not allow state employees to cash in their vacation time while still employed, so workers receive their entire vacation payouts when they retire. More than 4,000 people retired from the state over the past three years with an extra $50,000 or more for unused vacation and comp time.
The Mercury News found the state paid a total of $800 million in vacation payouts from 2009 through 2011. The total includes $293 million in vacation payouts distributed to retiring prison employees, including health care workers and corrections officers.
The state doesn’t allow employees to cash in vacation time while they are still employed. But earlier this year, several state parks employees were disciplined and one fired after auditors found a secret program that allowed more than 50 parks employees to cash in a combined $270,000 worth of unused time.
The newspaper’s analysis showed the biggest payouts go to state workers with vital jobs, like firefighters, highway patrol officers and doctors at state hospitals or prisons. But others — lawyers, researchers at obscure state commissions, traffic engineers — also got fat checks. Managers are supposed to help workers keep vacation balances under 640 hours or 80 days, and Ashford said 87 percent of current state employees are under that cap. However, state officials said in interviews, nothing stops employees from exceeding it.
The analysis found that 27 workers — including 19 prison physicians and dentists — received checks for more than $250,000 when they retired. Some of those 27 employees retired with more than 500 unused vacation days.
Topping the list was Napa State Hospital psychiatrist Dr. Gertrudis Agcaoili, who retired after 33 years with 642 days of accrued vacation and comp time. It cost taxpayers nearly $609,000.
How did she manage to bank so much time?
A veteran observer of government spending said six-figure payouts like Agcaoili’s can be crippling and called on the state to revise its personnel policies.
“It’s an unfunded liability and a burden on the taxpayer,” said Thomas Schatz, executive director of Citizens Against Government Waste, a Washington, D.C., watchdog group. ”California needs to look very closely at it. They have to enforce the 80-day limit.”
Payouts in state government spiked in 2010, topping $300 million, data shows.
Nancy Kincaid — a spokesperson for the state Correctional Health Care Services department — said, “You can’t force people to take time off. I’ve never been able to do that in my time as a manager.”
However, private employers can cap vacation day accruals and require workers to use days off, according to the Mercury News. It’s an accounting liability that private companies work aggressively to avoid, but one that continues to pile up in Sacramento. And, ironically, the problem grew even worse in recent years when the state tried to save cash by forcing workers to take unpaid furlough days as an emergency budget fix. As a result, banks of unused vacation grew even larger.
Elizabeth Ashford, spokesperson for Gov. Jerry Brown (D), said that the governor intends to address the vacation payout issue.
“The problem, like the $26 billion deficit, is a carry-over from a prior era,” Ashford said, adding, “Employees were furloughed for short-term savings, which has left a long-term debt in the form of accumulated leave.”
Identical to State workers, Humboldt County employees also accrue unused vacation and comp balances paid out at the highest rate of pay at the time of retirement or severing from employment.
Vacation and comp time for Humboldt County workers earned initially at lower rates of pay are paid out at higher, significantly increased dollar amounts later as the employee reaches higher step levels, takes promotions, receives coast of living adjustments, or transfers to more highly paid positions within the County during their employment.
One County administrative official retiring after 29 years received a nearly six-figure retirement payout of unused vacation and comp time that doubled in value during the course of employment. The County consequently had to make a special monetary bank transfer accomodating the final payout paycheck.