The State Worker

Limited leave cashouts available for some state employees -- with strings attached

Thousands of California state civil engineers, investigators and heavy mechanical equipment operators each stand to cash out up to 20 hours of leave time – if their departments can afford it.

Meanwhile, managers, supervisors and other employees not under negotiated contracts may also be cashing out some of their stacked-up leave under terms of a similar program for excluded workers.

For unionized employees, the arrangement is a provision of contracts covering a total 30,000 workers represented by Professional Engineers in California Government (Bargaining Unit 9), California Statewide Law Enforcement Association (Unit 7) and International Union of Operating Engineers (Unit 12). Beyond those groups, all excluded employees also are eligible to cash out 20 hours of accrued leave time, even if they manage union employees who are not.

Management and other excluded workers comprise the largest of the four eligible groups, accounting for roughly 15 percent of the state workforce, or about 32,000 employees. Their leave will be the most expensive to cash out because they are generally paid more than the rank and file. Employees in that group will also be in the position to influence decisions on whether a department can afford to offer the program to employees.

It’s not clear how much the cash outs will cost or how much they will save. That will depend on how many employees take advantage of the limited-time offer or how many hours they convert to money. The payments must be made by the end of June.

Departments have to come up with the money to pay the leave cash outs, so employee participation depends on whether their employer has funds that can be tapped.

“This provision could cost departments as much as a few million dollars in any given year,” the Legislative Analyst’s Office said in its review of the Unit 7 contract, but there’s a long-term savings, since employees who cash out leave when exiting state service do so at their final pay rate.

The state’s employee-leave liabilities change daily, but its safe to conclude that obligations to the employees in the three unions and to excluded employees runs into the hundreds of millions of dollars. The LAO last year pegged the state’s leave liability for the 7,000 or so employees in Unit 7, for example, at about $55 million at the end of fiscal 2011-12 – and it’s the smallest group eligible for the program.

For more details, click here for how the program applies to employees in units 7, 9 and 12. This link opens a memo detailing leave cash outs for excluded workers. Both documents lay out the tax withholding rates for cashed-out leave.