The State Worker

Some California state employees now eligible to cash out leave

Tens of thousands of state workers stand to get extra money in the next couple months by cashing out some of their unused leave time – assuming the state can find money to cover it.

Under the terms of contracts bargained last year, about 30,000 unionized civil engineers, investigators and heavy mechanical equipment operators could qualify to convert up to 20 hours of leave time into dollars. Last week the state made the same offer to about 32,000 managers and supervisors across state government.

The payments, which could reach about one-sixth of the rank-and-file workforce, must be made from departments’ current funds by the end of June and will likely cost millions of dollars. Such a program would have been unthinkable just a few years ago when Gov. Jerry Brown froze hiring, slashed everything from departments’ cellphones to office space and furloughed employees in response to California’s serial budget crises.

While the program will likely cost some departments big money up front, it saves even bigger costs down the line by reducing hours that their employees would cash out later at a higher pay rate when they quit or retire.

“This leave buy-back program is a small but important step in reducing the financial burden high leave balances have on the state of California,” said Pat McConahay, spokeswoman for the Department of Human Resources.

California owes billions of dollars to state employees for unused paid time off, a largely unseen burden that isn’t regularly tracked or reported statewide. Last year the nonpartisan Legislative Analyst’s Office said the state’s leave liability totaled $3.9 billion as of June 2012 – and it’s growing.

Workload and ineffective management contribute to the problem, the analyst said, and furloughs’ rippling impact has shown up as more paid time off being banked. Future pay raises, including those that will probably kick in July 1 for most state workers, also boosts the cash value of employees’ leave credits, since they are cashed out at an employees’ departing pay rate, not the rate when the hours are accrued.

The state caps paid time off for things like illness and vacations at 640 hours for most employees, by far the most generous government leave carryover policy in the nation. The longer a person is employed with the state, the more quickly he or she builds up paid leave. A career state worker making $65,000 a year at retirement and accruing the maximum leave would be owed $20,000 in leave.

The analyst also found that some departments ignore the cap altogether, allowing employees to accrue even more leave. In January 2013, more than 23,700 employees’ leave balances exceeded the cap.

Moreover, the analyst noted that “few, if any” managers it interviewed dealt with leave caps, and in some cases didn’t receive regular reports on their staff’s balances. And agencies that normally monitor state spending and operations, the analyst said, didn’t exert “any concerted or consistent effort ... to enforce the cap.”

The state made the problem worse with four years of furloughs, which forced state workers to take up to three days off without pay and added about $1 billion to the state’s mountain of unpaid leave obligations, the analyst estimated.

“People tended not to use as much vacation as they normally would,” said Bruce Blanning, executive director of the civil engineers union, “because they were already on furlough.”

It’s not clear how much the cash-outs will cost or how much they will save in the long run. No one knows yet how many of the state’s 150 or so departments, boards and commissions will offer the limited-time program to those eligible, or how many employees will take advantage of it or how many hours will be converted to cash.

The future value of leave hours cashed out today is difficult to estimate as well, so researchers talk about in snapshot terms. The LAO last year pegged the state’s leave liability for the 7,000 or so employees in the state investigators’ union, for example, at about $55 million on June 30, 2012. It’s safe to conclude that obligations to the employees covered in the current buyout program runs into the hundreds of millions of dollars.

One group that isn’t included in the leave program: correctional officers, who as a group had the highest leave balances.

During first two years of state furloughs from 2009 to early 2011, the number of non-managerial correctional officers who exceeded the state leave cap quadrupled to 3,700, according to the legislative analyst. By June 30, 2012, Department of Corrections and Rehabilitation employees had banked a total of $1.2 billion in leave credits, nearly one-third the state’s total.

California Correctional Peace Officers Association spokesman JeVaughn Baker said the department has long been “running staff deficits” and is currently 2,000 officers short of what it needs for normal operations. The shortage makes it difficult for prison officers to take paid time off, he said.

With more overtime likely in the coming years, the Brown administration and the union agreed last year to abolish the 640-hour cap for correctional officers.

The leave program never came up at the bargaining table, Baker said. Realignment, the state’s decision to sentence more convicts in local jails, has come with deep budget cuts for the Department of Corrections, making it highly unlikely it could find the funds to cover cash-outs for up to 30,000 correctional officers.

“We would have liked for our members to have had that option,” Baker said, “but from our perspective, (corrections) didn’t have the money.”