The State Worker

California state workers, want extra money? Cash out some leave

If it’s April, it must be close to cash-out time for thousands of state employees with paid leave on the books.

Starting May 1, most non-union employees and unionized state workers in one of six bargaining units can trade up to 80 hours of accrued leave for money paid at their current salary rate, according to memos issued this week by the Department of Human Resources.

The first catch: State and federal taxes withheld on cashed out leave totals nearly 40 percent.


The second catch: Departments must pull the money out of existing funds. No loose change in the budget, no extra dough for employees.

Most nonunion employees, managers, supervisors and others outside of collective bargaining, can make the trade if the departments participate. The six units that are eligible for the cash outs – if their departments agree – include lawyers, professional engineers and scientists. Here’s a full list.

Department personnel managers must tell eligible employees whether the department will participate in the program by April 30. Those who want to participate must turn in a cash-out request from during the month of May. The state will process the requests and make payments in June.

(For more details and links to forms, unionized employees can click here and excluded employees can click here.)

This is the third consecutive year that the state has authorized the leave program. Taking hours off the books makes financial sense for both the government and for taxpayers. Credits cashed out at the end of an employee’s government service is paid at the rate of their final salary, so hours banked years or even decades earlier gain value as the worker’s pay rises – and increases the state’s future debt.

An analysis of banked leave in 2011-12 figured that $270 million was stacked up, largely due to furloughs and loose adherence to the state’s 640-hour cap on accrued leave.

Which is why the latest cash-out memos include a reminder: “Departments are encouraged, to the extent operationally feasible, to allow employees to use their leave credits as they accrue rather than letting the leave balances accumulate as a future fiscal liability.”