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Report: Banked vacation continues to cost state millions

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More than one in four retiring state workers last year cashed out more than the state-allowed limit of unused vacation, costing the state millions of dollars and showing that the pressure of banked vacation on the state’s long-term liabilities isn’t likely to ease any time soon.

This according to a story earlier this week in The Los Angeles Times, which provides a much-needed update to a similar story we ran last year.

The Times calculated that 29 percent of the roughly 14,000 employees who retired in 2010 cashed out more than 80 days of unused leave – the cap for most state workers. Nearly 400 employees, the Times found, retired with payouts exceeding one year’s salary, implying that many of them had banked at least a year’s worth of vacation.

The state paid out more than a quarter-billion dollars in departure payments last year to retiring employees, including those who did not exceed the cap.

The Times’ numbers show an acceleration of the trend we reported last year. Between mid-2006 and the end of 2009, we found that the state spent $486 million on unused vacation payouts – or an average of about $138 million a year.

As we reported our story, many managers voiced concerns to us that an aging state workforce, combined with furloughs and a public sentiment that was tilting against government workers, would drive many employees to retire, thereby accelerating the state’s liability.

Furloughs, too, have exacerbated the banked vacation issue, and many workers who fell under Gov. Arnold Schwarzenegger’s furlough program will still be working for years before they retire. State workers who were allowed to bank their furlough days must burn through those before they tap into their vacation stores, making it even more difficult to clear unused vacation from the books.

Indeed, a state report released last year also estimated that 8 percent of active state workers were carrying leave balances that exceeded the caps, compared to 6 percent at the end of 2008.

The issue has arisen in the news again because of a labor contract approved last month by Gov. Jerry Brown’s administration that effectively removes caps on banked vacation for prison guards.

The Brown administration has been frank about its reasoning behind the contract change, arguing that current vacation caps are impossible to enforce. Ron Yank, director of the Department of Personnel Administration, summarized that argument in a letter to California Watch last month:

The current cap is not enforceable. As California Watch and others have reported, over the past several years employees have accrued leave credits faster than they’ve been able to take time off, especially while forced furloughs were in effect. Since the State cannot legally impose a 'use it or lose it' policy on vacation credits, employee leave balances have unavoidably reached or exceeded the cap in many areas, especially in 24-hour institutions like state prisons. We removed the cap for the duration of the correctional officers’ contract because we’re unable to enforce it at this time. This change simply reflects reality. It doesn’t grant these employees any more time off than other state employees, nor does it mean they’re getting a windfall at retirement.

 

Comments

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C. Leach's picture
My wife and I are retired from San Mateo County and were subject to limits to the amount of vacation time and sick leave that we could accumulate. Who are these people with thousands of hours of accumulated vacation time? Why didn't they take vacations. Couuld it possibly have been that they couldn't go because there was no one to replace them if they were gone? How many did not take vacations because the county, state or municipality was saving millions because they consistently worked short handed in important positions? How about some real research on this question?
bookworm360's picture
I work for the CSU system and am subject to limits to the amount of vacation as well. Why didn't these state workers' extra vacation leave over their limit go away? Once I reach my vacation cap, I won't receive anymore vacation leave over the limit. Isn't that what the vacation cap limit is for? Use or you lose it!

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