State on hook for $367 million in leave payouts

The state has paid nearly $60 million in unused leave and sick time to departing workers over the past three years and is on the hook for at least $367 million more to its current employees, according to state officials and an analysis of expenditure records.

At a time when private businesses are limiting how much banked time employees can earn, in some cases eliminating it altogether, the state continues to allow its workers to accrue up to 696 hours in unused vacation and sick time.

A Daily Sentinel computer analysis of actual expenditures reported by the State Controller’s Office show that all state agencies, including colleges and universities, paid more than $8 million in unused leave and sick time during the last fiscal year, about $22 million in fiscal year 2009–10, and more than $25 million in 2008–09, when the recession began.

In the first two months of the current fiscal year, which began July 1, the state has paid nearly $1.8 million in unused leave time and $327,220 in unused sick time, the records show.

When told about the payouts, Rep. Laura Bradford said she found them shocking. As a result, she is looking into introducing a bill to stop the practice when the Legislature reconvenes next year.

“Taxpayers are going to choke on that,” the Collbran Republican said. “But there’s reform coming.”

Bradford, who has been working with the Colorado Department of Personnel and Administration on possible legislation to address other employee compensation issues, said her own research has shown that in 2010, a single retiring state worker walked away with more than $60,000 in unused leave and sick time, while someone else earned nearly $35,000 in overtime.

She’s also learned that the state allows its workers to claim overtime when they didn’t actually work more than 40 hours in a week.

Under the state’s current pay policies, employees who take holiday or vacation time during a week are allowed to count that as time actually spent on the job, qualifying them for overtime pay if they end up having more than 40 hours.

While Kathy Nesbitt, executive director of the department, said she is looking into stopping that practice, she said the department has no plans to address whether state workers should continue to be paid for unused sick time.

“It’s been brought to my attention now, so I certainly will look at it,” she said in an interview. “I agree that is it above and beyond what I ordinarily see (in the private sector). I’m just not exactly sure what action I’m going to take on it during this legislative session.”

Up until 1988, there was no cap on how many leave or sick hours state workers could accrue, which left state agencies paying thousands of dollars when they resigned, died or retired. As a result, the Legislature capped both, but there are 232 state workers covered under the old policy, said Nesbitt’s deputy, Jennifer Okes.

Still, the existing cap allows departing workers to receive huge final paychecks, particularly if they are longtime employees earning higher salaries. A retiring state worker who earns $80,000 a year, for example, could walk away with an additional $26,000.

Banked time is paid based on whatever hourly wage an employee earns at the time of separation, not what their pay was when they accrued the hours.

The revelation that the state pays so much money in unused sick time comes at a time when Gov. John Hickenlooper has come out against a Denver ballot question up for a vote next month that would require all private businesses in that city to provide their employees up to nine paid sick days a year, saying it would cost the city jobs.

Regardless of that stance, however, his own personnel department is examining what overall changes the state should make in its paid-time-off policies, including introducing a bill into the Legislature next year to address an October 2010 state audit that questioned whether the state should offer employees even more sick days a year or go to a pooled time-off system, said MaryKathryn Hurd, the department’s legislative liaison.

The audit said the pooled time-off idea is a growing trend among private employers, but suggested state employees should not lose their current banked sick time and that they would continue to be paid for unused time under the new system.

According to the U.S. Bureau of Labor Statistics, state and local government workers earn an average of 10 sick days each year, while their private sector counterparts average eight days a year. It is rare to see employees of private companies get paid for unused sick time, according to the bureau.

Montrose County officials took the unilateral step last month to phase out the practice over the next five years, saying it makes more financial and management sense to do away with it, said Stephanie Barnett, director of the county’s internal services division.

“No other companies that we found does that, public or private,” she said. “If we’re trying to justify ourselves and make sure that we are being competitive, that was very much an additional benefit that we were providing that others weren’t.”

Mesa County spokeswoman Jessica Peterson said the county allows its workers to accrue sick hours, but it doesn’t pay them for unused time except in the rarest of occasions.


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