Buyback Tsunami —-City still pays retiring employees millions in accrued sick leave and vacation pay


By Robert Schussel, Ph.D

 

Purpose
To analyze separation and buyback pay that Vallejo City employees receive when they leave employment or retire.

 

Background
Vallejo City employees are entitled to receive at separation or retirement compensation for unused sick leave and vacation pay.

According to former City of Vallejo Finance Director Robert Stout a major factor in pushing the City into Bankruptcy was the large payout liability due the employees (primarily in Public Safety) who retired or left just prior to bankruptcy. The City was not able to pay the over $4 million due these individuals. Since that historic mass exit, there continue to be large payouts to retiring public safety employees. For 2013 the city had to pay leaving or retiring employees $2,616,996.
Below are the current employee buyout terms for accrued Sick Leave and Vacation.

 

source: City of Vallejo HR website

IBEW
Sick Leave–Eff. 7/1/10 – 10+ yrs. Service requirement: lump sum payment of 25% of accrued sick leave upon resignation, death (payment made to beneficiary), or lay off. 100% of balance may be converted to PERS service credit if retiring.
Vacation Buyout–3 years of the accrual rate (top is 600 hrs.)—15 weeks at current pay
IAFF (Fire)
Sick Leave–Eff. 3/27/2010 upon separation, EE’s may receive up to 25% of accum. Sick Leave at reg. pay rate or if retiring up to 100% credit to PERS Service Credit. Multiple payments may be made to the employee over time.
Vacation Buyout– Effective 3/27/10 3 years of the accrual rate (top is 936 hrs.)–16.7 weeks at current pay
CAMP (Management)
Sick Leave–Eff. 2/1/09 1 yr service required -Upon separation, EE paid 50% of accumulated unused sick leave balance based on last hrly rate of pay for the 96 hr accrual bank and 33.3333% for all hours accrued after 2/11/09. If 144 hr accrual elected no payout for the higher accral bank. If retiring employee may convert up to 100% to PERS service credit.
Vacation Buyout—672 hours –16.8 weeks at current pay
VPOA (Police)
Sick Leave–10 yr service required -Upon separation, EE paid 50% of accumulated unused sick leave balance based on last hrly rate of pay for the 120 hr bank and no cash out option for the 180 hr bank if the higher accrual is elected. If retiring employee may convert up to 100% to PERS service credit.
Vacation Buyout–4 yr max for employees hired before 2/1/09 = 896 hrs—22.4 weeks. 3 yr max for employees hired after 2/1/09 = 672.hrs—16.8 weeks at current pay

Caveats
1) 2013 buyback data was provided by the City of Vallejo.
2) No breakout of sick leave and vacation buyback was provided by the city. Only a lump sum figure aggregating these two numbers was available.

 

Findings
1) For 2013, 78 City employees received $2,616,996 in vacation and sick leave buyouts.

2) 30 Public Safety employees received 75.8% of the total compensation for vacation and sick leave buyouts
–23 VPOA Members accounted for 58.3% of the sick leave/vacation buyouts

buyout_1_2_6_15

 

 

3) 33 individuals received $20,000 or more in buyouts in 2013.

–Two thirds (66.6%) of these individuals were Public Safety employees

 

Employee Name

Title

Employment
Separation
Payouts

Gross Wages

LEE, LORI A Police Captain

$191,814

$191,814

WEAVER, KENNETH J Police Captain

$184,083

$184,083

KENT, STEVEN K Police Officer

$174,371

$174,371

WILCOX, DOUGLAS N Police Officer

$131,886

$131,886

JACKSON, RAYMOND W Battalion/Div. Chief – 56.3

$124,836

$124,836

COELHO, KEVIN G Police Sergeant

$112,476

$112,476

CLARK, WILLIAM B Police Sergeant

$110,816

$110,816

FALKENTHAL, GREGORY R Battalion/Div. Chief – 56.3

$105,632

$105,632

WHITE, GREGORY A Firefighter/56.3

$102,842

$102,842

PEDRETTI, MARY F Z-Temp/Part-Time

$101,414

$101,414

COBURN, JEFFREY S Police Officer

$96,416

$96,416

BOTTOMLEY, LESLIE J Police Corporal

$76,330

$76,330

GONZALEZ, GONZALO Chief Information Officer

$63,668

$63,668

LIDDICOET, BRETT T Police Officer

$62,098

$62,098

LIONEL, MICHAEL A Fire Captain 56.3

$62,003

$62,003

ESTUDILLO, BRIAN L Police Corporal

$61,616

$61,616

SWANSON, CLYDE T Firefighter Engineer

$60,101

$60,101

NAGEL, JOHN A Assistant City Attorney I

$59,369

$59,369

HERNANDEZ, FELIPE Police Officer

$53,931

$53,931

WEST, GARY J Chief Building Official

$47,326

$47,326

WARDLOW, ROBERT M Police Officer

$41,287

$41,287

MUSTARD, DAVID M Police Officer

$37,762

$37,762

CARAGAN, ALAN R Police Officer

$37,719

$37,719

ABNEY, STACIE E Police Officer

$35,216

$35,216

SCHROEDER, KELLY Z-Temp/Part-Time (Admin)

$35,114

$35,114

WOOD, DWAYNE K Marina Manager

$34,560

$34,560

NESTLERODE, MELINDA S Cd Program Manager

$30,244

$30,244

CALHOUN, CHASE R Police Officer

$28,134

$28,134

DOUGLAS, L.J. Leased Property Negotiator

$23,781

$23,781

ESPINOZA, DAVID S Associate Civil Engineer

$22,409

$22,409

MEYER, PAIGE W Fire Chief

$22,174

$22,174

LITTLEFIELD, EVA S Laboratory Supervisor

$21,821

$21,821

ANDERSON, GREGORY G Administrative Analyst II

$20,272

$20,272

 

        4) The average Public Safety employee received about $66,000 in vacation/sick leave buyouts.  All other employees average buyout was about $11,800.

buyout_2_6_15

Comments
No company in the private sector allows employees to accrue the large amounts of sick leave and vacation time that the City of Vallejo does. In fact the buyouts were so large at one point (over $4 million in one year) that they were a major reason the city was forced to declare Bankruptcy in 2008. The $2.6 million in buyouts for 2013 could have funded 11 or 12 more Public Safety employees.

Is there any question whether the amounts of sick leave and vacation time in the employee contracts are excessive? Most long term City employees are receiving over 5.6 weeks of vacation pay per year. With the exception of IBEW members (who receive 2.4 weeks of sick leave) most Vallejo City employees also receive 3.5 weeks of sick leave per year. In addition, most employees receive an additional 2.6 weeks of paid holidays. The net effect is that City of Vallejo employees work fewer hours per year than most of their peers in the private sector.

Finally, in the private sector, sick leave is not viewed as an entitlement to be accrued for a later cash payout. Sick leave is typically viewed as a consideration granted to employees rather than a benefit that is another source of retirement Mad Money. If a person becomes ill, sick pay is seen as way to soften the economic impact of losing work, not as a way of pumping up already generous retirement packages.

 

Final Thoughts
The large employee vacation and sick-leave buyback liability the City of Vallejo has experienced in the past 6 years is due to incompetent city negotiators and management. Bought City Councils who were willing to give the employee unions whatever they wanted (as the unions were instrumental in helping them get elected) and employee unions who often demanded and got excessive contract concessions helped build the continuing unsustainable monster of ultra rich employee benefits in the City of Vallejo. While some contract changes have occurred the City is still very vulnerable to the excesses in the employee contracts. For 2015 the City expects a $5 million structural deficit (most of which is due to employee costs such as pensions, wages, vacation/sick leave etc.)

One partial solution would be for the unions to agree to PTO (Personal Time Off) which has been adopted by the private sector. Typically a new employee in the private sector is given 22 to 30 PTO days. The PTO days may be used for vacation, illness or any other use the employee would like. The employee may bank up to 22 PTO days total over time—no more is allowed to be banked once the 22 days are reached. Once the bank is “full” if the employee does not use up the current years remaining PTO they sunset. The advantage to this approach is that excessive vacation and sick leave accruals will not occur.


'Buyback Tsunami —-City still pays retiring employees millions in accrued sick leave and vacation pay' have 17 comments

  1. February 7, 2015 @ 2:08 am Steve Williams

    Every one of them earned it and received it as they all should have and anyone else who earns it should too. There is no story here.

    Reply

  2. silasBarnabe

    February 7, 2015 @ 6:58 am silasBarnabe

    An excellent story documenting the need for “use it or lose it” type of vacation and sick leave systems.

    Reply

    • February 8, 2015 @ 11:00 am Anon

      “Use it or lose it” encourages waste

      Reply

      • silasBarnabe

        February 8, 2015 @ 11:44 am silasBarnabe

        Not if you get 6 paid sickdays a year and 10 paid vacation days a year, wanna bet that our heroes of taxpayer paid employees use more than that a year now and besides if someone is sick or takes a vacation are you saying they would not use the earned time they are given?

        Reply

        • February 8, 2015 @ 10:17 pm Anon

          I am saying that, like the private sector, they would use every minute of sick leave they earned instead of selling back a fraction of what was accrued.

          Reply

        • February 9, 2015 @ 10:43 am Anon

          Sometime prior to 1980 the City did not have a sick leave/vacation buy back policy. Why did the COV come up with this idea and offer it to all the unions? Without it (buyback) will the COV revisit the same situation it sought to avoid 35+ years ago?

          Reply

        • February 9, 2015 @ 8:39 pm Anon

          Besides, there is always State Law

          unless otherwise stipulated by a collective bargaining agreement, upon termination of employment all earned and unused vacation must be paid to the employee at his or her final rate of pay. Labor Code Section 227.3

          Reply

  3. February 7, 2015 @ 9:42 am ben

    And as a result we have one of the worst infrastructures in the United States. You get what you pay for. What have paid for is a lot of ungratful overpaid greedy people. Earned it? Yes through spiking and other political methods that are good for a small group of people in this democracy and bad for the overwhelming larger group. The concept of democracy being the greatest good for the greatest number has been ruined by this attitude. The result is that the vast number of people no longer believe in our form of government. They see most people as selfish, greedy, interested in their own advancement rather than the good of society. You have indeed earned the pension. You have also earned the contempt. The idea of respect, integrity, communication and excellence has gone out the window. Well you reap what you sow. Hope you do not believe in karma.

    Reply

    • February 8, 2015 @ 8:02 am Anon

      Ben
      Are you talking about (What have paid for is a lot of ungratful overpaid greedy people. Earned it? Yes through spiking and other political methods) our former CM (political methods, spiking) who lost his appeal recently? Simply keep out of political office that admire/support such carpetbaggers.

      Reply

  4. February 7, 2015 @ 3:34 pm Anon

    “Once the bank is “full” if the employee does not use up the current years remaining PTO they sunset. The advantage to this approach is that excessive vacation and sick leave accruals will not occur.”

    There is only an “advantage” to this plan? What is the disadvantage?

    Reply

  5. February 8, 2015 @ 6:30 am Bong Hit

    Police and Fire employees should continue with an accrual system. In those public safety jobs, your ability to take sick and vacation days are limited by the demanding nature of the assignments. Those of us that have worked in jobs where showing up to work is not optional can understand the challenge. There are no options to not show up for work, you just suck it up and do the job you signed on for. For these types of employees, I believe the accrual system is fair. Paper pushers in an office environment are another story altogether. If the democrat political machine, nationally, at the state level and/or locally were interested in fairness to the tax payers, we might see some movement but don’t hold your breath.

    Think about how far the democrats have fallen in the span of 50 years. Most of us, if not all here in Vallejo are naturally born democrats. We’re not born into wealth, we’re not members of an aristocracy, we work hard and build what we have from scratch. We admire and identify with political leaders like Harry Truman who upon leaving the office of the president, got into his car with his wife and dog and drove home. What an outstanding example of public service but in comparison to the democrat of today, a universe of difference exists. Hard working natural born democrats are now the financial slaves of a new aristocracy, the government employee. Think about what president Obama wants to do in giving illegal aliens a social security number. By doing this, illegal aliens will be able to get 3 years retro active earned income tax credits totalling as much as $24,000.

    The democrat party is in a self destruction mode, much needed and well deserved.

    Reply

  6. February 8, 2015 @ 7:39 pm Anon

    Public or private sector the ‘use it or lose it’ mentality encourages waste.

    Dr. Bob is confused and misleads the reader when he states that buy backs at service separation are “a way of pumping up already generous retirement packages.” From his statement one might assume that the vacation buy back is somehow part of the monthly pension formula. It is not. It is paying back a fraction of what is owed.

    Reply

  7. February 9, 2015 @ 6:07 am Billy Goat

    I agree with Dr Schussel that the buyback program is too costly. In the private sector, HR managers regularly let their employees know when they have accrued the maximum amount of time-off. You’ll get notes that either you use the hours, or lose them. And oh by the way, if you’re working in a “down-sized” company where most everyone is doing their own work, plus the work of folks who were down-sized, you likewise have pressures to always be at work, and not take time off.

    I don’t buy Bong Hit’s justification that folks in the safety field are not able to take time off. And, at any rate, if our employee costs were more inline with those in Fairfield & Vacaville (~40% less costly in those cities), we could afford a big enough police & fire force to allow for time off. Bottom-line, we can’t afford the buyback packages — which is also why the private sector doesn’t allow them.

    Vallejo has to get to a place where 1) the employee contracts are sustainable, and 2) city employees aren’t treated like feudal lords and monarchs, living WAY better than the rest of the population. How can it possibly be right that a city with so much unemployment, and such a low median income has the 2nd most expensive employee contracts in the entire state of California? This isn’t Beverly Hills. We need employee contracts that are within our means — including police & fire — and it’s obscene to see employees get so rich off the backs of so many low-income folks. Ridiculous.

    Reply

    • February 10, 2015 @ 9:32 am Ben

      Getting to a place that Billy Goat desires is indeed a method. Problem is that point is subject to contracts and challenges in court to those contracts. That is exactly what the police union has done. As long as the state law endorses “vesting” of those contract rights as called for under the California state constitution result is union 1, COV (read taxpayers) 0. MAKE THAT A BIG ZERO! It an’t right. But, it’s the law. Since it a law in the constitution of this state it will take an act of the taxpayers to change, not just some local city council. Good luck with that.

      Reply

      • February 11, 2015 @ 6:45 am Billy Goat

        Aren;t’ the “vesting rights” relative to pensions? What about salaries, benefits, step increase, bonus pay? All of those are contract terms for current employment; I believe they are negotiated with each contract, and thus do not need a statewide effort to change them.

        Reply

        • Firebug

          February 11, 2015 @ 9:18 am Firebug

          @Billy Goat, What they are referring to is leave already bestowed. You are correct if you are speaking about how leave is accrued. For example lose it or use it might be illegal, but we can impose a contract that calls for capping vacation at 10 days a year and 6 sick leave days a year. If they have below those numbers at the beginning of each Fiscal year would accrue up to 10 total vacation days and 6 total sick leave days. If they have 10 vacation days and 6 sick leave days they would not accrue anything for the fiscal year.

          Reply

  8. March 5, 2015 @ 4:49 pm Watching Eye

    Sick pay should not be bankable, and yes, by all means use it as earned. Lord knows VPD and VFD members need the time off as they have stressful jobs. Better for Vallejo budget management and better for Vallejo residents who don’t need contact with stressed out cops and firefighters.

    Reply


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