Furloughs left state government with $1 billion tab

9:57 AM, Mar 14, 2013   |    comments
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The hotly debated decision to furlough state workers during several years of huge budget deficits has left a sizable fiscal hangover: a lot of accumulated vacation days that will ultimately mean huge payouts to the state when those workers leave their jobs.

That's the overall assessment in a new report by the nonpartisan Legislative Analyst's Office, and it offers yet another frustrating epilogue to the past decade of budget deficit fixes geared more to short-term relief than long-term balance.

The fact that furlough days simply meant fewer state workers taking vacation days isn't exactly surprising; it was widely worried about when the most recent workforce savings plan was first implemented by Gov. Arnold Schwarzenegger in 2009.

But this offers proof of the policy's shortcomings.

"Our analysis," says the new LAO report, "indicates that roughly $1 billion-more than $500 million General Fund-of the state's $5 billion in furlough savings has been carried into future years as a liability from larger leave balances."

And that's just an estimate. As the analysis point out, the average value of those unused vacation hours is now around $4,000.  But if a worker stays in state service and his or her salary increases, the cost of those unused vacation hours -- even if earned while being paid a smaller salary -- also goes up.

Or consider the backlog this way: the new report says the average state worker now has 53 days of unused vacation or leave time accumulated -- compared to 35 days before the recent furloughs.

Not all of the roughly 215,000 state workers accrue vacation or leave time the same way, and not all of it is eligible for a lump sum cash-out when leaving government service. There are caps placed on how many vacation hours workers can accrue, but the LAO report concludes these were simply "not effective" in keeping the state treasury from getting hit in the long-run with a big bill.

So why didn't the cap on vacation and leave hours work? The analysts' report puts it this way:

Department staff with whom we spoke suggested that they took few, if any, steps to counsel employees reaching the cap or to modify workload to allow employees to take more time off. In some cases, supervisorial staff do not appear to receive regular reports of their staff's leave balances. We also note that there does not appear to be any concerted or consistent effort by state control agencies to enforce the cap.

As a result, the report estimates a whopping 24,000 state workers now have a vacation or leave balance that's above the mandated cap.

The LAO report says employees with the Department of Corrections and Rehabilitation now account for the largest part of the long-term leave time liability, more than $1.2 billion of unused time-off hours.  That problem may have been worsened by the deal Gov. Jerry Brown struck with prison guards in 2011 to remove their cap on vacation/leave time accrual.

None of this is to say that state workers didn't take a personal financial hit for all of those years of furlough day policies; the LAO estimates the cut to the average employee's paycheck was about $21,000 for the five year period.

But for the state, the reality is the furlough program simply pushed some of the problems out into the future... where someone will ultimately have to pony up the cash.


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