Huge Debt from California State Employees' Stored Leave

Huge Debt from California State Employees' Stored Leave

The state of California is spending enormous amounts of cash because state workers who are either leaving or retiring are being compensated for vacation hours they have banked over the course of their careers, the San Francisco Chronicle reports. Compensation has risen as high as $488,000 for one worker; the state paid over $250,000,000 in 2014 for the aggregate total of funds paid out.

Despite the state’s rule that the amount of banked vacation time should not exceed 640 hours, many employees have ignored the rule because they have not been penalized for doing so. 24,000 state employees have exceeded the state’s declared limit, as reported in 2013 by the Legislative Analyst’s Office. Over 1,600 state employees were the recipients of checks worth at least $50,000 last year.

Even two years ago, estimates were made that the state owed employees $3.9 billion for unused leave pay. Loren Kaye, president of the California Foundation for Commerce and Education, told the Chronicle, “That is really quite shocking. The reason private employers have caps on these sorts of benefits is because of the enormous liability that can accrue over time. That’s just simple good business practices.”

Making matters worse for the state is that unpaid furloughs that were forced on state employees meant fewer state workers were using vacation days, the Chronicle notes. That left an abundance of leave balances.

Roughly 8,000 state employees use a voluntary leave program that gives them one additional day off a month and drawing a 5 percent pay cut. They also have the option to bank that day for future earnings.