Taxpayers on hook for $444M in unused state worker leave

3:08 p.m Wednesday, May 3, 2017 Local

Ohio taxpayers are on the hook for more than $444 million owed to state employees for unused vacation and sick leave payouts, a benefit available to few in the private sector, an I-Team investigation found.

Tens of millions more are owed to county, city and other government employees, some of whom are able to cash out five- or six-figure payouts.

Former Montgomery County Coroner’s Office pathologist Lee Lehman retired with 3,000 hours of sick leave and 600 hours of vacation in August to get a check for $193,200. He was then rehired as chief deputy of the office and took a pay cut. His gross pay last year was $374,194.

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“He retired after a 30-year career and I’m in the middle of an opioid crisis,” Montgomery County Coroner Kent Harshbarger said about the reason for the rehire. “I needed him back.”

Montgomery County’s total liability for unused sick and vacation leave is more than $22 million.

The I-Team examined payouts for Montgomery and Greene counties and non-university state employees. The examination found 110 employees who were paid in excess of $40,000 for unused sick and vacation leave last year — 98 at the state level, eight in Montgomery County and four in Greene County.

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The ability to accrue sick and vacation leave and cash it out annually or upon leaving employment is a rare perk in the private sector, according to a 2016 survey by the Society for Human Resource Management.

That study found just 19 percent of private, for profit companies allow their workers to cash out vacation leave, compared to 36 percent for government employers. And only 8 percent of those companies allow workers to cash out sick leave, compared to 19 percent of governments.

“We obviously understand that people deserve to have some sick leave and vacation time and be able to utilize that while employed,” said Greg Lawson, policy director of the conservative Buckeye Institute. “But to be able to accumulate vast quantities of that and use it as a payout, we think that’s over-stepping and creates fiscal problems, and it’s not fair compared to what private sector employees get.”

But officials with public employee unions say private sector workers get benefits not available to the public sector, such as stock options and extended illness benefits. They say the discussion should be about extending sick leave to more companies, not taking benefits away from public servants.

“Every citizen in Ohio is an employer of public employees, and everyone wants the best person for the job. You want them alert and able to do the work, and you want a high-performance workplace,” said Joe Weidner, spokesman for AFSCME Council 8, which represents 39,000 Ohio workers, mostly in local government.

“You’re depending on the guy who gets the stop light to work, the coroners office, people at rest homes, people at the zoos, you want the people who do the best work.”

Policies vary

Although collective bargaining agreements often determine how much an individual employee can cash out, many state workers can accrue no more than three years’ worth of vacation leave, according to state law.

The payouts for vacation leave are often paid at 100 percent of the employee’s wages at retirement. Sick leave is paid out at 50 to 55 percent of their base wage.

In 2016, separation payouts cost the state of Ohio more than $27 million, according to an I-Team analysis of state pay data.

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The largest payout to a state employee went to John Foy, who received $109,658 when he left his job as a law enforcement training officer with the Ohio Attorney General’s Office in mid-2016. His gross pay was $141,982.

Most state employees also have the ability to cash out some of their unused sick leave each year without leaving their job. This is less common in local governments.

These payouts cost the state more than $33 million last year, the I-Team found.

The largest payouts for unused leave under this policy went to workers at the Ohio Treasurer of State’s Office. Deputy Treasurer Seth Metcalf cashed out $18,186 in leave last year, bringing his total salary to $214,742.

Policies vary among local governments. Montgomery County has six payout policies for different agencies and union contracts. Most employees can accrue up to 3,000 hours of sick leave and 600 hours of vacation. Vacation is paid out based on pay rate at separation; sick leave is paid out at 50 percent, and only if the person is eligible to retire.

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Greene County employees can also rack up 600 hours of vacation, but only 120 days of sick leave, which is paid out at 50 percent after 30 years of service.

That county’s highest payout recipient last year was Deborah Capuano, a director of adult services for Greene County Developmental Disabilities who retired after more than 30 years of service with 362 hours of vacation and 480 hours of sick leave at $57.17 per hour. That $48,137 payout brought her gross pay last year to $163,293.

HR consultant: Payouts don’t make sense

Mary Rita Weissman, who with her husband runs a Dayton human resources consulting firm, said it makes little sense for employers to allow workers to cash out vacation leave.

“All of my clients do not pay out vacation when someone has left, because philosophically it is not an earned benefit. It is a benefit of continued employment,” she said. “The reason to give someone vacation is they need time to be away from work, to recharge, to spend time with family, to do things they can’t do because they are at work every day.”

Weissman said companies are increasingly moving toward lumping sick and vacation leave into one pool. This gives hard-working employees who are rarely sick more vacation, and reduces incentive for employees to call off sick when they’re not.

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Small- and medium-sized businesses especially lean toward the PTO model, Weissman said. The Society for Human Resource Management study found only 17 percent of employers allow workers to cash out unused PTO.

“I don’t have any clients who don’t want to pay every employee they have as much as they can pay them and still make a profit,” she said. “Whatever dollars (workers) take out when they walk tout that door are not available for the people who continue to work for that company.”

Likewise, the Buckeye Institute’s Lawson said, small and medium-sized governments would have the most to gain from moving away from such payouts.

Montgomery County spent $3.2 million on unused leave payouts for departing employees last year. Greene County spent $878,490.

Bill would limit higher ed sick leave

Lawson said he believes many in Ohio’s Republican-controlled General Assembly would support cutting back these payments, but lawmakers are gun shy about taking on public employee benefits after the resounding defeat of the 2011 Senate Bill 5 effort to limit collective bargaining.

The current draft of the state budget does include a measure that cuts back sick leave accrual for state college and university employees to 3.1 hours per 80 hours of service — the same state employees receive.

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AFSCME’s Weidner said reducing sick leave especially hurts single parents — often women — who need time off to take care of sick kids.

He believes employee benefits should be decided at the local level in collective bargaining negotiations, not mandated by lawmakers.

“A lot of folks don’t think the legislators should stick their nose in local issues,” he said. “Let the administrators and workers discuss it and figure out what’s best for their community.”

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