Furloughs Save $1B Less Than Expected in California

The California Legislature's budget advisors say the state will owe $1 billion extra to many workers when they retire or quit for vacation time unused when they took unpaid days off.
March 18, 2013

By Chris Megerian

The decision to furlough state employees during the financial crises of recent years may have saved money in the short term but will leave a big bill down the road, the Legislature's budget advisors said Thursday.

The state will owe $1 billion extra to many workers when they retire or quit, for vacation time that went unused while they were being forced to take unpaid days off.

The furloughs were intended to save $5 billion from February 2009 to July 2013, effectively cutting workers' pay 5% to 14%. The $1 billion for unused vacation -- some in excess of state accrual limits -- will eat into those savings, according to a report by the nonpartisan Legislative Analyst's Office.

A spike in unused vacation time drove payouts to a historic $270 million during the 2011-12 fiscal year, two-thirds more than when the furloughs started. In June 2012, the average state employee had about 53 vacation days saved, 51% more than when Gov. Arnold Schwarzenegger first ordered forced absences in 2009.

Mike Genest, who worked as Schwarzenegger's finance director, said he wasn't surprised by Thursday's report. It was known that furloughs might simply delay some costs, he said, but they were the best option given the severity of the state's budget woes.

"It was a political judgment call," he said. "Some of us knew we were just borrowing money from the future."

Gov. Jerry Brown continued the furloughs during the first two years of his current term, although there are none in his latest proposed budget, which would take effect July 1.

Steve Smith, spokesman for the California Labor Federation, whose members include state government employees, said the analyst's report showed that "furloughs were not good fiscal policy for the state."

It is unclear how many furloughed workers exceeded the state's limits on vacation accrual. But most of the overage occurred from 2009 through 2011, said fiscal and policy analyst Nick Schroeder, author of Thursday's report.

Most state employees are allowed to keep 80 days of unused vacation, although California Highway Patrol officers can bank 102 days and corrections officers have no limits.

The limits are treated as "more of a guideline" and are not widely enforced, Schroeder said. Workers are routinely paid for unused time in excess of the limits.

"We are working with the governor to develop policies to cut leave balances," said Pat McConahay, a spokeswoman for the California Department of Human Resources. She said the administration would pursue changes with public-employee unions at the bargaining table this year.

A Times analysis in 2011 showed that more than 4,000 full-time state workers received payouts for more than 80 unused vacation days in 2010. Some received a check that was at least as big as their annual salary.

One prison doctor was paid nearly $600,000 after saving more than two and a half years of vacation time.

Schroeder's report encouraged lawmakers to enact stricter limits. Other states surveyed for the review have a cap of 40 days.

Brown's office declined to comment on Thursday's report. Two years ago, his spokesman described the lack of enforcement as a problem.

(c)2013 Los Angeles Times

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