By Pat Forgey
If Alaska takes the unprecedented step of partially shutting down state government in July, many of the 10,000 employees who would lose their jobs could also get a cash windfall -- whether they want it or not.
For years, state employees were able to save up annual or personal leave that they didn't use, and some have amassed substantial amounts, state personnel officials say. In the event an employee is laid off, for whatever reason, they have to receive the value of that leave as a cash payout.
"There's a fair amount of accrued leave built up over the years," said Sheldon Fisher, commissioner of the Department of Administration, which oversees state payroll and union contracts.
The state calculates the value of leave held by employees to be worth $175 million, and those who are laid off will be paid the value they've each earned.
But that's not all state employees. There are about 16,000 workers in the executive branch facing possible layoffs, but only about 10,000 have received notices of possible layoffs because funding is available for some government functions. Certain departments key to the safety of the public, such as Corrections and Public Safety, are fully funded, meaning that prison guards and troopers would stay on the job, as would a selection of others.
The state's largest department, Health and Social Services, is partially funded and won't face immediate layoffs. The Legislature and Alaska Court System won't be affected at all.
That makes it difficult to get a precise estimate of the immediate cost to the state of a shutdown.
Some employees have "bumping rights," meaning that if their job is slated for layoff, their seniority may allow them to move into a remaining job. "It's virtually impossible at this stage to know who is going to be laid off, " Fisher said.
He estimated the immediate cost to the state as being in the tens of millions of dollars.
That additional expense likely exceeds the amounts that have legislative budget negotiations deadlocked and have extended the legislative session for weeks.
The state will also have to directly pay unemployment costs for laid-off state employees who file for unemployment compensation.
In normal times, all that accrued leave would still be paid, but it would likely be done so over many years as it was used, or cashed out upon departure. It would be paid out of each department's regular operating budget.
Fisher said he didn't know how this year's amount would be paid, but it might be dealt with in a supplemental budget next year, adding to that year's deficit or resulting in additional cuts.
Some laid-off employees may want or need the cash-out money, for example, for living expenses in the event of a long-term shutdown.
But others might prefer to keep the leave on the books for the flexibility it gives them, or because they don't want to pay income tax on it immediately.
But Fisher said it has to be paid.
"Unfortunately, it cannot be declined," he said.
Employees who are furloughed, rather than laid off, won't have to cash out their leave. Only exempt employees can be furloughed, Fisher said. Those covered by collective bargaining agreements will have to be paid.
Exempt employees include political appointees such as commissioners, their deputies and other top managers, along with some specialized positions.
Union officials have been dealing constantly with state officials and their own members in recent weeks to address the shutdown, if one does occur.
Gov. Bill Walker said the state is charting new ground as it develops new shutdown procedures, in contrast to Washington, D.C., where congressional dysfunction has made shutdowns a standard part of budget negotiations.
Alaska State Employees Association executive director Jim Duncan said he's been in constant contact with state officials regarding the prospect of layoffs, but they haven't raised the possibility of not doing the contractually required leave payouts.
Doing so would require renegotiating the contracts, he said. "That's a contract provision, as part of our collective bargaining agreement," Duncan said, and any change would require a letter of agreement from the union, which represents 9,000 state workers, 7,400 of them full-time.
Duncan said he's more interested now in seeing that existing contracts are honored. A segment of the Legislature has said it wants to stop payment of a 2.5 percent cost-of-living raise, the third year of a three-year contract, following two years of 1 percent cost-of-living raises. "We want all of our contract provisions honored," Duncan said.
Legislators have estimated the cost of providing the raises to both union and nonunion employees at $30 million, and that's been a key sticking point in budget negotiations.
Many private companies have been moving aggressively to limit the amount of leave that can be accrued. State government has already imposed some limits, and Fisher said that when new contracts are negotiated he'll seek to continue that effort.
(c)2015 the Alaska Dispatch News