Perks take heavy toll on finances
Offering comp days rather than pay raises adds millions to future state payrolls.
By Dan Kane and David Raynor
dan.kane@newsobserver.com,
david.raynor@charlotteobserver.comPosted: Sunday, Jun. 14, 2009
The numbers (in dollars)
Nearly $1 million Cost to the state retirement system since lawmakers in 2001 eliminated a cap on accumulated sick leave.
$68 million Overtime paid to state agency and university employees last year.
$100 million Cost of unused bonus leave given to state agency employees in 2002, 2003 and 2005.
$154 million Cost of maximum accrued vacation that nearly 24,500 state agency employees are carrying.
Two years ago, State Highway Patrol Capt. Marc Nichols was on leave for nearly three months to deal with an extended illness that required two surgeries.
For many workers in the public and private sectors, that much time off the job would have exhausted their sick leave and vacation time and perhaps pushed them into reduced disability pay. But Nichols continued to get his $82,424 yearly salary without taking a single sick or vacation day.
That's because Nichols, like other supervisory employees in state government, had built up hundreds of hours of comp time during the previous year. The compensatory time, which is not required under federal labor law, allowed Nichols to finish the year without touching the 417 days of sick leave he had accrued in 24 years on the patrol, or the maximum number of vacation days state employees can accrue: 30 days.
“I had my sick leave and vacation, and thank God I didn't need it,” said Nichols, 46, who is now a major overseeing the patrol's Special Operations Section. “But it was there if I needed to go into it.”
While state employees and teachers annually battle with lawmakers over pay raises and health benefits, other policies – often passed to compensate for meager or no raises – can quietly add tens of millions of dollars to the state's payroll in future years.
That extra cost is important now because of the state's budget crisis. Legislators are struggling to close a $4.5 billion budget shortfall for the fiscal year that starts July 1, but they have been reluctant to take on key constituencies or powerful special interests, such as state workers.
A (Raleigh) News & Observer review showed that North Carolina offers its workers and educators compensation and retirement benefits that are often much better than the private sector's and, in at least one case, unusual even among public-sector employees.
Each additional benefit tends to amplify the existing ones; the state is now obligated to pay $714 million in accrued vacation and bonus time, more than double what was on the books six years ago. And that number is just for employees of state agencies and the UNC System. It doesn't include public school or community college workers.
Much of the compensation data for the public universities, schools and community colleges – a combined 215,000 employees – are not provided to the State Controller's Office, which collects that information for all other state agencies. A UNC system lawyer said information on individual employees regarding their comp time, vacation, bonus or sick leave should not be considered public record, and she declined to make it available. A 2007 state law declared that all forms of public employees' compensation are public record.
Because of the incomplete data, the N&O could include only 84,650 employees in our analysis of the way the state's policies have played out over time. Here's a look at some of those policies:
North Carolina does not cap the amount of comp time supervisors and other salaried employees can earn. The only rule is that they have to use it within a year or lose it. Wage-earning employees can accrue up to six weeks of compensatory time, but if it's not taken within a year, the state has to pay it in overtime.
All employees can substitute comp time for sick leave or vacation time, protecting those balances for the future. They can also use comp time to protect weeks of bonus leave that many state workers have received in lieu of raises since 2002.
Thanks to a 1993 law, vacation time in excess of six weeks gets rolled into sick leave. And in 2001, state lawmakers eliminated the cap on the amount of sick leave employees can accrue. That perk can significantly boost an employee's retirement compensation. The additional sick leave is added to an employee's tenure, so someone who worked for 30 years and accrued two years of sick leave would have a pension based upon 32 years of service.
These changes are having an expensive effect on the state's finances:
Nearly 24,500 of the 84,650 state employees The N&O looked at already carry the maximum six weeks of vacation time they can bank, worth a combined $154 million at current salaries, and many will cash out that time at retirement – when they typically earn their highest salaries. Compensation experts say a six-week carry-over on vacation isn't uncommon in the public sector, but it's rare in the private sector.
More than 10,800 of those employees have held onto five weeks of bonus time, and an additional 28,300 have a lesser amount. The combined cost at current salaries is just under $100 million, and that price tag will grow as salaries increase. State lawmakers offered the bonus time in the 2002, 2003 and 2005 sessions to make up for little or no pay raises. It is an unusual practice in the public and private sectors.
More than 8,000 of those employees have converted unused vacation time into additional sick leave to take advantage of the 2001 law. The state Treasurer's Office estimates that in the first seven years, the additional sick days cost the pension system close to $1 million. Last year alone, more than 540 retirees had accrued extra sick days that boosted their pensions by as much as 4 percent. That cost is expected to grow dramatically as more people retire with a larger number of sick days.
Compensation decisions are made mostly by chief budget writers in closed or unpublicized meetings. The lawmakers deal with data that are scattered across state agencies, UNC schools, community colleges and public school systems, which makes it difficult to pull together. There is no standard annual report, for example, of how much overtime was paid, or comp time taken, across state government.
Some state agencies don't allow supervisors or salaried employees to accumulate unlimited comp time. For example, the Office of State Personnel says its employees have to take their comp time within 90 days.
Employee advocates say the compensation and retirement benefits should not be scaled back or eliminated. They say the benefits make up for lower pay and higher health care costs not borne by the state.
“When you look at the side of the ledger for sick leave and vacation time, look at it in the context of health benefits and overall pay,” said Dana Cope, executive director for the State Employees Association of North Carolina.
Pros, cons of comp time
Former Rep. Art Pope, a Raleigh Republican, sponsored bipartisan legislation in 2001 that provided unlimited accrual of sick leave for retirement purposes. He said he saw it as a way to reward state employees without costing the state budget in a recession year. A 1 percent raise for state employees and teachers costs about $130 million a year.
Pope and others say the sick-leave policy also can save the state money because it encourages employees and teachers not to use the days. When a correction officer uses a sick day, for example, it can cost the state that employee's pay, plus the cost of finding someone to cover for him.
But the comp-time policy can quickly negate that advantage. In 2007, 34 State Highway Patrol members, most of them supervisors, each took five or more weeks of comp time. In nearly every case, those patrol members were out sick or taking care of sick family members, said Maj. Michael Gilchrist, the patrol's head of administrative services.
In one case, the patrol gave a trooper more than two months off because he had earned that comp time as a supervisor before being demoted to the rank and file, Gilchrist said.
Last year, the patrol changed its policy to limit to 240 hours the amount of comp time that supervisors can accrue.
As of March 30, employees in state agencies were carrying a combined $13.5 million in comp time for the fiscal year ending June 30. The employee with the most comp days in those nine months was Jeffrey Beane, a manager with the N.C. Museum of Natural Sciences in Raleigh. He had accrued 141 comp days. That averages out to 62-hour work weeks for this year, if no vacation, holidays or sick days were taken.
Beane, an expert on reptiles and amphibians, said he rarely uses the comp time he accrues. The museum reported that he has used nearly eight days worth of comp time in this fiscal year.
He said he spends much of his regular work days answering requests for information and accrues much of the comp time doing field work. He is also working on a second edition of a book on amphibians and reptiles in North Carolina and Virginia.
“I just choose to work all these hours because I like my job,” Beane said.
His boss, Bryan Stuart, said Beane is one of the most dedicated employees he has ever seen, working long days and weekends, driving his own car for field work and not charging the state for the gas. Beane, 48, makes $37,160 a year.
“The state is very lucky to have him,” Stuart said.
At the Highway Patrol, Commander Walter Wilson Jr. said he and his officers have earned every hour of comp time. Wilson reported accruing 63 days by the end of 2006. That number dropped to 57 days by the end of 2007, but he took the equivalent of 24 extra days off that year. He became the patrol commander in July.
He, Gilchrist and Maj. Nichols said patrol supervisors often work more than 40 hours per week. Wilson and Gilchrist said the force is not growing fast enough to keep up with the increasing numbers of drivers and miles of state roads, which means supervisors are stretched. Accidents, shootings and other calamities happen around the clock, and when they do, supervisors have to respond.
“You get called out a lot of times,” Nichols said. “You miss a lot of the family things that you would like to be there for. It's just the way the job is.”
Retired Trooper Terry Story, a past president of the N.C. Troopers Association, is skeptical of the comp-time hours patrol supervisors are accruing. Records show that rank-and-file members are accruing far fewer hours than supervisors.
“They are in a salaried position, and unless they've got some kind of special project going on, they should have enough supervisors to share the load,” he said. “Shoot, I don't see how they are accumulating so much.”
The state offers comp time to wage-earning employees to avoid paying overtime, but that hasn't stopped the state from paying it. In the first 11 months of this fiscal year, the state paid close to $53 million in overtime to employees in state agencies and universities, controller records show. Those overtime costs have doubled in the past six fiscal years, from $34.4 million in 2002 to $68.4 million last year.
Two veteran budget writers in the legislature said they were not aware of the level of growth in employee vacation, bonus leave and overtime costs. Both said the growth is troubling and lawmakers have to get a handle on it.
“It says we're not being as careful as we need to be in spending our state money, and it also says when you don't pay people what you think you should, you may be more generous on the benefits end without being mindful of these costs,” said state Sen. Linda Garrou, a Winston-Salem Democrat.
But Rep. Jim Crawford, an Oxford Democrat, said lawmakers likely won't take a deeper look until next session, because state workers won't receive a raise for the fiscal year beginning July 1. In April, Gov. Bev Perdue cut employee and teacher pay by 0.5 percent to help close a $3 billion budget gap for this fiscal year.
Gilchrist, the patrol's head of administrative services, isn't waiting on the lawmakers. He is developing a policy that would cap accrued comp time at three weeks. He figures that's enough for troopers to get the time off they need after going above the call of duty.
News researcher Brooke Cain contributed
http://www.charlotteobserver.com/597/story/779344.html
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