Champaign County owes employees more than $1 million in unused vacation time

Friday, May 30, 2014
Champaign County Administrator Deb Busey.
Photo by Darrell Hoemann/CU-CitizenAccess.org
Champaign County Administrator Deb Busey. Champaign County employees have accumulated more than $1 million in unpaid vacation time.

By Sari Lesk and Robert Holly/CU-CitizenAccess.org -- Despite a 2003 effort to limit the number of unused vacation days employees can carry over, Champaign County workers have accumulated more than 62,000 hours of unused vacation.

And that total will cost the county at least an estimated $1.6 million as of the last fiscal year, according to County Administrator Deb Busey.

The county must pay employees for unused vacation time when they retire or leave their county position. When that time comes, the county will pay those employees one lump sum at their current salary rate.

"In some ways, some people may look at this as almost like an additional savings account for when they're going to retire, because they're allowed to be compensated for those days when they leave the county," said John Farney, Champaign County auditor and a former county employee.

"You're going to kind of hoard your hours so you can get that additional payment at the end," he said.

The more than 62,000 vacation hours as of the last fiscal year that ended Nov. 30, includes 700 to 750 county employees, which is representative of any given pay period, Busey said. Busey ran the report at CU-CitizenAccess' request.

But the total vacation hours accrued excludes information from about 200 employees who work for the Champaign County Nursing Home because of a different work schedule, Busey said.

That means the amount of unused vacation hours that county employees have saved up is actually larger.

"Quite honestly, in a lot of government positions, benefits come rather generous to compensate for what may be a lack of salary," said Farney. "The county is a very stable place to work."

Champaign County sees an average of about 20 retirements each year, Busey said, although many other people leave county positions for other jobs. She said the cost of a retirement benefit package is generally absorbed by a department's budget.

"It's pretty rare that a department has to ask for a budget amendment in order to cover the benefit payouts," she said.

Concern about the cost of accumulated vacation days led the county to pass an ordinance in 2003 to limit the amount of vacation time that can be accrued. Currently, the maximum possible vacation time a general personnel county employee can accrue is 50 days.

Different departments and labor unions each have different policies that define their benefit time. Many of them are similar to the general personnel policy, Busey said.

The American Federation of State, County and Municipal Employees, Council 31, represents between 400 and 500 Champaign County employees -- including general administration staff, the state's attorney's office, the sheriff's office and the county nursing home.

Michael Wilmore, staff representative of AFSCME Council 31, said the caps on unused vacation time help force employees to take needed time off or face losing it.

And in today's work environment there are fewer employees - either through retirement or attrition -- doing more work, he said.

"There are some people who actually prefer to get paid and to never take vacation, but that system, which is the former system, can also lead to pressure on employees who need a break and earned a break to never take the time to have a vacation," Wilmore said.

A hidden cost

Thom Reilly, an expert in public policy, described accrued vacation leave as a "hidden cost" to taxpayers and said efforts have increased to limit the number of unused days that can be paid out.

Accrual limits are becoming a more popular practice for public sector jobs, said Reilly, who is director of the School of Social Work at San Diego State University and director-to-be of the Morrison Institute for Public Policy at Arizona State University.

"As there's more attention paid to public benefits, it's brought to the attention of many elected officials and others, I think we're seeing an increased amount of limits being placed on them -- most for vacation and sick leave," he said.

Records show that much of those unused vacation hours belong to the county's highest-paid employees.

But finding out the exact amounts can be tricky because the county had posted hours accumulated as days, thus inflating the potential owed.

A state law requires the posting of the benefit packages exceeding $75,000. Until recently, the county Web site listed 148 county employees who had saved up 61,527 vacation days as of Dec. 1.

But, Busey said the posting was wrong because it incorrectly listed unused vacation time in days instead of hours.

"Oh my goodness," she said when asked by CU-CitizenAccess.org to review the list. "That would just be unbelievable."

After discovering the error, the county put up a new posting that Busey said listed only days accumulated in the past year because that is the way Urbana interprets the law.

Ineffective policy prompted benefit-time buildup

Prior to 2003, Champaign County employees accrued vacation time without set limits. The county's general personnel policy previously stated that "the County will not reduce vacation and personal leave earned and accrued beyond a maximum level to any county employee covered by the Champaign County Personnel Policies."

"It had been believed you could never take away an hour of vacation that someone had earned," Busey said.

As a trade-off for a limitless vacation-accrual policy, the county implemented a buy-back plan in 1994 to offset the unlimited number of vacation hours employees could save up. As part of that plan, employees could sell back unused vacation time at certain times during the year instead of waiting until they leave their job or retire.

But to be eligible to do so, they were supposed to have used at least half of their vacation time.

However, some county officials may not have strictly adhered to that part of the buy-back plan, Busey said.

"It wasn't being implemented at the department level," said Busey. "The county board cannot tell elected officials what to do or how to run their offices, so it wasn't necessarily being implemented that way."

Busey also said that payroll workers did not have the authority to question departments run by elected officials.

Furthermore, it may not have been in the best interest of some employees to sell back unused time through the buy-back plan. Days could only be sold back for a percentage of an employee's current salary, based on a schedule of seniority.

For example, only employees who were in the start of at least their 11th year working for the county could sell back vacation time at 100 percent of their current salary.

Meanwhile, all employees could sell their saved vacation time back at 100 percent of their current and generally higher salaries if they waited until retiring or leaving their jobs.

The buildup of unused vacation time, Busey said, prompted the Champaign County Board to change its vacation accrual policy.

"I think, overall, the policy was being followed pretty accurately," Busey said. "But it still painted a pretty large expense every year, and it was a way for employees to basically take less vacation and increase their annual earnings."

Busey said she worked with the county legal staff to write the policy change.

Current policy reflects public sector trends

Records show that on Sept. 4, 2003, the county board voted to adopt the new ordinance, which limited vacation time buildup and eliminated the buy-back plan. Busey attributed the policy change to a variety of factors, including a reinterpretation of legislation in which the board realized that it could put a limit on vacation time accrual.

Under the new system, employees can save up a limited number of vacation days based on the number of years they have worked for the county.

"Hours gained above the maximum will not be credited to the employee's vacation balance, but will be forfeited," according to the current general personnel policy. Union contracts with county employees follow that general principle.

Nonetheless, employees who signed contracts before Dec. 1, 2003 were able to maintain the amount of vacation time they had available on the day the policy was changed. Busey said these hours were put into a reserve account.

The county keeps track of employees' time off through a computerized system that automatically updates accrual time when vacation, personal or sick days are used. Time off has to be approved by a department supervisor, which is then entered into the computer system.

Busey said the restrictions for when time off can be requested depend on individual departments' policies.

Unused personal days are also paid out

The employees included in the list posted on the county Web site hold both salaried and bargaining positions. Many employees listed are in management positions.

"A lot of time, those are the people who are less likely to use vacation time," Busey said.

Unused personal days are also paid out at an employee's current salary. Unlike unused vacation hours, though, they cannot be carried over from one year to the next.

The original list shows that most of the county's top-paid employees have fewer than four unused personal days. In total, it shows that just the 148 county employees named on the list had more than 400 unused personal days.

Busey described the document as a "moment-in-time snapshot," because vacation and personal days might have been used since the document was produced on Dec. 1.

The earliest an employee can retire is at 55 years of age. The employee must have also worked for the county a minimum of eight years.

The county does not pay out sick time to employees. Employees who leave their county positions forfeit the accrued sick days. For retiring employees, the days are converted to additional service credit with the Illinois Municipal Retirement Fund.

Busey said she expects the money owed to shrink once employees hired before Dec. 1, 2003 have all retired.

'Pay as you go' plan not considered an unfunded liability

Although Champaign County does not list a specific line item in its budget to pay out accrued benefit time, Busey and Barbara Ramsay -- chief deputy auditor for the county -- said the cost is not considered an unfunded liability.

"They are liabilities that we have in the books that are set up for employees," Ramsay said. "They are not unfunded."

Reilly explained that this is a common accounting practice for government agencies.

"They pay as you go," Reilly said. "They don't actually set aside funds for that payout."

Reilly said this is why many jurisdictions impose accrual limits, which are also intended to mitigate the cost of people accruing vacation time while they hold lower-wage positions and cashing them out at a higher wage upon retirement.

"Most governments aren't putting specific funds to set aside to pay them out, they're just popping up and they're making the payment," Reilly said. "And if they do calculate them, they're calculated in today's dollars and not in dollars when they actually have to pay them out."

In his study "Comparing Public-Versus-Private Sector Pay and Benefits: Examining Lifetime Compensation," Reilly stated that public sector employees earn greater lifetime benefits than their private-sector counterparts.

The difference results from public sector employees being able to retire an average of five years earlier than those in the private sector, and because public sector jobs have more generous benefits, his study found.

"The issue becomes how you define and calculate benefits," Reilly said. "I think, increasingly, you're seeing salaries becoming more comparable, but benefits are continually ... richer in the public sector."