Bloomberg Businessweek, 12/20/12.
Republicans in the California Senate are drafting legislation targeting state worker compensation that exceeds pay levels for public employees elsewhere in virtually all wage categories and job descriptions.
Payroll data compiled by Bloomberg on 1.4 million public workers in the 12 most populous states show how managers and employees throughout California government ignore limits on accrual of paid vacation and other leave, leading to lump severance payouts of as much as $609,000 to one state employee last year. The state’s obligation for accumulated time off grew to $3.9 billion last year from $1.4 billion in 2003.
“The Bloomberg series highlighted some shocking abuses and problems in California,” said state Senator Ted Gaines, a Republican from Rocklin who serves on the Public Employment and Retirement Committee. “I am working on legislation for this session that attacks these issues, protects taxpayers and restores some sanity to our state.”
The series demonstrated how accumulation of vacation hours accelerated in California from 2005 through 2010, fueled by state policy initiated by former Republican Governor Arnold Schwarzenegger and continued by current Democratic Governor Jerry Brown, forcing workers to take unpaid time off, or furloughs, before using paid leave. A state rule limits accrued leave for California employees to 640 hours, or 16 weeks, yet many go beyond that boundary and cash out the time when they leave state service, data compiled by Bloomberg show.
The consequence is $1.4 billion in lump-sum payments to departing employees from 2005 through 2011, according to the data compiled by Bloomberg. Last year, no other state among the country’s 12 largest paid a worker more than $200,000 for accrued leave, while 17 people got such payments in California. There were 240 employees who received at least $100,000 in California, compared with 42 in the other 11 states, data show.
California also leads the 12 largest states in overtime expenses, according to the data compiled by Bloomberg. Last year, it paid $964 million in overtime to 110,000 workers, an average of $8,741 per employee. That was more than twice the $415 million New York paid in overtime to 80,000 staff members, for an average of $5,199, and almost as much as all the other states in the database combined. In Georgia, total overtime for 8,935 workers last year was $12.3 million, an average $1,378.
Aides said Gaines’s bill, to be introduced when the California Legislature returns to session in January, may address both the lump-sum pay and overtime disparities between California and other states, among other steps. Republicans are the minority party in both houses of California government.
“The governor will closely review any legislation that reaches his desk,” said Elizabeth Ashford, a spokeswoman for Brown.
“It’s very difficult and very complex to fix — these costs are baked in,” said David Crane, a public-policy lecturer at Stanford University and a Democrat who worked as an economic adviser to Schwarzenegger. “The only answer is to cut the benefits that are not yet accrued for those employees and to reduce salaries for certain employees.”
“The only people that haven’t had to suffer yet — and it isn’t their fault because they didn’t cause this, the politicians did — are the existing employees and the existing retirees,” Crane said.
Brown hasn’t curbed overtime expenses or limited payments for accumulated leave. The 74-year-old Democrat reaped $400 million in short-term savings to help balance the state budget last year by continuing a policy initiated by Schwarzenegger that requires workers to take an unpaid day off each month. That could lead to additional leave accruals and costs for the state in the future, data compiled by Bloomberg show. Last year, Brown waived a cap on accrued leave for prison guards while granting them additional paid days off.
“Furloughs were never meant to solve the state’s structural budget problem or save money in the long run,” Schwarzenegger said in an e-mailed response to questions for a six-part Bloomberg series on state pay. “We had to do what was necessary to keep paying the bills and keep the lights on.”
In an interview before publication of the Bloomberg series, California Labor Secretary Marty Morgenstern said the accrual of leave documented by Bloomberg isn’t permitted under state rules.
“Those payouts are payouts of accumulated salary that it’s against the rules to allow people to accumulate, and it shouldn’t have been done, and shouldn’t be done,” said Morgenstern, a member of Brown’s cabinet whose Labor & Workforce Development Agency oversees labor relations, employment and unemployment.
“I think some of our rules were negligent, and I think people were allowed to build up overtime pay who shouldn’t have been, who accumulated leave time and furlough time,” Morgenstern said. “Those kind of payments are absolutely inappropriate and we’re doing everything we can to see that does not recur.”
In an e-mailed statement responding to findings of the Bloomberg series before its publication, Gareth Lacy, a spokesman for the governor, said many of the costs highlighted by the data are the result of policies set by governors who preceded Brown in office.
“Governor Brown is busy fixing the many problems that he inherited from past administrations,” Lacy said. “California’s $26 billion budget deficit, and the decades-old structural imbalance, was eliminated in large part by cutting waste and slashing costs. The governor also achieved historic reforms to public pensions and workers’ compensation that will save the state billions of dollars.”
Topping the list of severance payments to California workers last year was $608,821 paid to psychiatrist Gertrudis Agcaoili, who retired from the Napa state mental hospital after a 30-year career. Agcaoili said in a telephone interview that it was her right to take the payment.
Among other findings of the data compiled by Bloomberg was that another psychiatrist, Mohammad Safi, collected $822,302 last year, up from $90,682 for six months of work in 2006, the data show. Safi was placed on administrative leave in July and is under investigation by the Department of State Hospitals, formerly the Department of Mental Health.
Safi and other psychiatrists employed by the state benefited from what amounted to a 2007 bidding war between California’s prisons and mental health departments, after a series of federal court orders forced the state to improve its inmate care. Higher pay in the prison system was matched by mental health, and as psychiatrists followed larger salaries, the state’s cost to provide the care soared.
Last year, 16 psychiatrists on California’s payroll, including Safi, made more than $400,000. Only one did in any other state in the data compiled by Bloomberg, a doctor in Texas. Safi earned more than twice as much as any state psychiatrist elsewhere, the data show.
Safi was paid for an average of almost 17 hours each day, including on-call time and Saturdays and Sundays, although he did take time off, said David O’Brien, a spokesman for the department. In a brief interview outside his home in Newark, California, Safi said he’d been placed on leave for working too many hours and declined to comment further. An increase in the number of beds at the facility where Safi worked forced him to cover more shifts, and he was allowed to do some of the work from home, said his lawyer, Ed Caden.