As Calif. Goes Bankrupt, State Employees Rake In Vacation Time, 6-Figure Severances

Amid a crippling fiscal crisis, managers throughout California’s government have routinely allowed their employees to amass unused vacation time, enabling hundreds of workers to end their public-service careers with payouts topping $100,000, a California Watch investigation has found.

One worker combined vacation and compensatory time to walk away with more than $800,000, records show.

In the past four years, nearly 500 government workers earned six-figure paychecks mostly for unused vacation. In total, the state spent $486 million between 2006 and mid-2009 to pay more than 52,000 employees for time-off benefits – which includes a small percentage of unused comp time and holidays that weren’t taken.  

Many of those cash payments appeared to violate rules designed to limit how much vacation time state workers can accumulate during their careers. Most employees are allowed to bank 80 days worth of unused vacation, but records show that supervisors routinely allow them to exceed that amount.

And the problem is growing, state payroll officials said. Personnel documents estimate that as of December 2008, more than 14,000 active state employees had already exceeded their vacation caps.

In one case, James C. Tudor Jr., the former president of the State Compensation Insurance Fund, cashed out six times more vacation time than regulations allow, taking home more than $550,000 after he was fired in 2007 in the wake of an internal probe that “uncovered serious abuses at the highest levels,” according to state Senate documents.

Another state employee was allowed to accumulate large amounts of comp time in addition to unused vacation days, taking home $815,000 when he left state service. The payout for Kim Nguyen, a former doctor at the prison substance abuse facility in Corcoran, includes more than twice the allowable amount of vacation time and nearly 10 times the limit of comp time for physicians, records show.

In an interview, Nguyen said a heavy workload kept him from using his vacation, and his supervisors paid for extra shifts in comp time instead of overtime, leaving him few options.  

“They never hired enough doctors,” he said. “I never complained so they thought we could handle it. … They kept asking us to work more.” 

These large payouts were made during a tumultuous time for the state budget, when lawmakers trimmed programs for child welfare, elder care, domestic violence and other state services to help eliminate multibillion-dollar budget gaps. This year, lawmakers are scrambling to make even more cuts in the face of a $20 billion shortfall.

Amid this, Gov. Arnold Schwarzenegger has instituted mandatory furlough days that most state workers must use before their vacation days. The result, according to several large departments, is that workers are banking more time off than ever, offsetting short-term savings with long-term liabilities.

Though some departments argue that their employees must work long and unpredictable hours, critics say the payments highlight a system defined by lax management and generous benefits unavailable to most workers in the private sector. 

“This is part of the whole milieu of excess compensation packages in the public sector,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. 

Managers failing to follow state regulations  

Most state employees build up vacation and annual leave at a rate of between 7 and 20 hours a month, depending on the type of leave, bargaining unit and years of service.  

State regulations cap the amount of vacation time most employees can accrue at a maximum of 80 work days, or 640 hours. Some employees collect “annual leave time,” which includes both vacation and sick days that is subject to the same limits.