Freaking Out About 2.43% of the Budget Deficit

California Watch has a new article out examining payouts of accrued vacation time. Some employees have accrued so much unused vacation time that they get six-figure payouts upon leaving/retiring.

My first reaction to this is “so what?” It’s an extremely common practice for employers to pay out unused vacation time as pay. It’s better and fairer to the workers than “use it or lose it” policies regarding vacation time that tend to penalize workers for not making immediate use of benefits they have been given. This is especially true in an American working environment where vacations are discouraged as we quite wrongly believe that constant work is good either for the employer or the employee.

The California Watch article’s point, of course, is that this practice is detrimental to the state at a time of budget crisis:

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.

$486 million sounds like a lot of money. But that is just 2.43% of the current $20 billion deficit. In other words, if we had eliminated that practice in 2006, or capped it, the budget deficit would not be meaningfully impacted. In fact, given that we’ve had about $60 billion in budget shortfalls since 2007, these vacation payouts are 0.81% of the overall deficit.

So I don’t understand why this is all that newsworthy. Sure, there might be some point to capping the payout at $100K or $200K, but even then it would be a very minor fix that would do nothing to address the deeper budget mess.

Of course, these kinds of articles help build a larger narrative that the budget problem is in large part caused by greedy public sector workers who are paid too much. The actual numbers here indicate that the vacation payouts are not a meaningful part of the budget problem at all. Similarly, Meg Whitman’s desire to layoff 40,000 state workers would probably save about $2.5 billion (assuming those workers make the state average). That’s a bigger chunk of the projected $20 billion deficit, but it’s still only 12.5%. Whitman and other critics of public employees need to come up with solutions for the other 87.5% of the deficit.

Maybe one place to start is by looking at how the rich evade their tax obligations. Last week the LA Times’s Michael Hiltzik showed that Frank and Jamie McCourt paid no federal or state income tax between 2004 and 2009. Many wealthy Californians and large corporations have similarly evaded taxes.

There’s a lot there for investigative journalists to pore over. For example, California Watch could examine how much money some of California’s largest corporate landowners have cost the state by using shell companies to get around property tax reassessments at sale, unfairly extending Prop 13 protections. Or they could examine how many other California CEOs follow Meg Whitman’s lead and use offshore tax shelters. There is much more money the state loses through these means than the paltry $486 million over 3 years cited in the California Watch article.

But instead they seem to be focusing on attacking public workers. It’s a sad reflection of the fact that in today’s California, workers are seen as an acceptable punching bag, but corporations and the wealthy aren’t.

17 thoughts on “Freaking Out About 2.43% of the Budget Deficit”

  1. 486 million dollars is a lot of money.  That is a bunch of people who could be employed, or a step- even a 2 per cent step towards getting a better handle on the problems.

    Yes it is a head line catcher.

    Yes it is a focus on mismanagement of/by government employees

     And it should be.

  2. We have laws in California, and the law says that accrued vacation == pay.  It cannot be capped, and it must be paid out, and even the employee cannot choose to waive it.

    Here’s the relevant code:

  3. You may think that it’s mismanagement by employees, but you are incorrect.  Employees must request and be granted leave time.  Due to severe understaffing – particularly in 24/7 facilities, leave is often not granted even though it has already been earned – and everyone deserves respite from the workplace.

    For example, at the Sonoma Developmental Center where the State’s most vulnerable developmentally disabled reside in a 350 acre community, there is only one water treatment plant operator.  Yes, ONE.  He could work- and too often does literally weeks at a time.  He relies upon the assistance of a retired annuitant to work several days a week.  His vacation is piling up, along with his furlough time and his overtime is extraordinary. He sure isn’t complaining because he – and all his coworkers are committed to serving the needs of the residents who depend upon his public service (despite all the denigration from our Governor, the public and the business interests who would rather privatize and profit from this necessary work).

    If your looking for mismanagement, don’t waste your time looking at the working stiffs, look at the Capital, and the public who demands service but doesn’t like paying for it.

    ANd when your on your vacation Edi, send a postcard to a guy like Mike why dontcha.

  4. This issue is a testament to sloppy administrative practices under a Republican Governor. Two of the top 25 listed in the article are Larry Bolton from Dept of Social Services and Jarvio Grevious from CalPERS. Larry Bolton was the head of the Legal Department at Social Services and Grevious was for many years the Director of Personnel at Social Services. There is just no way either of those two did not know they were breaking the rules. Remember Arnie has been Governor for the last six years. This happened on his watch.

  5. Let us do both. Say if you want to use public employees as a punching bag, lets use the wealthy Californians and large corporations as a punching bag so we would ALL take the punches.

    Remove the Frank and Jamie McCourt tax loophole.

    And also do something about the big public employee mega payouts where the employees will have to either take days off or end up getting a slightly reduced payout. Maybe the payout would gradually decay if you end up banking 80% of your days.  

  6. ostensibly the foundation of both capitalism and anglo-american legal tradition – when public employees are involved.

  7. Obviously the employees in question earned the money. The problem is a broader one of sloppy management, but a lot of organizations share the difficulty in dealing with vacation backlogs.  We Americans work to darned hard and don’t take enough vacations.

    That said, it’s disingenuous to complain about a story highlight a mere $486 million problem. Dream as some liberals might of $20 billion in new taxes magically appearing, the way you fill a big hole is one shovelful of dirt at a time.  

Comments are closed.