California makes huge payouts for some workers’ unused time off

Reporting from Sacramento —  Managers in California’s government routinely ignore official limits on the number of vacation days their employees can save, compelling the state to cut huge checks — many worth six figures — for unused time off when workers retire.

Prison doctor Fong Lai received $594,976 when he retired in 2010. Like most state employees, Lai was supposed to bank no more than 80 days of vacation, but his payment represented more than 2 1/2 years of unused time off.

Jay Wickizer, an administrator for the Department of Forestry and Fire Protection, saved about the same number of days, resulting in a $294,440 check upon his retirement last year. Former parole agent Thomas Berns accrued nearly three years’ worth of time off, allowing him a $268,990 cash-out, state records show.

Such payouts are almost unheard of in the private sector. Most companies allow employees to accrue a few weeks of vacation, but after that it’s “use it or lose it,” said Steven Frates, research director of Pepperdine University’s Davenport Institute on public policy. “The theory behind vacations, of course, is rest and recuperation and recharge.”

But in state government, lax oversight, understaffing and a spate of furloughs in recent years have resulted in widespread stockpiling.

“This is a problem throughout state service because the vacation caps have not been enforced,” said Gil Duran, spokesman for Gov. Jerry Brown. The governor plans to chip away at the vacation stockpiles with a “budget that is honest and doesn’t rely on gimmicks like the furlough program,” Duran said.

Of slightly more than 14,000 full-time employees who took a lump-sum payout for unused time when they left state jobs last year, 29% received checks for more than 80 days’ pay, according to a Times analysis of data from the state controller’s office. Such departure payments in 2010 were compared with each employee’s regular pay in 2009 to estimate the number of days off those payments represented.

Nearly 400 employees left state jobs last year with checks equaling or exceeding their previous year’s salary, the data show. In most cases, that meant the workers had saved more than a year’s worth of time off — more than 260 work days. Lump-sum payments can include money from legal settlements, but the state cannot say which employees received such compensation without violating the confidentiality of personnel records, according to Jacob Roper, spokesman for Controller John Chiang.

The state calculates the payouts using employees’ final pay rate, which is generally higher than what they earned earlier in their careers. So the saved vacation days cost the state more than they would have if the employee had taken them as they were earned.

And the number of employees who benefit from large stashes of vacation is actually larger than payroll records show, state officials acknowledge, because some workers choose to “run out” long stretches of unused time at the end of their careers. They stop working but continue to be paid until their banked time is used up.

The controller’s office cannot tell how many employees do this, because payroll records offer no way of tracking it, Roper said.

While managers are directed to help an employee reduce accumulated leave when he or she nears the 80-day cap, most public worker contracts allow exceptions for those denied vacation because they are needed in an emergency — to fight a fire or battle a flood, for example — or are assigned work of a “critical nature over an extended period of time.”

That final exception, officials say, accounts for much of the banked vacation taxpayers are on the hook for. The state distributed $294 million in departure payments last year.

“A lot of it has to do with hiring freezes,” said Lynelle Jolley, spokeswoman for the state Department of Personnel Administration, the agency that negotiates contracts with state employees. “You have people working in core positions where they can’t take time off.”

Many employees also have large numbers of personal days that were granted in lieu of raises dating to the administration of Gov. George Deukmejian, Jolley said, and those days are not subject to the contractual cap.

Wickizer said he battled fires and floods during his 37 years with Cal Fire, rarely taking vacation. Many of the thousands of hours of time off he accumulated came from his days as a manager with the agency when, instead of being paid overtime, he was given “compensated time off” when he worked more than 40 hours a week. He often worked 80-hour weeks, he said.

“I did not abuse the system,” Wickizer said.

Thomas Berns said managers at the California Department of Corrections and Rehabilitation never questioned his stockpile of unused vacation as it built up over 28 years. Although he knew he’d get paid for those days eventually, he said he was “quite astonished” when he learned what the time was worth.

Berns said even his bankers, who had “heard about the state going broke … seemed surprised.”

Physician Lai, who spent 34 years working for the state, could not be reached for comment. But prison spokeswoman Terry Thornton said Lai had accrued more than 3,000 hours of annual leave and more than 1,000 hours of comp time when he retired last year. “He was very dependable,” Thornton said.

Although prison employees, highway patrol officers and firefighters dominate the ranks of those with giant vacation accounts, many other employees took big time-off payouts even though the kinds of emergencies specified in the contracts seemed unlikely for them.

In 2010, the former executive director of the Gambling Control Commission, two managers from the Department of Parks and Recreation and two assistants to former Gov. Arnold Schwarzenegger received six-figure checks for more than a year of accumulated time.

Parks and Recreation Supt. Steve Horvitz got $122,000 for unused time after retiring from his job overseeing operations in the forests of the state’s north coast.

“That’s a very busy district,” department spokesman Roy Stearns said. “So he was burning the midnight oil.”

Terri Ciau, former executive director of the gambling commission, cashed out $169,623 in unused time after 40 years of service. She couldn’t leave the office to use up vacation because “there was no one else at that level of responsibility to handle the job,” said commission spokeswoman Pamela Mares.

Most of Ciau’s unused vacation accumulated while she was in other state posts, before she joined the gambling agency, Mares said.

Schwarzenegger’s accounting and personnel advisors, Sandra Sharrer and Priscilla Garza, had payouts of $114,733 and $102,840, respectively.

“Most people who work in the governor’s office are workaholics, or they wouldn’t last very long,” Sharrer said. Garza could not be reached for comment.

Despite the difficulties of enforcing the 80-day limit, Brown and his chief contract negotiator — former prison guard union lawyer Ronald Yank — left the provision in all but one of the six contracts they have negotiated with state employee unions since the governor took office in January.

The exception is the deal proposed for the California Correctional Peace Officers Assn., Yank’s old client, which spent nearly $2 million to help Brown win the governor’s race.

Administration officials say the cap had to be lifted after Schwarzenegger imposed 70 unpaid furlough days on the guards but many officers had to work those days anyway. The time off was added to accumulated vacation.

Brown spokeswoman Elizabeth Ashford wrote in an email to The Times last week that lifting the cap “in this contract acknowledges it is unenforceable” in the prisons, which are understaffed and must operate around the clock.

jack.dolan@latimes.com