Oct. 28--Driven partly by an unusually generous benefit to police officers, the city of Austin has paid departing employees about $40 million in the past five years in unused sick or vacation time -- an expense that consistently surpasses budget projections, an American-Statesman analysis has found.
The Austin Police Department, which pays departing officers up to 10 months' worth of unused sick time, has spent the highest amount among all city departments for several years, totaling about $17 million since 2008.
Last year, the department spent $4.5 million in so-called "terminal pay," the highest amount in at least five years and more than $1 million more than it had budgeted.
According to city records, 20 departing officers each received more than $100,000 in separation pay last year, including a former assistant police chief who got $134,040.
The American-Statesman's review of the expense comes a month after the city closed its books on last year's budget, which ended Sept. 30. Police officials said they used money from vacant positions to close the gap, and that, overall, the department came in about $2.5 million under its $267 million annual budget.
But the overspending on separation pay in the police department -- and the city as a whole -- highlights the difficulty of predicting how much to set aside to pay for unused time, a practice that has been dropped by many private sector businesses and is being re-visited by other government entities nationally.
"It's very difficult to gauge how much it's going to cost, because you don't know how many people are going to retire," said police department assistant director Alice Suter, who oversees the police department's budget.
Although the city's policy for payouts is similar to that of some other local Texas governments and the state, Austin police receive more generous benefits than many of their counterparts in other Texas cities.
Through a contract between officers and the city that has made Austin officers among the highest paid in the nation, police may be paid up to 1,700 hours in unused sick time if they have worked for the department for at least 10 years and leave in good standing.
The contract also limits how much sick time officers can use in the two years before they leave the department.
Officers also can receive up to 400 hours in other unused leave, including vacation time -- significantly more than other Austin city employees, who generally receive up to 240 hours of unused vacation time and about 720 hours of unused sick time if they joined the city before 1986 (those hired after 1986 don't get sick time payouts).
At the same time, officers earn sick time hours faster than other city employees -- a little more than six hours every two weeks, compared with four hours for other workers.
Next spring, city officials will have a window to possibly alter the current agreement when they begin negotiating a new, three-year labor contract with police.
"Every few years, when we go back to the table, everything gets thrown out there that the city wants to talk about or that we want to talk about," said police union president Sgt. Wayne Vincent.
Deputy City Manager Michael McDonald said the payout system for unused sick time "is balanced with everything else in the contract."
"The contract has to be taken in totality," he said. "Generally, the way those negotiations go is that there are things we put on the table, things they put on the table, and give and take until we get a consensus that we can live with."
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City and police union officials have said that the payouts for unused time were meant to keep soon-to-retire officers on the streets instead of calling in sick -- which can run up the department's overtime tab when supervisors have to call in other officers.
A former state police union leader who helped get a state law passed that paid police officers up to 720 hours in sick time said at the time that the payouts were viewed as an added bonus for officers who were often poorly paid.
In a 2009 interview, Vincent also said that officials wanted an incentive for retirement-eligible officers to remain on the force until 2011, when a new batch of rookies would hit the street.
To cover the agreement, city records show that the department budgeted $14.7 million for terminal pay since 2008 but spent $16.9 million.
Overall, the city budgeted about $28 million for separation pay for its nearly 13,000 employees during the past five years -- including police -- but spent $41 million.
City officials said they usually are able to cover such overages by using salary savings from vacant positions. They said they try to estimate the costs of terminal pay each budget cycle by averaging the number of departing employees in recent years.
Austin firefighters also may receive up to 720 hours of unused sick time when they quit or retire, according to state civil service law.
In past contract talks, Austin firefighters have discussed with city officials obtaining more hours in sick time payouts, but "the city wasn't interested," fire union President Bob Nicks said.
But in contract negotiations between the city and the police union during the past decade, city officials have consistently upped the sick time payouts for police officers.
The maximum amount went from 920 hours in 2004 to 1,700 in 2011.
Several weeks before the city council adopted the current deal in 2009, the American-Statesman reported that the city had spent $2.1 million on the payout expense that year for 40 department officers.
Last year, 69 officers received separation pay. They included former Assistant Police Chief John Hutto, who received the highest payout at $134,040. Hutto joined the department in 1986 and became chief of the Fort Collins, Colo., police department in October 2011.
Officials said last week that they have no estimate of the total bill the department would face if all of the 150 officers eligible to retire did so.
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Experts have said that such payouts have become less common in the private sector as more businesses opt for a "use it or lose it" policy and decrease the amount of sick time and vacation time that employees can carry from one year to the next.
And some local governments have begun trying to reduce the cost of paying employees for unused time as they struggle with tight budgets.
Jersey City borrowed $19 million in the past two years to cover retiring workers' unused sick and vacation time, according to published reports. New Jersey Gov. Chris Christie has said he wants the payouts eliminated.
In New York, published reports show that the state spent $256 million in the past five years on payouts to employees for unused leave time. That state has capped the amount in sick time an employee can receive upon retirement and now allows them to use that money to pay for health care insurance upon retirement.
Florida lawmakers also have discussed passing a new law to curtail payouts to state employees, according to published reports. And San Jose, Calif., city officials recently worked with three employee unions to eliminate cash payouts for sick time for all new employees, although the change wasn't expected to save the city much money for years to come.
Some Texas cities have begun their own reforms in recent years, particularly in how they handle separation pay for police officers.
Dallas police, who aren't covered by the state's civil service law, stopped sick time payouts about a decade ago, said Ron Pinkston, president of the Dallas Police Association.
"You can see it in how officers use their sick time," Pinkston said. "They are using it."
Houston gives officers options on disposing of unused sick and vacation time that don't necessarily include cash payouts.
For instance, they can leave their jobs but continue to get their normal pay -- but not their pensions -- until they exhaust sick and vacation time. They also can begin receiving their pension immediately and draw pay for their sick and vacation time at half the hourly rate.
Copyright 2012 - Austin American-Statesman
