By DAVID WASHBURN and ADAM ELMAHREK, Voice of OC
First in an ongoing series.
On April 1, 2009, Orange County Counsel Benjamin de Mayo officially retired from the county after a 32-year career and became eligible for a $226,713 annual pension, which amounted to nearly $14,000 more than his final year’s salary of $212,908.
On top of his pension, which is among the richest in county history, de Mayo was also handed a check for $352,097.34, a payout for nearly 2,500 hours of unused sick and vacation leave that he had racked up over his career.
De Mayo’s leave-time largesse was by far the most given to a departing county employee between 2008 and April of this year, according to a Voice of OC analysis of payout records.
But he is just one of many high-level employees who have walked away with sizable checks for unused leave time they banked during their careers.
Voice of OC’s analysis showed the county paid $43.8 million in sick and vacation leave payouts to departing employees during the five-year period, an amount nearly equivalent to the annual general fund budget of Laguna Beach.
The most lucrative payouts went to the highest-ranking employees, including agency directors, executive managers, senior deputy attorneys and assistant sheriffs, among others.
Click above to see who got the highest payouts.
The average payout of $31,928 to executives and managers in the county government was nearly six times the average $5,593 payout to rank-and-file employees.
Meanwhile, top brass and supervisors at the Sheriff’s Department took home an average of $46,481, the most of any employee group, while deputies and sergeants had payouts averaging $14,899, according to the Voice of OC analysis.
Here is a rundown of some of the findings:
•The county paid $18.2 million to 3,266 departing general employees and Social Service Agency eligibility workers during the five-year period. At the same time, $15.9 million went to a group of 561 outgoing executives, managers and attorneys.
•A total of $9.7 million went to 499 employees who left the Sheriff’s Department, including nine assistant sheriffs who were paid a total of $754,459.
•A group of 26 county employees, nearly all executives or high-level managers, cashed out more than $100,000 each for a total of $3.5 million during the five-year period.
A Widespread Issue
While these payouts haven’t received nearly as much media coverage as public pensions, awareness of their impact on government budgets is growing from the local level to Sacramento.
“This is not, in my opinion, something we intended to become a practice,” said state Sen. Lou Correa, D-Santa Ana.
Yet it is a practice in jurisdictions everywhere. For example, two years after de Mayo cashed his check from the county, departing Santa Ana City Manager Dave Ream walked away with an even larger payout — $365,787.09 — for his accrued vacation and sick leave.
Blame for the abuse of accrued sick and vacation balances often breaks down largely along ideological lines.
Conservative Republicans point to unions and the collective bargaining process as the reason the system was developed in the first place.
“It stuns me that we have this kind of largesse going on, especially in a county that is supposed to be conservative,” said Jon Fleischman, publisher of the FlashReport, an online publication tilted to the right. “But because collective bargaining mandates it, the people elected to make these decisions have to sit across the table from unions.”
Union leaders counter that as with pensions, it’s the executive class that took a reasonable benefit and turned it into a windfall enjoyed disproportionately by those at the top.
“This is a clear example of how executives in Orange County approach working for local government, like they’re at a big corporation and entitled to huge bonuses and payouts,” said Jennifer Muir, the assistant general manager of the Orange County Employees Association. “They have rigged the system so they get more than anyone else.”
Supervisor John Moorlach, who said he abhors the county’s system, argued that rather than being rigged in favor of executives and managers, the system benefits them more because they have longer careers at the county than the average county worker and therefore have a longer period in which to bank time.
Records do show that the largest payouts go to longtime employees. But it is also true that the policy is tilted heavily in favor of the executive suite, regardless of tenure.
And records and interviews also show that the county’s top executives specifically pushed for policy changes during labor talks in the late 1990s and early 2000s that triggered a significant increase in annual leave balances, though they claimed the changes would lead to cost savings.
Under the system that has evolved since that time, general employees are allowed to cash out a maximum of 320 annual hours at 100 percent of pay upon retirement, according to the union’s memorandum of understanding with the county.
Managers, however, can cash out up to 480 hours at 100 percent, while executives are allowed up to 580 hours, according to a policy adopted in 2007.
The disparity becomes even more pronounced when it comes to annual leave hours that employees can cash out while they are still working, according to the documents.
The county has budgeted $11.3 million for ongoing leave payouts to employees in fiscal year 2013-14 and has already paid out $3.4 million, according to figures circulated last month to county department heads.
General employees are allowed to cash out up to 40 hours each year based on the discretion of their department head, while the number for managers is 90 hours. But executives get up to 170 hours, according to the 2007 policy.
Such a consistent tilt on pay and benefit issues is itself beginning to raise questions.
“The disparity between the top managers pay and the line workers pay is growing, and it is kind of a scam,” said Chris Norby, a former supervisor and assemblyman. “It’s a badge of honor. … If you are paying them more it means they are worth more.”
Making the ongoing payouts even more costly to taxpayers than those given upon retirement is the fact that they are factored into an employee’s pension formula.
That’s largely why de Mayo’s annual pension is higher than his final year’s base salary, said county Human Resources Director Steve Danley.
De Mayo did not return a reporter’s call seeking comment.
‘Really Ticked Off’
Moorlach said the county’s system for cashing out unpaid leave needs repair on several levels. Among the aspects bothering him the most is the policy that allows departing employees to cash out their unused leave time at their final pay rate, rather than at the rate they were being paid when they accrued it.
This is one of the reasons the payouts to the long-tenured executives were so high. De Mayo, for example, began accruing his sick and vacation leave in the 1970s but was able to cash all of it out at $102.36 per hour, the rate he was being paid when he retired in 2009.
“I have vocalized my outrage at that approach,” Moorlach said. “I hope the [CEO Mike Giancola] and Danley are working on some solution, because that is a directive I’ve given twice.”
Giancola refused the opportunity to comment.
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