Oct. 26 (Bloomberg) -- Jean Keller earned $269,810 last year working as a nurse at a men’s prison on California’s central coast by tripling her regular pay with overtime hours.
Keller got more overtime in 2010 than any other state employee. In all, California’s public workers collected $1.7 billion of extra pay last year, more than half of it in overtime, state payroll data show. The rest was for unused vacation and union-negotiated benefits such as clothing allowances, physical-fitness incentives and special compensation in recognition of a “complex work load.”
“It’s outrageous,” said 29-year-old Gilbert Ramirez, one of about 30,000 teachers fired in California since 2007 because of budget cuts. “It boils my blood that I’m out of work and they claim they don’t have enough money to pay me.”
California paid the additional wages -- enough to fund the average salaries of about 25,000 teachers -- as it faced a $19 billion deficit and cut school spending and services for poor children and the elderly. The state may have to trim the academic year by seven days and eliminate some student busing if revenue shortfalls persist.
The extra compensation underscores a broader trend in California, where government workers are paid more than in other states for similar duties. Among them: city managers whose pay is higher than the governor’s, prison doctors who make more than counterparts in other states and Los Angeles firefighters who collect twice the national mean.
Union-negotiated “pay differentials,” requirements that workers take monthly furloughs and staff cuts that heaped extra work onto remaining employees combined to inflate overtime and other non-salaried pay, the data show. So did inefficiencies in management of state departments, said Dan Pellissier, a deputy cabinet secretary under former Governor Arnold Schwarzenegger.
“It’s just a mess,” said Pellissier, now head of a group pushing for changes in public employee pensions. “The way the state establishes its pay classifications is very complex and often obscure. What we need is transparency and disclosure and a fair accounting of what those costs are so we know if we are paying the right amount for labor.”
Among those who got large payouts are a prison doctor who cashed out more than a $590,000 of vacation time when he retired, a computer specialist in the legislature’s legal office who got $61,905 in overtime on top of his $71,560 salary, a psychiatrist for the Developmental Services Department who received $97,700 in extra-duty pay and the head of the state gambling commission, who banked $169,623 in unused holiday pay.
Collective-bargaining rights granted to state workers by Governor Jerry Brown, a 73-year-old Democrat, when he first held the office three decades ago made it more difficult to pursue cost-cutting measures such as eliminating extra pay allowances or privatizing prisons.
Union-backed provisions, among other things, allow employees to collect as much as $1,200 in “arduous duty” pay for projects requiring long hours and, in the case of prison guards, receive a $130-a-month fitness bonus for getting annual physical exams, even if they aren’t fit.
“I’m so angry as a taxpayer,” said Marilyn Cohen, chief executive officer of Envision Capital Management in Los Angeles, who manages $250 million of fixed-income assets, including California debt. “This makes me sick. I don’t know what it is going to take for this state to come to its Jesus moment.”
Unpaid Days Off
State rules allow employees to cash out unused vacation at their highest salary levels regardless of when the time was accrued. Cash-strapped departments have held off hiring new staff, pushing existing workers to put in extra hours to get the jobs done.
Three unpaid days off each month, instituted by Schwarzenegger, helped depress regular wages paid last year and forced overtime compensation for employees, such as prison guards, who had to work through them. The first six months of the furloughs, for instance, cost California $52 million in accrued vacation time for prison guards alone, according to findings by the state Senate Office of Oversight and Outcomes.
New York also paid its employees more than their normal pay in 2010 -- though less than in California. New York state workers took in about $1.5 billion above regular pay, or about $9,348 per employee on average, compared with $10,643 in California, a comparison of the states’ pay databases shows.
In California, the amount of extra compensation grew from $1.67 billion in 2008 to $1.7 billion last year. In 2007, the year the state budget reached its record high, employees got $1.9 billion in additional pay, according to the California controller’s office.
The government has tried to curb its payroll costs, including a hiring freeze ordered by Brown in February. California now has the fourth leanest state workforce in the U.S., behind Florida, Arizona and Illinois, at about 11 state employees for every 1,000 residents, according to 2009 data from the U.S. Census Bureau. The state paid $906 million in overtime last year, nearly three-quarters of it in agencies where staffing is required around the clock, such as prisons, mental- health hospitals and the highway patrol.
“The hiring freeze put in place by the governor has prevented the state from hiring as many employees as it could have, which has reduced the overall state employment level,” Elizabeth Ashford, a spokeswoman for the governor, said in an e- mail. “This has saved the state millions and millions of dollars.”
Service Employees International Union Local 1000, the largest union of state employees in California with about 95,000 members, agreed to concessions last year aimed at reducing overtime, spokesman Jim Zamora said.
State workers, for example, used to be able to collect overtime anytime they worked certain holidays such as Martin Luther King Day, Cesar Chavez Day or the day after Thanksgiving. Now they can only collect the extra pay if the holiday is in addition to a full week of work. State workers also must pay more toward their own pensions, Zamora said.
“We entered the collective bargaining process with an open mind and a desire to help the state work though its financial problems and to make things work,” Zamora said.
In addition to the overtime, state workers in California collected $472 million last year in bonuses and extra compensation for additional duties and qualifications such as speaking more than one language, obtaining a commercial driver’s license or having to make a presentation to the governor, the payroll data show.
California unions have secured almost 400 pay differentials granting additional wages to state employees.
Certain workers at the Department of General Services, for example, are eligible for a $10,000 annual bonus for “exceptional performance.” Some accountants working at San Quentin prison outside San Francisco get $200 a month as a retention bonus on top of their $3,209 maximum monthly salary. Hydroelectric plant workers get an extra $1.10 an hour to work rotating shifts, in addition to the $32 to $38 an hour a senior operator typically makes.
Workers tasked with fielding phone calls from the public at the Consumer Affairs Department earn an extra $100 a month “in recognition of the complex work load and level and knowledge required to receive and respond to consumer calls.”
Besides overtime, extra-duty pay and bonuses, state workers got payments totaling $293 million, mostly for unused vacation and accrued leave. The state also paid out $25 million more to 74,000 workers for fringe benefits such as clothing allowances and mileage.
New York Pay
California will spend 8 percent of its $86 billion general- fund budget this fiscal year on wages. In New York, by comparison, payroll expenses will account for 9.8 percent of the $56.9 billion budget.
The average state worker in California made $58,340 in total pay last year, according to data provided by the controller’s office. Per-capita income for all employees in California, public and private, was $42,578, the U.S. Commerce Department said.
The state pays employees time-and-a-half for overtime. That’s still cheaper than hiring an additional worker full time to cover the overtime hours, because the state would also have to pay the new worker benefits that can equal one-third of salary, says Lynelle Jolley, spokeswoman for the Personnel Administration Department.
“When you look at individual employees, some of them rake in a lot of money, but from the employer’s perspective you have to ask is that cheaper than paying to have someone else on the payroll,” she said.
Prisons, Mental Health
More than half of the overtime was accrued by just two state agencies: prisons and mental health, both of which must operate around the clock with required staffing levels.
Keller, the nurse at a prison near San Luis Obispo who tripled her pay with overtime, worked 2,450 extra hours in 2010, or 102 full days. Some of that was required overtime, though she volunteered as well, said Nancy Kincaid, spokeswoman for the federal court-appointed receiver that runs California’s prison health-care system.
Keller wasn’t alone. Nurses working in California’s crowded prison system earned $54 million in overtime in 2010, an average of $13,600 each, in addition to their regular pay. Nurses working in mental health hospitals got $41 million more in overtime. Through her supervisor, Keller declined to comment.
‘Meet That Minimum’
“When you run a 24-7 health-care facility, you are required in order to have your license to have a certain number of staff,” Kincaid said. “You have to meet that minimum. So if you don’t have enough staff to cover for vacations or when someone is sick, then you have to go to registry or someone has to work overtime.” Registry refers to hiring temporary nurses.
California state employees can cash out unused vacation when they resign or retire. The practice of banking such pay for retirement is so prevalent that the Personnel Administration Department keeps a Lump Sum Separation Pay Calculator on its web page.
State policy says workers shouldn’t accumulate more than 640 hours of vacation time, yet many do. When workers breach the cap, managers are supposed to develop a plan to draw down the time. But the law doesn’t forbid employees from banking the hours, and state data show that many take more than 640 hours worth of pay when they leave.
Terri Ciau retired last year as the executive director of the California Gambling Control Commission and cashed out $169,623 in vacation time she had banked during her career. She declined to comment.
‘Within the Rules’
“It was strictly within the rules,” said 65-year-old Jay Wickizer, a retired section chief for the Department of Forestry and Fire Protection said of his own $294,440 vacation payout when he left last year at a salary of $83,100. “Sometimes you just don’t have the time to take vacation.”
Fong Lai, the retired prison doctor who got $590,000 in vacation pay, couldn’t be located for comment. Matt Hazel, the computer specialist who received $61,905 in overtime, and Daisy Demaranville, the psychiatrist who collected $97,700 in extra- duty pay, weren’t unavailable to comment, their supervisors said.
Schwarzenegger, a Republican who often battled with unions over contracts, won concessions last year with 150,000 state workers that require them to contribute between 2 percent and 5 percent more toward their own pension benefits and increased years of service to qualify for full benefits.
Brown struck similar deals with 51,000 more employees earlier this year.
Those compacts allow guards to accumulate an unlimited amount of unused vacation and sick leave. The guards had faced an 80-day cap on how much they could bank, though in practice the cap was ignored to maintain minimum staffing levels amid mandated furloughs.
Brown’s deals also cut state worker pay by about 4.6 percent in the current fiscal year through an unpaid day of leave once a month. Yet employees already in the top range of their salaries would get a pay increase equal to their higher pension contributions beginning next year.
“It’s fiscal insanity,” said Assemblyman Tim Donnelly, a Republican from Hesperia, criticizing “this notion of spending money and paying people more than we need at a time when every department is broke, when we are starving our local schools and we are cutting public safety.”
The governor has taken other steps to curb payroll costs. In February he imposed a statewide hiring freeze, one part of an effort he said could trim $363 million in operational costs this year. He also said he will propose a package of reforms to state and local government pensions. Brown ordered state workers to hand in half of the 96,000 government-paid mobile phones and reduce the fleet of 13,600 vehicles by half.
The state’s $1.7 billion in 2010 non-salaried pay “includes all the various forms of disability pay as well as hundreds of different kinds of add-ons to pay that range from recruitment incentives for hard-to-recruit areas, education differentials, night-shift differentials, bilingual pay, hazardous duty pay, etc.,” Ashford, Brown’s spokeswoman, said by e-mail.
Ramirez, the Los Angeles teacher who lost his job in 2009, lived off unemployment benefits until they ran out. He postponed his wedding and said he almost became homeless before his brother agreed to let him sleep in a spare room.
“Outrage would be the word,” Ramirez said. “They confiscated my career.”
--With assistance from Rodney Yap in Los Angeles. Editors: Jeffrey Taylor, Pete Young
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