$32M Cost for Unused Sick and Vacation Time
Friday, October 22, 2010
The cost of unused sick and vacation time among Providence city employees has topped $32 million, according to documents uncovered in a GoLocalProv investigation.
That cost came as a surprise to Councilman John Igliozzi, who chairs the finance committee. “I did not know that,” Igliozzi told GoLocalProv. “I’m shocked. … Those kinds of numbers become unsustainable for the city.”
Each year, the about a tenth of that amount is due to employees who are leaving or retiring.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTBut the expense is not listed in the budget. Instead the city has to dip into the money set aside for salaries to make any necessary severance payments for unused sick and vacation time, according to Richard Kerbel, Director of Administration.
“So if a department ends up paying severance to one of its employees, the position or an equivalent position needs to remain vacant for the amount of time required to absorb the severance payment,” Kerbel said.
The practice has been going on for a number of years. A GoLocalProv review of the 2008 and 2009 budgets, for example, shows that no money was set aside for severance pay for firefighters and police officers.
‘Poor budgeting’
A city union leader thinks that’s bad budgeting. “Everything right now—it’s kind of in the washing machine. It’s all thrown together,” said Paul Doughty, president of the local firefighters union. “I think it’s a poor budgeting practice.”
The total amount owed in unused sick and vacation time is buried deep in the latest city financial statement, which was released in June 2009. That report shows that the total liability is $32,982,000, with $3.298 million due to employees over the next year. (Click here to read it, scroll down to page 40. The financial statement for 2010 has not been released yet.)
But the report does not indicate where the money is coming from, according to Joe Rodio, the legal counsel for the city police union. He says it’s a serious unfunded liability that the city is facing. “They don’t want to admit that they must account for sick and vacation time because they have lied about the budgets and they have lied about the financial statements at least since 2003,” Rodio said. “Their approach is lie and deny … lie and deny.”
City ‘playing a game’ with numbers
Paul Doughty, president of the city firefighters’ union, agreed that it was yet another example of how the city hides money. He pointed to a 2007 arbitration deal which gave firefighters $4 million in retroactive pay raises. Somehow, the city was able to pony up the money even though it didn’t have it in its budget. “Mysteriously, every year they come up with the money,” Doughty said. “It’s like they play this game. There is this number—there is this money set aside, but they don’t want to tell us.”
“There’s no way they’re looking at $32 million and not addressing it,” he added. “They’re just not telling us how they’re addressing it.”
He said the lack of transparency in the budget gives the city an advantage in contract disputes with unions. “It gives them wiggle room to cry poverty,” he said, adding that it also allows the city to pay out “enormous vacation severances” to non-union employees like Col. Dean Esserman, the chief of police.
Councilman proposes reforms
Igliozzi said the council had not realized severance pay was not being properly recorded in the budget because the city administration limits the internal and independent auditors’ access to information.
He said the city administration—not the council—is responsible for the way the budget is put together. He said city administrators are bound to spend money in keeping with what is in the budget. “They are ethically, legally, and morally responsible to follow what’s been approved and passed,” Igliozzi said. “If they don’t do it, it’s their violation.”
Igliozzi told GoLocalProv he will review city budget practices and may propose an ordinance that requires that the city record severance pay for unused sick and vacation time in the budget. “They’re choosing to put a zero and not be honest,” Igliozzi said. “It’s the constant hide and seek game this administration plays.”
He also called for amending existing ordinances to clarify how much of that unused time employees can collect when they leave city service or retire.
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