Cost in the Millions: Unused Sick, Vacation Time Threaten City Budget
Thursday, October 21, 2010
It's a hidden cost that no one wants to talk about—unused sick and vacation time that Providence city employees have built up over time.
When GoLocalProv contacted the city Finance Department and the Mayor’s office, neither disclosed just how much has accumulated. Karen Watts, a spokeswoman for Mayor David Cicilline said the total cost would not immediately be available. “There aren’t viable totals for vacation or sick time until the end of the calendar year, for obvious reasons,” Watts told GoLocalProv.
Internal Auditor James Lombardi estimates the unfunded liability for unused vacation and sick time for police and fire employees could be at least $12 million—a number based on 11 weeks of unused sick and vacation time and an average salary of $60,000.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThe amount of unused sick and vacation time that employees could collect upon retirement is not in the budget proposed each year, according to Lombardi. The proposed budgets for fiscal years 2008 and 2009, for example, show zeros for severance pay for vacation and sick time for both the police and firefighters.
‘There’s a huge number floating out there’
“They haven’t addressed the issue. They ignore it,” said Joe Rodio, the legal counsel to the city police union. “You can’t ignore it. It’s like a tumor. It keeps getting bigger.”
“There’s a huge number floating out there,” Rodio added. “There’s no question about that.”
Rodio told GoLocalProv he believes the unfunded liability is higher than $12 million. He noted that about 20 officers in the Police Department who have been on the job for 20 years have accumulated more than 200 days of sick time, equivalent to 28 weeks.
“I definitely think the city should be accounting for it in some manner,” Lombardi told GoLocalProv. “We should be budgeting for it on at least an annual basis.”
No separate fund for severance pay
City budget records show that severance payments can reach into the millions. In fiscal year 2006, for example, severance pay for unused sick and vacation time hit $2.9 million.
The city does not have a separate trust fund set aside for the severance payments, according to Watts. She said any severance payments the city makes instead are drawn from the operating budget at the end of the year.
Rodio said the city should plan ahead for severance expenses. “The city should have put aside a sum of money every year—like they do for pensions—for severance payments,” Rodio said. “It’s like not making a payment on your mortgage or your car. Any payment that’s due should be paid.”
He said the police union had been begging the city to do that since the 1990s—to no avail. Instead, he suggested the city has been looking for quick fixes by moving around money from funds in the operating budget each year. “This problem was created over 40 years,” Rodio said. “It has to be fixed over a period of time.”
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