The Investigators

May 1, 2012 1:00 AM

Millions of tax dollars paid out in unused sick time

TUCSON - If you left your job today would your boss write you a check for unused sick pay?
Probably not unless you work for the city, the county or state.

Did you know Arizona paid out over $13,000,000 to retired workers for unused sick days? That's sick time on the taxpayer's dime. And the city of Tucson and Pima County offer the same benefit.

The News 4 Tucson Investigators obtained the amount of unused sick time pay out for city, county and state under the Freedom of Information Act.

YEAR TUCSON PIMA COUNTY ARIZONA
2009 $3,057,200 $818,124 $11,385,080
2010 $1,824,629 $1,260,375 $12,085,165
2011 $3,025,517 $1,309,341 $13,881,449

The Investigators wanted to find out why cash-strapped governments are still making sick time pay a retirement benefit.

WAGES, SALARIES AND BENEFITS

It has been widely believed many public sector jobs pay less than similar private sector positions, however, workers in the public sector often enjoy stronger benefits.

But a report published by the Bureau of Labor Statistics shows that last year, "Private industry employers spent an average of $28.57 per hour worked for total employee
compensation in December 2011, while "Total compensation costs for state and local
government workers averaged $40.90 per hour worked in December 2011. You can see the report by clicking here.

To clarify, this amount is not a workers gross hourly rate, but the entire amount an employer pays including all benefits and taxes.

Mayor Jonathan Rothschild has seen the numbers but does not believe this means public sector workers are making on average more than $10 per hour than those in the private sector. He cites that cities and counties employ attorneys, judges, in some communities doctors, many engineers and professional administrators---positions which require advanced degrees. The lower rate in the private sector includes thousands of non-skilled labor and part time jobs.

Nick Dranias is an attorney with the Goldwater Institute. The Goldwater Institute is advocating for change in how public sector workers are compensated.

"In the aggregate, regardless of all the differences that exist in particular jobs, in the aggregate the government is competing for the same work force as the private sector," he explains.


"So you will find whatever your ideological persuasion across the spectrum, economists and political scientists do compare aggregate averages from the public sector to the private sector in accessing who's being paid more and why."


When the economy turned soft, the City of Tucson was hit hard with far less revenue coming in from sales tax. The city made huge cuts in the workforce.

Mayor Rothschild said keeping services like police and fire is essential.

"So what we did was we said 'we will increase the time you can bank for sick pay or for overtime but you don't get it until you leave'. And so what that did was allow us to keep people on the streets but try to keep the year to year budget in place."

Dranias believes unused sick time payout is a benefit public sector workers enjoy because of the strength of their unions.

"And this example of retaining your sick leave time indefinitely is clearly something that would never be sustained in the private markets."

Dranias contends public sector unions have too much power, and that's why benefits like unused sick time, government-paid pension plans and expensive health care exist for government workers

"The problem with the government sector is they can shift all of those excessive compensations to taxpayers who have no choice. Where as if a corporation like GM tries to shift their costs to the consumers, people stop buying the Volt."

Not so fast says the mayor. State law requires the city to be in the black.

"We have to balance our budget every year. So we have the same kind of market constraints," says Mayor Rothschild. "We have to submit a balanced budget and so we can only spend what the economy has brought us, so that's a real restraint on what we can pay out and how we pay out."

Dranias also believes there's a conflict of interest.

"In the government sector, unions help elect their bosses and that gives them leverage in negotiating, in these secret negotiations that they tend to have in Arizona."

Allyn Bulzomi is the Director of Human Resources for Pima County he says in the last 10 years he's seen the opposite.

"I've seen unions that have heavily supported certain candidates in local races, specifically school boards, city councils and counties, where the incumbents or the person that was supported by the unions didn't win."

Bulzomi also says there's a reason why so much money was paid out; baby boomers.

"The bubble of baby boomers are hitting the retirement age and they're moving out of the system. So the pay offs will be a little bit higher right now but then will come back down."

The State says only employees who retire and have at least 500 hours of unused sick will get the benefit which applies to 1.25% of State employees per year.

The state sent us this response via email:

When an employee uses a sick day, they are compensated for that day at their full hourly rate and the employer receives zero productivity from that employee that day. If the employee decides to instead come to work that day, the employer receives productivity from the employee on that day, and the employee may be paid a fraction of their hourly rate upon retirement for banking that sick day. The program is also a benefit which encourages employees to stay with the State until retirement resulting in reduced costs related to turnover including hiring and training costs (conservatively estimated at $55.7 million in FY11), and the loss of institutional knowledge.
--Alan Ecker, Public Information Officer, Arizona Department of Administration

Both the Mayor and Bulzomi tell us they have to be competitive when it comes to hiring and keeping good employees. And they say moving forward, all governments are evaluating pension plans and benefits.

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