San Diego County pays millions annually for unused sick days

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Jeff Dusek was one of San Diego County’s most prominent prosecutors, successfully handling some of the region’s highest profile murder cases. He was known as a hard worker, who spent a lot of weekends in the office. He rarely took a sick day off in his 34 years at the District Attorney’s Office – except for gall bladder surgery.

The accumulated sick pay turned into a cash payout in January when Dusek retired. The county cut him a check for $118,605.20 – the biggest sick pay cash-out in recent years.

It’s a practice virtually unheard of in private industry, but at the County of San Diego, top tier managers and some other employees have the option of cashing out 50 percent of their unused sick time or applying 100 percent of it to their service time. If an employee has banked a year of sick leave, for instance, that time can be added to years of service to boost his or her pension.

The Watchdog Institute, a nonprofit reporting center based at San Diego State University, analyzed four years of sick pay cash-outs, and found that since 2007, San Diego County has paid more than $2.5 million to 278 employees. Of the total, the county paid $686,238.93 in 2010 to 49 employees for an average payment of $14,005 a piece.

The county’s policy allows executives, some managers and unrepresented administrative employees to accumulate unlimited amounts of sick time. That amounts to about 4 percent of the workforce.

It is not unusual for government agencies to allow sick time to be translated to cash, but many have limitations. The city of San Diego, for example, does not distinguish between sick time and vacation time, but it caps the amount of unused time off most employees can accrue at 350, 600 or 700 hours, said Scott Chadwick, human resources director for the city.

Dusek, who has officially retired as chief deputy district attorney but is still working under a temporary program, said his payout was a pleasant surprise.

“I didn’t know what the policy was until the end,” he said Thursday. “I hardly ever used sick leave. I looked at it as an insurance program for catastrophic injury.”

Several employees who were covered by the cash-out policy defended it as an incentive program. They said that compensating employees for unused sick time discourages employees from using sick time when they shouldn’t.

“I think there’s something to be said for that,” said Darren Pudgil, spokesman for San Diego Mayor Jerry Sanders. “Otherwise, there might be people who take advantage of (sick leave).”

Pudgil worked for the county for almost 13 years before leaving his post as Supervisor Ron Roberts’ chief of staff in 2008 for a position in city hall. The county paid Pudgil $35,528.28 for unused sick time.

Countywide, 30 employees cashed out more than $20,000 for unused sick time. The average payment to all 278 employees over the four years was $9,119; the median was $6,000.

Full-time county employees are allowed 13 sick days a year. When they are cashed out, sick days are calculated according to the employee’s latest salary.

The high-level employees leaving the Auditor and Controller’s office from 2007 through 2010 received some of the highest average payouts of any department at about $27,000 per person.

The Department of Health and Human Services paid $363,105 to 63 employees in the past four years for an average payout of $5,763. It was the highest total amount paid out to the largest number of employees.

County Supervisor Dianne Jacob said she supports the policy because it helps the county attract the best workers.

“Allowing top managers – those with the highest level of responsibility – fair compensation for half of the sick time they don’t use is a reasonable, cost-effective way for the County to stay competitive as an employer,” she said in a statement.

Board of Supervisors Chairman Bill Horn declined to comment.

County Chief Administrative Officer Walt Ekard said the the sick pay policy is treated as one part of the wage and benefit package offered by the county to attract and retain quality personnel. To his knowledge, he said, the benefit had not been raised in cost-cutting discussions.

Jennifer Loftus, the national director for Astron Solutions, a New York-based human resources consulting firm, said the county’s policy of allowing employees to accrue unlimited sick time and then cash it out is “extremely rare” in the private sector.

Typically, there are caps, she said. One level limits the amount of sick leave per year, the second limits the total amount of sick time an employee can accrue.

Sick time is generally allotted by an employer to bridge the gap between when an employee experiences a less serious illness and the need to go on short-term or long-term disability, Loftus said.

Paying employees for unused sick time could also have practical ramifications, Loftus said. “You have to consider strongly the culture of the organization and will that encourage people to come in when they otherwise should stay home,” she said.

Matt Weatherly, president of Public Sector Personnel Consultants, a compensation consulting group based in Tempe, Ariz., said it’s not unusual for governments to reward healthy employees by letting them cash in their sick time. In his experience, the ones that do give employees 25 to 50 cents on the dollar for unused sick days, he said.

But, Weatherly said he thinks more employers will establish tiered systems that limit the amount of sick leave their employees can bank.

“Everything that I’ve read would suggest that employers are revisiting this notion,” he said.

Eric Banks, president of the Service Employees Local 221, which represents about 10,000 county employees, said he disagrees with the idea that certain high level employees can get cash for unused sick days.

Banks said a down economy has increased the need for services in the county, and that many county employees are being asked to do more with less.

“If we’re looking at cutbacks across the board, everyone should share in those cutbacks,” he said. “The actual cashing out for money is a problem because that’s money they could be using to provide services.”

Carlos Armour, another high ranking prosecutor in the DA’s office, retired in 2008 to become a Superior Court Judge. He was surprised to get a $93,597.61 check for unused sick time.

When he realized he was getting the money, “I thought, at least all those days that I came in to work when I maybe could have taken the time off, paid off in some manner.” He said he rolled some of it into his retirement account.

He thinks the policy is beneficial because it provides an incentive for employees to avoid using sick time unnecessarily.

“If you can accumulate and get some compensation at the end when you retire,” he said, “it encourages people to be on the job and not be tempted to maybe try to use their sick leave every year.”

Watchdog Institute, by By Kevin Crowe and Kelly Thornton

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California drug chief arrested for drug dealing, extortion

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The commander of the Contra Costa County drug task force and a high-profile private investigator are facing charges on over 25 felony offenses, including selling drugs and other criminal offenses.

The Contra Costa Times reports that Norman Wielsch, 49, commander of the state Department of Justice’s Central Contra Costa County Narcotics Enforcement Team, or CNET, and Christopher Butler, 49, the owner of Concord-based Butler and Associates Private Investigations, were arrested Wednesday by federal agents and booked into Martinez County Jail.

The investigation of the two men began in January, and uncovered evidence on possessing, transporting and selling marijuana, methamphetamines and steroids, and embezzlement, second-degree burglary and conspiracy.

Wielsch is the top law enforcement officer of CNET, a drug task force made up of officers from police agencies throughout the county. In his position, Wielsch oversaw thousands of drug investigations in Contra Costa County. He has been with the drug enforcement agency for 12 years.

Butler’s private investigation firm received national attention last year after employing mothers as investigators for their strengths in intuition and persuasion. He was planning a reality TV series called “PI Moms”, according to his firm’s website.

Wielsch and Butler were put under investigation after Department of Justice agents received a tip on the alleged drug activities.

Contra Costa Times

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Pension perk granted by California legislature, now under fire

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A little-know pension benefit used by tens of thousands of state workers annually, has bubbled up to the top of a list of pension abuses under fire for contributing to a skyrocketing unfunded pension liability.

The benefit, called “air time” allows workers to purchase up to five additional years of fictitious work time, in order to retire early, or receive a larger retirement benefits as if they had worked for a longer period.

The employees pay a fee to purchase the additional years of service, although critics say the amount isn’t enough, especially when a pension fund’s investment earnings are lower than projected – an increasingly common occurrence.

Last September, officials discovered that state actuaries priced the benefit so low, they increased buy-in payments by 17 percent to 38 percent, depending on the job classification.

The Los Angeles Times reports that benefit was bestowed on all state employees in 2003 by the legislature, which was intending to help its own staffers who took time off to run their bosses election campaigns. After then-Gov. Gray Davis vetoed the bill in 2002, lawmakers pushed through legislation the following year, this time making all state workers eligible for the perk.

The unusual benefit does not exist in private businesses with their employees’ retirement plans. Instead, those wishing to do something similar must purchase an annuity, which pays a return of 3 percent, less than half as much as the 7 to 8 percent guaranteed air time benefit provides.

Pension benefits are determined by multiplying a small percentage – usually 1.2 to 3 percent – times the number of years that an employee has worked and applying that percentage against the final year’s income. If an employee’s deal provided for a 2 percent factor, and worked 30 years in government, then a $100,000 final salary would yield a $60,000 annual pension benefit for life.

In an example given by the Times, a 55-year old employee who purchased 5 years of air time for $124,000 would get another $9,840 for life, and break even on the investment at age 67. According to actuarial tables, that employee could expect to live to 83 years if a male, and 86 if a female.

One investment advisor, Scott Hanson of Sacramento-based Hanson McClain, said he almost always advises government workers to purchase the extra years. Even after the recent price increase, “It’s still a tremendous benefit,” he said.

Los Angeles Times

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Erratic-driving legislators cost California taxpayers hundreds of thousands of dollars

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A  Toyota Highlander driven by two California politicians has cost state taxpayers over $400,000 in less than four years, according to Monday’s San Francisco Chronicle.

The jinxed car, a $41,078 Hybrid Highlander, was leased by former state Sen. Carole Migden in 2007. She traded in a two-year old Cadillac STS for the so-called green vehicle.

While driving to a meeting with a former assemblyman, she was reportedly driving somewhat erratically, first sideswiping a guardrail, and later plowing into the rear end of a Honda at a stoplight.

Migden claimed that her cell phone rang, and when she reached for it, she ran into the back of the car that had stopped at the light. Although she was meeting with the assemblyman about an endorsement for her in an upcoming election, which she lost, she claimed she was on state business.

The cost of repair to her vehicle was $9,681, and the Honda’s repair bill was $16,798. To settle the lawsuit filed by the other driver, who received only minor injuries, the state paid $335,000. Total cost: $361,479.

Critics questioned the contention that she was on state business, but the state paid the costs anyways.

After Migden lost her re-election bid, the car went into the state’s carpool and was reassigned to Sen. Leland Yee. While driving Yee to the airport in the car, Yee’s wife, Maxine, had a one-car accident while driving the car at unsafe speeds, according to the Highway Patrol.

The repair bill this time came to a whopping $22,897.

In both cases, the taxpayers were on the hook for the cost of the erratic driving, since the state self-insures its drivers.

Fortunately, both drivers suffered no serious injuries. Whether that can be said for California taxpayers is another matter considering the final bill for damages thus far on the vehicle totals $384,376. Adding in the purchase price of the Toyota gets the grand total up to $425,454.

Now that’s an expensive car!

Information from: San Francisco Chronicle

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San Diego judge allows transfer of pension overcharging case to L.A. despite city’s objection

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A lawsuit filed by the San Diego city attorney against its pension system will be transferred to another venue, according to a ruling by San Diego Superior Court Judge Joan Lewis.

The transfer was sought by the San Diego City Employees Retirement System and local labor unions because they felt that the recent damaging stories in the local press about alleged abuses in the pension system would prevent them from getting a fair trial.

The city tried to stop the transfer saying the request was not made timely, and only for the purpose of delaying the trial. The case was originally scheduled to begin on April 29 in San Diego.

City Attorney Jan Goldsmith brought the lawsuit last May, based on an interpretation of the city charter requiring that workers and the city contribute “substantially equal” amounts into the employees pension plan.

The lawsuit claims that the city has been overcharged by tens of millions of dollars each year by pension system officials.

“In light of the constant media attention that San Diego’s pension funding has received, we believe it is prudent to change venues to ensure a fair trial and we’re very pleased that Judge Lewis agreed with our position,” pension official Mark Hovey said.

Goldsmith told the San Diego Union-Tribune that “The labor unions and their supporters see this case as such a threat that they pulled out all the stops to delay, confuse and bury it — anything to avoid a decision on the merits.”

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New San Francisco law will bar construction workers from surrounding communities

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SAN FRANCISCO-The San Francisco local-hire law that was enacted in December is being challenged by a California legislator that says taxpayers will have to foot the bill for increased costs of public projects.

San Mateo Assemblyman Jerry Hill is introducing legislation today that would limit the reach of the bill by prohibiting the use of state monies on San Francisco local-hire projects, and prevent the ordinance from being applied to projects that are within 70 miles of San Francisco.

The local-hire ordinance, created and passed by the San Francisco Board of Supervisors, requires that city-funded construction projects over $400,000 must employ at least 20 percent of workers that live in San Francisco, with the total rising to 50 percent within 7 years.

Officials in surrounding communities called on Mayor Gavin Newsom to veto the measure, saying it would hurt construction workers who live there.  Newsom didn’t sign the bill, but did not veto it either. He said he would like to have seen some reciprocity arrangements with surrounding communities.

Assemblyman Rich Gordon, whose district includes much of the Peninsula and Silicon Valley said “If local governments choose to tackle their challenges through myopic self interest, regional problems relating to employment, the environment, education, and transportation will not be solved for the betterment of Bay Area residents.”

The Sacramento Bee

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California water utility tries to push through 40.3 rate increase

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Only one year after California American Water increased its water rates by 24.3 percent for Sacramento-area customers, the utility is back asking the state’s utility regulators to allow them to enact another rate increase of 40.3 percent over the next three years.

The company said that rising costs, mostly for infrastructure projects, are the reason for the requested rate increases. It also said that it was planning an aggressive meter retrofit program.

Angry residents packed the City Council chambers in Rancho Cordova, and 30 people spoke about the proposed increase. Most of the residents said that even if there is a legitimate need for improvements to the system, given the current state of the economy, now was not the best time.

“We believe our water service is still a tremendous value,” Andy Soule, general manager of the water company’s Northern California division, said during the meeting.

Most of the residents at the meeting disagreed, citing poor customer service, faulty meter readings and billings that have tripled in the last decade.

An independent advocate agency, the Division of Ratepayer Advocates for the PUC, has already filed an objection to the proposed rate hike for Sacramento and two other areas in California, saying the hike would present “unacceptable rate shock” for customers.

The advocate’s office did its own analysis of the request and said that the increase should be substantially lower than what the company is seeking. It says the increase should be only 13.8 percent in 2012, followed by a decline in rates for 2013.

Breaking it down by year, California American is asking for permission to increase rates by 22.8 percent for 2012, 6.7 percent for 2013 and 7.1 percent for 2014.

The utility is a subsidiary of publicly traded New Jersey-based American Water, which serves 16 million customers in 35 states.

Information from: The Sacramento Bee

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