AT PUBLIC EXPENSE

Toledo's retirement payouts add to cash woes

Unused sick, vacation days mean hefty sums

The Blade
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One in an ongoing series.

Toledo Mayor Mike Bell took home $68,237 for unused sick time when he retired as city fire chief in 2007. A supporter of Issue 2, he says times were different then.

When Toledo Police Capt. Mark Mason retired in 2007 after 31 years on the force, he walked out the door with a handsome check for squirreling away sick days and vacation days.

The police captain retired with “severance” valued at $163,487 — something critics dub a golden parachute for public-sector workers. That benefit was in addition to the city-funded, state pension he had accumulated over three decades. His wife, Linda Mason, was a command officer for the Toledo Police Department who retired that year with severance totaling $99,710. Like her husband, she had cashed out unused sick and vacation days banked over the years and collected upon retirement.

Mr. Mason received the highest payout from the city since 2001, chiefly because he rarely called in sick and he took a disability retirement that allowed him to cash out all his time without the normal restrictions, according to former Police Chief Mike Navarre, who just retired last week. And while Mr. Mason’s sick time cash-out of $144,644 was far above the average of $26,588 in 2007 for 83 Toledo workers collecting sick-time severance then, or the average of $26,755 last year for 107 city workers, it is the kind of end-of-career payments that municipal officials have sought to control since most city budget revenues across Ohio took a nosedive in 2008.

The city of Toledo wrote checks totaling $2.8 million last year and $3.27 million in 2009 for unused sick time that union and nonunion employees — including upper management — had saved up during their years working. The city has paid more than $20 million since 2007 for unused holiday, vacation, and sick days. Also since 2007, 67 city of Toledo employees have taken home more than $70,000 each in sick-time payouts alone, according to a Blade review of city records.

If Senate Bill 5 is upheld Nov. 8 by an affirmative vote on Issue 2, both sick-time accrual and cash payouts of unused sick time would be curtailed — just one of many cutbacks the law delivers to public-sector union workers.

A state budget deficit of about $8 billion set the stage for the Republican-controlled General Assembly, with support from GOP Gov. John Kasich, to craft Senate Bill 5. The law redefines Ohio’s 27-year-old collective-bargaining law and in the process, clamps down on the state’s 360,000 public union employees.

A battle for votes

Aggressive campaigns on both sides of the issue have tried to sway public opinion on Issue 2.

Lt. Dan Schultz, president of the Toledo Police Command Officers Association — the same union that represented Captain Mason — said provisions such as sick-time payouts, sick-day accrual, or the controversial funding of employee pension payments were added to city contracts over many years as trade-offs for pay raises.

“I wasn’t there when [unused sick-time payment] was negotiated in for the contract, but it definitely helps with the police department being short on manpower because it encourages people not to call in sick,” Lieutenant Schultz said. “I think anybody who doesn’t use their sick-out is going to have a high payout, and when you are a command officer, you have a higher pay scale, so you are paid out at a higher rate.”

Melissa Fazekas, a spokesman for We Are Ohio — the organized labor and Democratic-backed group opposed to the law — said the provisions on sick-time accrual and cash-outs of unused sick time are just small parts of a law that should be repealed.

“The time to discuss pieces of this bill was during the legislative process, which as you know was deeply flawed,” Ms. Fazekas said. “The bottom line is Senate Bill 5 is about way more than payouts. It fundamentally takes away collective-bargaining rights for public employees. Ohioans are being asked to vote on the bill in its entirety. It’s a flawed bill and that’s why 1.3 million Ohioans signed petitions to repeal the law and look forward to voting against it.”

The proposed law reduces sick-leave accrual for most public employees from 4.6 hours to 3.1 hours per biweekly pay period. It also caps sick-time payouts.

The legislation

The Ohio Legislative Service Commission’s analysis of Senate Bill 5 states the law prohibits a collective-bargaining agreement “from containing a provision for the exchange or sell?back of a public employee’s accumulated paid sick leave balance at the public employee’s final retirement or death that provides for a cash payment” exceeding 50 percent of the employee’s total sick-leave accumulations and for accumulated sick leave in excess of 1,000 hours.

Jason Mauk, spokesman for the pro-Issue 2 group Building a Better Ohio, said the law, if upheld by voters, would “essentially cap the buyout at unused leave at 1,000 hours or 50 percent of what an employee has accrued up to 1,000 hours.”

He said Senate Bill 5 would reduce the pressure those payouts put on city budgets such as in Toledo and Cincinnati — where more than 900 Cincinnati employees eventually could cost taxpayers more than $93 million for unused holiday, vacation, and sick days.

“It means the cap is 1,000 hours, or if you haven’t reached 1,000 hours, it is 50 percent of what you have,” Mr. Mauk said. “But you can’t accrue more than 1,000 hours annually. It is an incentive not to just bank all of your time like some employees are doing. The idea behind limiting paid leave is to encourage employees to use that time and to avoid banking significant hours that they would cash out at the end of their service at great expense to cities.”

Critics often point out the unfairness for taxpayers that city employees can cash out the accrued time at their final salary level instead of at what they were paid when they earned those days. For example, a worker who saved five sick days when he started his city career as a $500-a-week employee could 30 years later cash in those same five days at a salary that is two or three times greater.

Senate Bill 5 also covers the potential of public employees using massive amounts of sick time. The law caps public employees to two weeks of paid sick leave a year.

In the case of Toledo’s police officers, for example, the current formula lets any employee with at least 25 years of service hired before 1993 to cash out 50 percent of the first 1,600 hours and 100 percent of the unused sick time beyond that.

Steve Herwat, Toledo’s deputy mayor of operations, said that before 1993, the city’s AFSCME Local 7 employees, for example, could have an unlimited number of banked sick hours. After 1993, the formula allows them to cash out no more than 400 hours, he said.

“It goes back to the days when public-sector compensation did not match that in private sector, so this was a way to equalize compensation,” Mr. Herwat said.

Lieutenant Schultz said collective bargaining has worked for both management and the city and a recent change in the union’s current contract proves that.

“I don’t think you will see as many of the [high severances] from police as you have in the past because in the contract we are currently under, there is a section that says beginning Jan. 1, 2010, TPCOA members who have accumulated 25 full years of service may have up to 33 percent of their accumulated sick time over 1,600 turned into compensatory time and then you can cash out the comp time,” he said.

Pair of perspectives

Donato Iorio, an attorney representing the unions for Toledo’s police patrolmen and firefighters, said the city negotiated the sick-time accrual and payouts in part for its own benefit.

“The city of Toledo recognizes there is a costs benefit and it has been a subject of negotiations,” Mr. Iorio said. “The formula for sick-leave accumulation has been adjusted on countless occasions. … The benefit the city gets is it provides an incentive for employees to come in when they are sick, which means the city continues to pay straight time instead of time and a half.”

He said Senate Bill 5 will not cut costs as the state’s Republican leadership has promised.

“It will increase costs, at least within the safety forces,” Mr. Iorio said. “And it is also a retention tool, where if you are a police officer and you don’t reach your 25 years of experience, you then forfeit your accumulated sick time. So that is a very nice retention tool, especially in Toledo where the salaries are at a disadvantage from Columbus, Cincinnati, and Dayton.”

Toledo Mayor Mike Bell, who took home $68,237 for unused sick time in 2007 when he retired as the city’s fire chief, said the severance formula doesn’t work in the current economy.

“This can be extremely beneficial to have another tool in the toolbox,” Mr. Bell said of the provision within Senate Bill 5.

“Most employers want to be fair when employees are sick and allow them to handle their issues,” said the mayor, who is an outspoken Senate Bill 5 supporter. “At the same time, it is a blessing to have a job in the times we are in now and you shouldn’t have to bribe workers to work in these times. … A lot of things were beneficial in the past and I am saying they are not right today.”

Mr. Bell said he could recall using just three sicks days during his years as a Toledo firefighter and state fire marshal after retiring as chief. He said times were better when he retired and the city could afford that cash-out benefit.

“People are complaining that this is not fair,” he said. “Who decides what is fair? What the taxpayers believe is fair is that we don’t raise their taxes.”

The mayor would have taken home even more if the previous mayor, Carty Finkbeiner, had not changed the rules for executive exempt staff such as city directors and capped the sick-time payout formula. Those nonunion employees get paid for 50 percent of the first 200 sick days and 100 percent for days over 200 days for those banked before Dec. 31, 1992. They then get paid out for one-third of the first 80 days, one-half of the next 80 days, and nothing after that for any days banked after Jan. 1. 1993.

“I took home less because they switched the rules for me,” Mr. Bell said. “In 1993, Carty switched the rules of engagement for exempt employees. I didn’t stop coming to work.”

Taking action

The Lucas County commissioners have not waited for Senate Bill 5. The three Democrats just last month lowered the number of hours of sick leave that nonunion employees can cash in when they retire. Previously, county employees who are not members of a bargaining unit could get cash for up to one-third of their unused sick leave, for a maximum of 320 hours. The new policy limits that maximum to 240 hours.

Pete Gerken, president of the board of commissioners, said the loss of $3.6 million in local funding from the state and the expectation of more cuts to come mean the county can’t afford the benefits it has paid since about 1978. The county has about 600 employees affected by the rule change, starting in 2012.

Last week, the commissioners and AFSCME Council 8 announced an agreement that cuts benefits for about 150 of the county’s 1,985 unionized employees.

In addition to wage freezes, the union agreed to reduce the percentage to 25 percent for cash-out of accrued but unused sick time. The maximum cash-out is capped at 240 hours starting Jan. 1, 2012. The agreement also cuts back on unused vacation accrual.

The county so far this year has paid out $737,501 for unused sick leave and an additional $593,275 for unused vacation time at retirement for all employees, including those in the collective-bargaining units.

From Dec. 24, 2006, to Oct. 8, 2011, retired Lucas County employees collected $3.68 million in unused sick-time payouts; $3.63 million in unused vacation payouts, and $190,928 in unused compensatory time, according to a review of county records.

Lucas County Sheriff Sgt. Ephron Linzy, who retired in February, 2010, with an annual base salary of $58,427, took home $62,833 more for his nearly 2,237 unused sick time hours; $20,224 for 720 unused vacation hours, and $1,292 for 46 unused compensatory time hours.

Smaller cities are not immune. The city of Oregon has paid nearly $1 million for retirement severances since 2007 and so far this year it has paid $418,743 for 15 severances that ranged from $78,514 for police Lt. Brian Andrzejewski to $11,710 for maintenance worker Timothy Borgerson. The average of those 15 payments is $34,895.

Oregon City Administrator Mike Beazley said that, like many cities, Oregon also has been cutting that perk.

“Employees prior to 2000 are grandfathered under a rule that had no cap on sick-time payouts and now the current rule is that they get one-half of their accrued hours up to a max of 480 and so there are some employees serving under the old rules who have potentially large payouts,” he said. “It is a less common benefit in the private sector certainly and you will find in the public sector that government certainly over the last 10 to 15 years have been moving to reduce that benefit.”

Perrysburg City Administrator John Alexander said retiring employees’ severance packages have a “fairly limited” effect on the annual budget because, unlike some places, built-up vacation time there cannot be carried forward more than one year. The city also has a five-year employee plan where it monitors employees who are of the retirement age so it can plan the annual budget, he said.

“We plan ahead as best we can,” he said. “We have a certain amount of predictability.” But he added, “Occasionally, there are surprises.”

School systems

Several provisions in Senate Bill 5 apply specifically to teachers, including a clause that eliminates the state-mandated 15 days of paid sick leave for teachers and the payouts for up to 120 days of unused sick leave in severance pay in state law. The bill still requires that school boards provide sick leave for employees, but there are no state minimums.

Many local teachers have banked enough sick time for nice retirement cash-outs.

The 13 Perrysburg teachers who retired at the end of last academic year took home a total of $380,233 for unused holiday, vacation, and sick days. The top three — who all retired on July 1, 2011 — each took home severance checks for $36,075.

In the suburban Oregon school district, where severance payments are based on 50 percent of unused sick leave, and the maximum payout is based upon daily rate of 150 days, 15 retired employees cashed out $758,753 in 2011 or $2.1 million since 2007.

Gerald Anthony, a Clay High School physical education teacher who retired after 33 years with the district, was among the top paid with $60,335 in severance.

None of the Oregon employees reviewed by The Blade over the past five years was able to take home a severance check greater than his or her annual salary.

At Toledo Public Schools, the region’s largest school system, a greater-than-usual number of teachers retired at the end of the 2010-11 academic year. The district got socked with $7.8 million in severance payments for teachers who left Jan. 1 through July 31 alone.

In July, 126 teachers retired compared to half that many the previous July.

Toledo Public Schools teachers currently accrue 15 sick days a year that can be carried over from year to year. Upon retirement, they get paid for all unused sick days up to a maximum of $49,000 a year — meaning a payout of say, $120,000, would be spread out over three years for the retiree.

Kevin Dalton, president of the Toledo Federation of Teachers, said the Senate Bill 5 provision that caps accrual for teachers at two weeks and caps the sick-time cash out is short-sighted.

“Someone in a different profession has the ability to take a day off and go to the doctor and also has additional time,” Mr. Dalton said. “Whereas a teacher is locked into a specific time because there are 30 individuals dependent on them.”

Like all public-sector union leaders, Mr. Dalton has taken a strong stance against Issue 2.

“If Issue 2 is not defeated, it would really restrict and almost eliminate the ability for teachers to be the professional advocates we are for children,” he said. “We use collective bargaining to advocate for classroom size, supplies, student services, and without that ability, who would be the advocate for the students we serve?”

Staff writers Carl Ryan and Gabrielle Russon contributed to this report.

Contact Ignazio Messina at: imessina@theblade.com or 419-724-6171.