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Palo Alto retirees cash in on 'cash out' payments

Original post made on Mar 26, 2010

Pay raises may be a thing of the past in Palo Alto, but some city workers managed to supplement their salaries with hefty "cash out" payments last year by turning in unused sick and vacation time. The city doled out $5.3 million in cash-out payments in 2009.

Read the full story here Web Link posted Thursday, March 25, 2010, 10:12 PM

Comments (29)

Posted by Toady, a resident of Old Palo Alto
on Mar 26, 2010 at 8:12 am

Time to rollout caps on accumulating vacation and sick time.

(yes, it's legal here in California)

Posted by Mather, a resident of Barron Park
on Mar 26, 2010 at 8:27 am

I can see maybe instituting cash-out caps, but it would be nonsense to put a cap on how much vacation an employee can accrue. If an employee earns vacation time by his or her own hard work, they should be able to take that vacation time whenever they want, or cash out up to some reasonable amount. I have no problem with the fact that a city worker who deals with our garbage every day, who is only making $50,000 a year in Silicon Valley, to cash out vacation one time to earn $156k. The following year, that employee will only receive their normal salary. It is only fair. We work our butts off, we earn pay and benefits, and we should not have them taken away.

Posted by Fran, a resident of Mountain View
on Mar 26, 2010 at 8:34 am

Nothing wrong with cashing out your unused vacation hours. Most private companies do does.

Posted by palo alto mom, a resident of Duveneck/St. Francis
on Mar 26, 2010 at 8:56 am

Many/most private companies limit the amount of vacation time you can roll over to the next year with the intention that employees should actually take the time off because breaks are important. Sick days are (or should be) insurance, you're sick, you take them, you are not, you don't. They should never be something you can "accumulate". And I have never heard of a company allowing you to "cash out" your vacation time when you are still employed, only when you resign.

Posted by Toady, a resident of Old Palo Alto
on Mar 26, 2010 at 9:12 am

" We work our butts off, we earn pay and benefits, and we should not have them taken away."

And you're insinuating that we in the private sector don't?

My company institutes these caps - the State of California has said these caps are legal (what's not legal is not allowing employees to roll over vacation to the following year). If it's good for the private sector, it should be good for public employees.

BTW, California is unique in that. In the other 49 states, it is allowed for employers to have vacation expire at the end of the fiscal year.

Posted by sickof pensionsinPA, a resident of another community
on Mar 26, 2010 at 10:23 am

Isn't the real issue that they cashed these in to boost their terminal salary for calculating pension. That is the real outrage as they can retire on more than they were ever paid! It is called 'spiking'!

Posted by bp resident, a resident of Barron Park
on Mar 26, 2010 at 10:26 am

The city spent $93 million on regular salaries -- not including overtime or cash outs -- in 2009.

Probably well over $100m WITH overtime and cashouts...i wonder how that compares with Los Altos, Menlo Park, and Mountain View.

This is purely anecdotal, but it seems like Palo Alto sure does have a lot more employees per resident than neighboring towns and a lot less to show for it. The crown jewels of Palo Alto----the public schools and Stanford University---aren't even part of the city's purview.

Posted by Crescent Park Dad, a resident of Crescent Park
on Mar 26, 2010 at 10:28 am

Yes it is standard practice to cap rollover vacation and/or sick time in the private sector. Some companies offer flex-time instead of separate vacation and sick accounts. Be healthy or be sick but your time comes out of the same bank --- keeps the "1-day cold" from creeping up all the time.

Posted by Mama, a resident of Downtown North
on Mar 26, 2010 at 10:34 am

bp - You need to remember that Palo Alto owns it's own Utilities, Landfill and operates a regional wastewater treatment plant therefore more employees. Also, the numbers are gross numbers, what you don't see is what the "partner" cities utilizing the treatment plant reimburse to the City.

Posted by Fact Check, a resident of Downtown North
on Mar 26, 2010 at 10:35 am

Hey sick of pensions in PA

You obviously don't know anything about the retirements in california.

Vacation and sick cash outs are not calculated into retirements. Overtime also isn't calculated into retirements.

Employee pay, night time differential, bilingual pay, those type of normal compensation items are factored into pay and retirement by law in California.

Easy on the fiction please

Posted by carlito's way, a resident of Old Palo Alto
on Mar 26, 2010 at 10:36 am

In all business I ever worked they had caps on yearly accrued vacation time, there was one that required us to use our vacation time every year or loose it. Taking a time off yearly makes wonders in productivity and most important in workers health. But greed never takes a day off.

Posted by Lineman for Palo Alto, a resident of another community
on Mar 26, 2010 at 10:48 am

P.A. does have a cap on the amount of vacation that can be accrued. It's dependant on how many years of service the employee has. I know someone taking two days off next week because she's at the cap. It's use it or loose it.

Posted by sick of pensions, a resident of another community
on Mar 26, 2010 at 11:02 am

fact Checker:
there are dozens of govt sites that refer to ;pension spiking by CA muni employees. What is your citation for your comment. Joe Simitian has even introduced a bill to stop this. Here is just a sample story:

" An analysis of the fire chiefs' pensions by a fiduciary counsel, Reed Smith, has been posted on the website of the Contra Costa retirement board, which plans to hold a hearing on the issue on Jan. 11.

The analysis shows how Craig Bowen, a San Ramon fire chief, had a base salary of $222,507 and retired with an annual pension of $283,958. The pension calculation was boosted with management pay, stand-by pay, an auto allowance, and cashing in administrative leave and vacation time."

Posted by Work Together, please, a resident of South of Midtown
on Mar 26, 2010 at 11:55 am

To BP Resident who wrote, "The crown jewels of Palo Alto----the public schools and Stanford University---aren't even part of the city's purview."

WRONG!!! The city supports PAUSD in a thousand ways. One small a shared use agreement, city takes care of PAUSD playing fields, saving the district megabucks. CPA provides all kinds of after school activities, and some in-school programs, including theater and sports programs that in other communities are provided by the schools. Partnership of the city and school district makes a huge difference in the quality of our schools. You need to take a close look at both organizations' budgets to understand that interdependence fully.

You are wrong about Stanford, too. For instance, the city mitigates traffic impacts of thousands of car trips that come though PA every day enroute to Stanford and other local businesses. While our employee cost per capita looks high when you look at number of residents, you need to consider that PA's population DOUBLES during every work day. Recalculate. City of PA has to serve the needs of all of that daytime population.

I appreciate the good work that most of our city employees do, and I think that (like the rest of us)they deserve to be fairly compensated. That said, I would like to see city employee compensation more in line with what the rest of us are living with. I think the unions have gone to bat for their longer term employees at the expense of younger staffers. I don't really understand why the younger folks put up with that. Further, I think the unions are damaging their reputation in the community by putting city finances at risk to go to bat for compensation that is completely out of line with what is affordable in the long term. A sustainable budget that provides stability in the long-term for both the city and for employees (of all ages) is important. The unions seem to have forgotten that. It will hurt them in the long run.

Posted by common sense, a resident of Midtown
on Mar 26, 2010 at 12:02 pm

With the budget deficit and the city wanting to reduce salaries, those city employees with large accruals in vacation & sick pay will be looking at the trade off of cashing out now at a higher salary versus waiting....

Posted by reform needed, a resident of Fairmeadow
on Mar 26, 2010 at 1:04 pm

Cash out vacation time is fine, although it should have a cap of how many vacation days one employee can keep. However, cash out sick days is SICK and SICK. Sick days should be just used when you sick but not for money when you are healthy. I never heard about cash out sick days in a private company. Why city and government employees are so spoiled even when city or state has no money. Our tax money (which does not have sick day pay) goes to those spoiled government workers, plus pensions, etc, YES, US government is going to bankrupt and other foreign countries are going to be our OWNERS, like China.

Posted by Reform done 25 years ago, a resident of Another Palo Alto neighborhood
on Mar 26, 2010 at 1:17 pm

From the article [with clarification]:

"In January 1984, the city changed its policy and set limits on the number of unused vacation days workers can swap for cash. Lalo Perez, director of the Administrative Services Department, said workers [hired after 12/1/1984] can no longer cash out their sick days and have limits on how many vacation days they can trade in for cash. "

Posted by jardins, a resident of Midtown
on Mar 26, 2010 at 1:18 pm

"Hundreds of workers took modest cash-out payments when they had worked more days than required -- most less than $10,000 but some into five-digit figures."--Palo Alto Weekly.

What's "modest" about $10,000???!! That's as much as (or more than) many ordinary workers for non-profit organizations earn in a YEAR!!!! I'm outraged!! The city must mandate its employees to use or lose vacation days each year, and allow sick days only for the current financial year.

Posted by reform needed, a resident of Fairmeadow School
on Mar 26, 2010 at 1:51 pm

Jardins, I totally agree with you. I am so sick to hear the news like this when City of Palo Alto is short of money. It makes me think more next time when any money related bill is on the voting ballot because our tax money is going to those city worker's pocket but not for the CITY. Palo Alto...No more the Unions, that will kill the city! Old time, Union is protecting workers, nowadays, Union kills the city, kills NUMMI, and kills many other factories, that may includes PAUSD soon.

Reform done, thanks for the info. However, if there is a law since 1984, almost 26 years ago, I don't think they make as much salary as today. Let's honor them, long time workers, but should use the pay rate 26 years ago, but NOT today's pay rate.

Posted by Joe, a resident of Greenmeadow
on Mar 26, 2010 at 3:05 pm

Ready, how many employees are left from 1983 and early? I bet not many. I'm more concern with the future salary and benifits of the employee.

Posted by stretch, a resident of another community
on Mar 26, 2010 at 4:45 pm

Dear sick of pensions, aka, he/she-who-knows-not-what-of-he/she-speaks. Spiking is when, during the last year of employment, the worker pays his/her own retirement contribution (which was taken over by the City in lieu of a raise one year), and his/her salary is "spiked" by that amount (6%?)for calculation purposes. No overtime, no cash-outs are used in the calculations. You really should check on things before you go spreading lies and stampeding the cattle with sudden noises.

There are bits and pieces of truth scattered among these blogs. There is a cap on how much vacation a person can accrue, so there are no big cash-outs for the big percentage of employees. People hired after a certain date cannot cash in their sick leave at all (and so many use it as they get it).

And, it doesn't do any good to shut the barn door after the cows have escaped. Change things, sure, but quit your whining!

Posted by opus, a resident of Old Palo Alto
on Mar 26, 2010 at 8:13 pm

perhaps reading the full article and researching facts prior to posting comments would resolve most of the stress most of you seem to be having. it's ok to blurt out nonsence verbally but should probably be contained when writing in a public forum where you expect a coherent response.

Posted by lol, a resident of Embarcadero Oaks/Leland
on Mar 27, 2010 at 2:13 am

the reform must have been done when people were fresh hires, reform was set because people knew the downside of the future and expected criticism.

look when the law was passed it should have cashed everyone out whom ever it was at that point to make a stop to thats reform...thats just a law that was put to proctect the ones down the road with a chance to get their money going...and laugh at those that were hired before them...

in that case the city should higher contract workers, to do their job cheaply...

Posted by neighbor, a resident of another community
on Mar 27, 2010 at 6:06 pm

I think that if anyone can last long enough to retire in Palo Alto, without having a total nervous breakdown, they deserve every penny of retirement that they can get.

Posted by lol, a resident of Meadow Park
on Mar 28, 2010 at 3:34 am

Posted by neighbor, a resident of another community, 9 hours ago

I think that if anyone can last long enough to retire in Palo Alto, without having a total nervous breakdown, they deserve every penny of retirement that they can get.


i agree with you,

the city knew this would happen years ahead of its time, i tell you these pesky city managers predict the future or have psychics around them 24/7

Posted by Trickle down tyranny, a resident of Embarcadero Oaks/Leland
on Mar 28, 2010 at 5:26 am

I see some scary, scary thinking here.

We must not keep going down that nasty path of believing it is ok to break contracts.

Our WH did it with banks, and then did it with investors in auto companies...our contract law is in shambles, we here in the USA and outside the USA fear trusting our contracts anymore, since our WH has shown it has no regard for our contractual arrangements.

I see some of that same thought here. In the USA it used to be a deal is a deal...not anymore apparently.

is this trickle-down tyranny?

Posted by Frank, a resident of Ventura
on Mar 28, 2010 at 2:50 pm

Not taking vacation for 20 years is in fact an interest free loan to the City. The City boosting pension payments because of any kind of cash out (sick time, vacation time, car expense, ...) is not right.

Don't limit the accrual - that's not the problem. But base the pension on the base salary - that is fair.

Private sector companies like to limit vacation accrual because they have to keep the vacation salary owed to employee on their books as a liability. That's not really an issue for a city.

Compensation in the private sector is somewhat different than compensation in the public sector. But to vilify everything that city employees get that is not offered in the private sector missies an important point that city employes will never receive things like stock options or profit sharing. These other benefits make public sector more appealing and are necessary unless you want a civic sector staffed solely by people who can't work in the private sector.

Posted by Toady, a resident of Old Palo Alto
on Mar 29, 2010 at 1:34 pm

"Private sector companies like to limit vacation accrual because they have to keep the vacation salary owed to employee on their books as a liability. That's not really an issue for a city."

Oh yes it is. You make it sound as if it were only an accounting issue. It's more than that -- where does that money come from? Tax revenue doesn't grow on trees.

Posted by Mike, a resident of Crescent Park
on Mar 29, 2010 at 5:52 pm

You whiners need to stop going on about the pay and benefits of our city workers.

Your role in life is to work hard to enable you to pay the taxes that make their above private market compensation and benefits possible. That alone should give you a deep, warm feeling of accomplishment.

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