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Audit: Worker furloughs cost California more than it saved

March 14, 2013 12:00:00 AM PDT
A new audit shows furloughs of state employees have ended up costing California more money than it's saved, by increasing the state's long-term costs.

At one point with the state facing a $42-billion deficit, state leaders had very few options about balancing the state budget immediately, so they turned to worker furloughs, pushing costs to the future.

At the height of the recession, despite protests, state workers were forced to take as many as three days off without pay per month during the Schwarzenegger administration. Today the furloughs continue at one day a month under Governor Jerry Brown.

A new report by the independent California Legislative Analyst's Office found furloughs saved the state $5 billion in the short term over five years, but increased vacation and leave time by 50 percent.

"During furloughs, employees would use their furloughs in lieu of vacation," said Nick Schroeder, an analyst with the Legislative Analyst's Office. "In fact, employees still have banked furlough days."

The problem with a mandate of using furlough days first is that employees rack up vacation days and when they leave their state job, they're entitled to cash out all of that unused time, which can be more than their annual salaries.

"If all state employees were to separate employment today, we would have to pay out that value," said Schroeder. That value adds up to $3.9 billion.

In the budget year, 2011/2012, payouts were at an all-time high at $270 million.

The LAO analysis also found many state agencies were not enforcing the cap of accruing no more than 80 vacation days. Nearly 24,000 state workers are currently over that cap.

The California Association of Professional Scientists union points out the report failed to account for what the pay cuts did to workers who struggled financially after losing an average of $21,000.

State workers never wanted furloughs.

"These vacation balances are up by design," said Chris Voight, executive director of the California Association of Professional Scientists. "That was the plan of the past administration. The current administration has continued furloughs. So that's the cost of doing business."

Taxpayer groups says it's time for the Legislature to act.

"I think the entire personnel policies, including the furlough policy, should be reviewed top to bottom," said Jon Coupal, president of the Howard Jarvis Taxpayers Association.

The Legislative Analyst recommends offering a cash buyout now at current salaries and enforcing the 80-day cap. The report suggests lawmakers look at long-term costs before using furloughs again.


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