Elected officials, government managers can turn perk into profit
By JEREMY HAY & BRETT WILKISON
THE PRESS DEMOCRAT
Rohnert Park City Manager Gabe Gonzalez’s contract outlines his base salary, $165,000, his monthly car allowance of $333 and that he “is expected to be available at all hours.”
It also says he is entitled to all the benefits of other management employees.
Those benefits include a little-known perk termed administrative leave that amounts to a guaranteed cash bonus or extra vacation.
The leave is essentially a bank of extra hours given to most upper-level public workers across Sonoma County — including elected county officials — that can be used to take more time off or, in some cases, be cashed in at year’s end. In other instances, unused hours roll over each year and a certain amount can be cashed in at retirement.
When that happens, the results can be startling.
This year, five elected officials have retired and cashed in their hours.
Former county auditor-controller Rod Dole retired in May and cashed out leave hours for $44,140, plus used additional time to boost his last year’s salary and, as a result, his retirement pension.
County Supervisors Mike Kerns and Paul Kelley got $50,232 and $39,000 in cash respectively when they retired. They too cashed in additional hours that bumped up their pensions.
Neither Kerns nor Kelley returned calls seeking comment.
Even people who believe the extra-hours benefit is justifiable say it leads to major problems when the option to cash them in is managed poorly and when they are allowed to accrue toward retirement.
“I think the concept is a valid one, if it appropriately compensates someone who is not eligible for overtime and has to work a schedule that goes beyond what most people would consider a normal workday,” said former Rohnert Park Mayor Tim Smith.
“But you have to clean it out so you don’t have a mounting deficit,” he said.
In Rohnert Park, administrative hours cannot be rolled over, but they can be cashed in at the end of the year. Last year, that cost the city $62,000 in cash paid to 10 employees.
“We had a very luxurious package in terms of administrative leave,” said Gonzalez. The policy was tightened this year.
Even when used only as vacation hours, the benefit adds up to extra time off that many would find enviable.
In Santa Rosa, for example, hours cannot be cashed in. Instead, at least 150 managers each took an average of two extra weeks off last year, on top of the two weeks or more of vacation time they get.
“Taxpayers are pretty generous providing that,” said Fred Levin, executive director of the Sonoma County Taxpayers Association.
Administrative leave is widespread in public-sector managers’ compensation, although how it is administered varies. Employees qualify for it if they are classified as “exempt,” meaning that under federal labor law they are ineligible for overtime pay.
It is also commonly part of benefits for confidential employees, who are defined as those whose work involves personnel issues.
In Rohnert Park, Cotati and Sebastopol, where hours can be converted to cash, the total does not count toward state pension benefits that are based on earnings.
However, in county government, a portion of the value of cashed-in administrative hours does count toward the income calculations used to set retirement benefits.
Former Sheriff Bill Cogbill cashed out administrative leave when he retired that added $18,567 to his final year’s salary. That was used by the county to calculate his annual pension, which guaranteed him 90 percent of his top pay based on his more than 30 years in law enforcement.
Dole added $19,994 to his last year’s salary. For both Kerns and Kelley, accrued administrative hours increased their final year’s pay by $12,850.
About 440 county managers and department heads qualify for administrative hours that accrue at the rate of 2.3 hours every two weeks. They can cash in up to 80 hours annually or roll them over into a bank to be used later.
Elected officials do not get vacation time but qualify for more administrative leave hours per year. The county’s four elected department heads — sheriff, district attorney, clerk-recorder-assessor and auditor-controller-treasurer-tax collector — accrue 2.95 hours every two weeks, while the five supervisors get 3.41 hours.
Both groups of county elected officials can cash in up to 160 hours a year. Unlike managers, there is no limit to the hours elected officials can bank, but only 200 hours can be applied to boost their final year’s salary for retirement. For managers that number is 80 hours.
The system is one that needs to be revisited, while still preserving incentives for people to enter public service, Smith said.
“I don’t think every benefit that a public employee has needs to be stripped away, but I think they need to be looked at closely,” he said. “The key is, do you still need that package to attract top talent?”
Bonuses are a staple of private industry, especially among larger companies — which generally pay executives more than their public-sector counterparts — but they are structured very differently.
“Typically there is no guaranteed minimum bonus,” said Radhakrishnan Gopalan, assistant professor of finance at Olin Business School at Washington University in St. Louis.
“Usually bonus is linked to performance, and for top executives especially there is no minimum guarantee,” said Gopalan, who co-authored a 2011 study that surveyed executive compensation packages at 1,500 U.S. companies.
Public officials say the administrative hours benefit is a fair deal for people who are expected to work as much as necessary to meet their responsibilities, even if that extends beyond a 40-hour workweek.
“They’re salaried employees, so they work as long as it takes to get the job done,” said Linda Kelly, city manager in Sonoma, where managers, including Kelly, are given 80 hours a year they can use for time off. But those hours cannot be cashed in.
Administrators note they often use less vacation time than they are given. Santa Rosa City Manager Kathy Millison, who gets five weeks of vacation a year, said she used 16.5 hours of administrative leave last year and “lost” 86 leftover hours.
She used just two days of her vacation time, she said.
“It’s been a busy year,” Millison said in an email.
In Santa Rosa, managers get 80 hours of administrative leave that they also lose if they don’t use it through the year. Unused hours cannot be cashed in.
“It’s a benefit for managers, it’s not a bonus,” said Fran Elm, the city’s Human Resources Director.
Petaluma managers get 80 hours a year of administrative leave and can cash in a maximum of 40. Sebastopol has the same plan.
In Cotati, City Manager Dianne Thompson gets 28.5 vacation days a year and 120 hours of administrative leave, potentially giving her 44 days off a year. She can cash in up to 80 administrative hours at year’s end. Hours she doesn’t cash in or use for time off accrue into a leave bank.
Thompson, the only Cotati employee to get administrative leave, notes that she doesn’t receive sick time and says she uses less than her allotted yearly vacation time.
“It’s really a 24/7 job and I tend to keep working when I’m on vacation,” she said, adding that she and other staff in 2009 took voluntary pay cuts to help the city through its budget crisis.
Levin, though, said the benefit plans need to be changed to mirror the private sector, where boards of directors have the authority to assess whether targets were met and to determine bonus payouts.
“The council has to set defined goals, and then I have no problem with a bonus program,” he said. “But to just give people what amounts to a bonus without any justification other than they work overtime — that’s part of their job, they’re managers.”
You can reach Staff Writer Brett Wilkison at 521-5295 or email@example.com, and Staff Writer Jeremy Hay at 521-5212 or firstname.lastname@example.org.