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State employee sick time payouts spike with early retirement

ST. PAUL, Minn. (AP) — Leaders of a joint committee that reviews state employee contracts say they will take an aggressive stance in looking at all forms of compensation — including sick-time severance — after the number of sick day payouts spiked this year.

The state of Minnesota allows its workers to store away unused sick days over time, and take them as payouts upon retirement. Those payouts usually cost the state about $14 million per year.

But the St. Paul Pioneer Press reported Sunday ( ) that this year, Minnesota went over its annual payout by June 30, because thousands of workers took early-retirement incentives as the state tried to balance the budget.

Paying out unused sick time is rare in the private sector, but it's common for governments and has been standard in Minnesota for at least 40 years.

A Pioneer Press analysis found that between January 2008 and June 30, the state paid out $57 million in unused sick time to about 5,600 people.

The payments make up less than 1 percent of what the state spends on salaries and benefits, but a handful of employees — all from the Minnesota State Colleges and Universities system — received more than $100,000.

State managers received average payments of about $21,000. Faculty at MnSCU's four-year colleges had average payments of about $27,000, and faculty at two-year colleges averaged $18,777. Members of the state's two largest unions, AFSCME and the Minnesota Association of Professional Employees, averaged payouts of $3,500 and $7,000, respectively.

"The system isn't broken, so let's not create a solution in search of a problem," said Eliot Seide, executive director of AFSCME Council 5.

State officials and union leaders say paying out unused sick time as a form of severance discourages sick-day abuse, makes up for wages that are lower than those in the private sector, and helps longtime employees pay for health care costs in retirement.

"The total money may appear large, but it's a lifeline for people," said Jim Monroe, executive director of MAPE.

But with repeated budget deficits, the Republicans in the majority in the Legislature are targeting state employee compensation for possible cuts.

"We need to align public employees closely to the private sector as we move through these tough economic times," said Sen. Mike Parry, R-Waseca, chairman of the Legislative Subcommittee on Employee Relations.

AFSCME and MAPE are in contract negotiations with the state, and Parry's committee will get to review those contracts first, before they go on for legislative approval.

Parry's co-chairman, Rep. Steve Drazkowski, R-Mazeppa, said they'll look at payouts for unused sick time.

"We haven't talked in depth about it," Drazkowski said. "As we look at these things as a whole, I think we'll be bringing proposals forward to bring forward private-sector practices."

Contracts for state employees all have clauses for severance pay. Typically, a person needs to be at retirement age or have worked for the state for 20 consecutive years. In most cases, the payout goes into a health care savings account.

Sen. Barb Goodwin, DFL-Columbia Heights, said state employee compensation is not out of line with the private sector and that, if anything, pay has gotten worse in recent years because of the lack of base salary increases.

"They have all the same job risks as everybody else," Goodwin said. "There was a time when having a civil-service job meant a job for life, but that's not the case anymore."


Information from: St. Paul Pioneer Press,

Copyright 2011 The Associated Press.

Denton (Denny) Newman Jr.
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