Sentiment on City Council for ending practice of paying cash for unused sick & vacation time

LACONIA — When the last city manager left she received more than $44,000 for the personal, vacation and sick days she did not take but accrued during her tenure. When her successor leaves, he will not get a dime. The question is whether the example the City Council and Scott Myers have chosen to set will ultimately apply to other municipal employees.

The practice of attaching a cash values to accrued leave upon retirement or resignation is enshrined in the collective bargaining agreements negotiated between the city council and the four unions representing municipal employees — the Laconia Professional Firefighters, Laconia Patrolman's Association, State Employees Association and American Federation of State, County and Municipal Employees. These benefits are also incorporated in the city's personnel rules in recognition of a practice that ensures that employees who are not represented by a union, especially salaried employees, and union members are treated equitably.

Although the rules governing police officers are somewhat distinct, employees receive 10 vacation days per year and an additional five days after a decade of service. Employees can accrue up to one-and-a-half times their allotted vacation days, which can be carried over from one year to the next and cashed in when their employment ends. For example, an employee of 15 years could accumulate 22.5 vacation days.

Employees earn one sick day a month or 12 a year and may accumulate up to 90 sick days. Moreover, employees earn one personal day for each three consecutive months they work without taking sick time and may earn additional personal days based on their balance of sick days as of July 1 each year.

Recently the departure and retirements of four senior employees with many years of service cost the city more than $180,000 in payments for accrued vacation, sick and personal days. The amount represents more than half the increase in the amount to be raised by property taxes in the proposed 2011-2012 city budget.

Likewise, retiring Finance Director Pam Reynolds projected that payouts to employees eligible to retire during the next five years could total $877,000, which represents 90-percent of the budget increase proposed for coming fiscal year.

The budget includes $100,000 to establish a capital reserve fund for so-called "uncompensated absences" to defray these anticipated costs. Since this time has been legitimately accrued, it cannot be retrospectively devalued.

Meanwhile, several councilors have begun to question the practice of monetizing accrued benefits. Councilor Matt Lahey (Ward 2) said that since the city does not provide disability insurance, employees should be entitled to accumulate sick days against the risk of extended disability or prolonged illness. But, he insists they should not be paid for that time when they retire. Employees in the private sector, who find themselves unable to work for long periods, he noted, usually lose their jobs, especially because so few employers in the area have payrolls large enough to qualify their workers for the protections of the federal Family and Medical Leave Act.

Lahey likened the payouts to paying employees twice for the same time and stressed that because pensions are based on the three years when employees post their highest earnings, the payouts add to the cost of employee pensions and employer contributions. to the New Hampshire Retirement System.

"I agree a hundred percent," said Councilor Brenda Baer (Ward 4), "but how we go about changing the system is kind of tricky. We don't know how to get there."

With the appointment of Myers as city manager, the council sent a signal. His contract provides for 20 days of annual leave for vacation, sickness, bereavement or other personal reasons. Up to 10 days can be carried over into the following year, but must be used within the first six months or forfeited.

"By taking the lead," Baer said, "I think Scott has set the bar. You have to set an example and you have to start from the top."