As a follow up to our previous articles about areas of concern in the school district budget, the subject of this article is the multi-million dollar cost of the paid time off or PTO plan for district employees.

Our long standing position on this issue is that payment for unused sick time should be dropped in favor of a traditional leave plan for both vacations and sick time. The district’s policy, which is similar to the county’s plan, is not cost effective, does not accomplish the stated goals for of the plan and under state law is optional not mandatory. The program is also overly generous and not competitive with the private sector.

While we support the need for competitive benefit programs we object to the millions of dollars of liability to the taxpayers. For example, the current balance sheet liability for the district’s PTO program is $15,110,256.00. Employees accrue leave time on their first day of employment at the rate of one day per month - with no maximum. This is simply unreasonable on its face. On average, most employees do not use a substantial portion of their accrued time and the unused portion is paid in a lump sum payment at termination - and at a higher rate of pay than when it was earned. As a result, taxpayers are saddled with a current liability of over 15 million with millions more to come if the policy is continued.

District employees also receive 6 days of paid personal leave, professional leave time and holiday pay where appropriate. When PTO is added to the overall cost of other benefits, we believe this is excessive. Therefore, we believe the Superintendent and the School Board should take immediate action to review the purpose and the cost of each and every benefit and take action to reduce, or eliminate costs as appropriate. It also be noted that only a small percentage of private employers have banked leave time policies, but with one key difference. Private sector employers do not pay for unused sick or vacation time or allow carryover of unused time from year to year. Our other concern is that the PTO program does not meet its stated objective. Here’s why.

Vacations are designed for rest and recuperation and sick leave is for employees who are ill. However, in both instances, these policies should contain a “use it or lose it” provision. In order to fix the PTO problem, we recommend the following. Beginning with the new contract year, freeze all accrued leave time. Next, replace the current plan with a traditional sick leave plan and a vacation plan for 12 month employees using years of service to determine the amount of leave time but with a “use it or lose it” requirement. This revised plan when coupled with both a short and long term disability program (sequentially) would be adequate to provide for employee needs. However, under no condition should any accrued or unused time be credited for retirement benefit calculations unless otherwise prescribed by the state.

In summary, the district’s PTO program is poorly designed, is too costly and does not meet the objectives for which the policy was designed. We also believe that PTO programs are being used as “savings plans” as evidenced by the 15 million in taxpayer liability. For these and other good reasons, we encourage the Superintendent and the School Board take action to correct these deficiencies in order to create more cost effective leave policies and reduce the cost the budget for 2011 when each dollar will count.