MaryJo Webster, writing for the Pioneer Press reports that Minnesota legislators will examine severance payments and payments for unused sick and vacation time made to retiring and laid off state employees. The paper reported in November 2011 that US$57 million in unused sick time had been paid to retiring and laid off state workers. An additional US$32 million had been paid for unused vacation time between January 2008 and June 2011. A few Minnesota State Colleges and Universities (MNSCU) employees received six figure payouts. Those figures do not include the University of Minnesota.
Webster reports today that departing University of Minnesota employees received an average of US$4,500 for unused vacation and severance, compared with a US$12,000 average for MNSCU employees. “The Pioneer Press analysis of MNSCU’s payouts did not include the more than US$319,000 paid to outgoing chancellor James McCormick,” writes Webster. “When he retired Aug. 1, McCormick received US$180,000 in severance, plus US$92,965 for unused sick time, and US$46,896 for unused vacation.”
Mark Albert, Mike Maybay, and Erik Altmann for KSTP-TV were even more breathless in their coverage with a definite tinge of denigrating public employees. “For some, it could be a golden parachute—and you’re paying for it,” was their lede.
No, you’re not paying for it. At least not very much. Certainly not anything near what you think you are.
The great state of Minnesota sees fit to fund roughly 20 percent of the University of Minnesota’s budget. That’s a pitiful reflection of how important education is in the current culture, but that’s another argument. Getting paid for unused vacation and severance is earned income and taxed accordingly. It’s not a gift, it’s earned. It’s the institution’s binding obligation.
Make no mistake, I have very little love for the University of Minnesota. I was employed there from 2006-11 as the senior editor and ecommunications manager in the College of Design and laid off in December 2011. When I left, I received payment for unused vacation. My severance pay was initially denied (another argument for another time); I filed a grievance and almost a year later the University finally paid it.
Work for civil servants at the University is structured such that it’s quite difficult to take vacation—especially more than a day or two at a time. As a result, the University carries a hefty unused vacation liability and long ago instituted a policy that prevented employees from accruing more than two-years’ worth of vacation, something Webster conveniently fails to note in her article. The University also has a wonderful policy allowing employees to donate accrued vacation to other employees that needed it.
Unlike other state agencies—including MNSCU—the University does not pay its employees for unused sick time. After accruing 800 hours of sick time, University employees are allowed to convert half of additional sick time to vacation time.
Severance for University civil servants is paid at the rate of one week’s salary for every complete year of service, up to a maximum of 52 weeks.
The payment I received for my unused vacation is included in the KSTP-TV spreadsheet (.xls; 1.1MB), but is inaccurate. My annual salary was US$59,821 (as evidenced by the severance payout noted below) not the US$62,161.60 reported and the severance payment I received after filing the grievance isn’t included. Here’s how it really shook out:
Gross payment for unused vacation: US$8,260.73
Gross payment for severance: US$4,601.60
So, yeah, I received US$12,862.33 (less about 30 percent tax withholding; double what millionaire presidential candidate Mitt Romney paid, but again that’s another argument for another day) when I left University employment. I also received six months of University contributions to my and my wife’s health insurance.
When Utne Reader was sold in 2006 and I was laid off after almost five years there, I was making a significantly higher salary (even though I was only working three-quarters time), received payment for unused vacation, and received three months salary as severance. As a non-full-time employee, I didn’t qualify for Utne Reader‘s health insurance program.
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