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State Spends Big to Pay Outgoing Workers for Unused Vacation Time

State agencies have paid fired or resigning state employees more than $500 million in unused vacation time over the last decade.

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Texas government agencies have paid fired or resigning state employees more than $500 million in unused vacation time over the last decade. It’s a staggering sum that fiscal conservative critics call “ridiculous,” especially in tough budget times.

But state workers say what’s ridiculous is that so many jobs have been cut — and that agencies are so understaffed that employees can’t take vacations.

In each of the last 10 years, state officials paid out an average $50 million in accrued vacation time, according to data from the Texas comptroller’s office. That number crept up to $68 million in 2004 and $67 million last year — both on the heels of a budget shortfall and related layoffs.


Paying departing public employees for unused vacation time is not uncommon, but it has drawn greater scrutiny in tough financial times. In New Jersey, Republican Gov. Chris Christie has battled his legislature to institute a “use it or lose it” vacation policy, and to limit state workers’ ability to carry unused vacation days over from year to year. 

In Texas, Allison Castle, communications director for Gov. Rick Perry, said the governor is "concerned about every issue that impacts the state budget" and will be "looking at all cost-drivers" headed into the next legislative session. 

Josh Treviño, vice president of communications for the conservative Texas Public Policy Foundation, said that while any state government wants to give its employees "time to rest and recuperate," the vacation payouts shouldn't be misused. “When it becomes a de facto system for severance payments," he said, "it’s a burden on the taxpayer, and an unwise if not unjust use of state funds.”

In Texas, state employees can carry weeks of unused vacation time over from one year to the next; their years of service determine how many hours they can roll over. These unused hours can accrue — up to 532 hours, or 13 weeks, for the longest-serving state workers — until the employee resigns or is fired, at which point they can be cashed in for a lump-sum payment. In some cases, employees can also use this accrued vacation time in conjunction with unused sick time to become eligible for an early retirement.    

Jim Branson, assistant organizing coordinator with the Texas State Employees Union, said state workers need this benefit because it has become so difficult to take vacation time. Over the course of the 2011 fiscal year, in the face of a budget crisis, Texas slashed 15,100 workers from the state's payroll. Since the 2012 fiscal year began, another 2,800 employees have lost their jobs, according to the latest employment information published by the Texas Workforce Commission. 

Branson said state employees, many of whom have watched their colleagues get laid off, are picking up the slack — and are owed the value of that vacation time.

“I know people who haven’t had a vacation in five years, and keep requesting time off, but it’s not granted because there’s not enough staff to do the work,” he said. “People are actually losing their vacation time because of the accumulation caps, and because they’re made to work.” 

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Economy State government Budget State agencies Texas Legislature