HD90 - Study of Annual Leave Benefits for Long-Term State Employees

Executive Summary:
House Joint Resolution No. 557 requested the Department of Personnel and Training, in consultation with the Joint Commission on Management of the Commonwealth’s Workforce, to study the annual leave benefits provided to state employees and make recommendations on the feasibility of increasing those benefits for long-term employees.

I. Current Policies on Annual Leave Accrual

Department of Personnel and Training Policy 4.10 provides for an increase in the accrual of annual leave at five, ten, and twenty years of state service, with a corresponding increase in the amount of leave which can be carried forward from one calendar year to the next. There is no incremental increase for either fifteen or twenty-five years of service.

II. Comparison to Benefits Offered by Other States and Employers

Of the twelve other states for which information was available, Virginia ranked last in the amount of annual leave granted to employees with fifteen years of service. Virginia, along with Georgia and Missouri, also ranked near the bottom with regard to granting leave to employees with twenty-five years of service; only Florida granted less.

In addition to its state counterparts, the Commonwealth also lags behind such major local employers as the City of Richmond, CSX, Phillip Morris, Reynolds Metals, and Virginia Power in the annual leave accorded to long-term employees.

III. Impact of Increasing Current Annual Leave Provisions

To reward long-term employees and provide an incentive for continued service, there are several possible alternatives to the current annual leave provisions. However, in order to determine an appropriate recommendation, several factors were considered Among these factors were 1) the financial impact of such a change, 2) costs associated with changes that might need to be made to leave-related automated system, 3) employee productivity concerns, and 4) the incentive such a change might provide for employees to continue their employment.

A. Financial Impact

Given the Commonwealth’s turnover rate, combined with the average amount of annual leave paid to terminating employees, an increase in annual leave accrual could be provided with little or no financial impact.

B. Programming Changes

Changes to State systems resulting from an increase in annual leave would be minimal. Such changes can be made by in-house Information Systems personnel and would not require the expenditure of additional funds.

C. Productivity

The majority of annual leave earned by employees is being taken, as intended, while on the job. Accordingly, there could be concern that an increase in the amount of annual leave might hamper management’s ability to plan and execute its workload responsibilities. However, policy grants management discretion in approving annual leave requests in order to control workflow.

D. Incentive for Continued Employment

Providing additional leave accrual could be an incentive for the Commonwealth’s most seasoned, knowledgeable, and experienced employees to remain in state service. Loss of these employees could have a detrimental impact on their agencies’ ability to provide quality and timely services. An increase in the annual leave accrual rate would demonstrate the Commonwealth’s commitment to and appreciation of this valuable resource.

IV. Conclusion

Virginia lags behind other States and local employers in its provision of annual leave to long-term employees. It is possible to provide an increase in such leave without any significant financial impact or loss of productivity. This would not only bring the Commonwealth in line with other states and employers, but also would provide additional incentive for continued service to the large number of experienced, knowledgeable employees on whom the Commonwealth depends.

V. Recommendation

Based on the above, it is recommended that an additional accrual increment of one hour of annual leave per completed pay period (7 hours) be provided to employees with 15 years of state service. Additionally, it is recommended that the current annual leave accrual rate for employees with 20 years of state service be increased by one hour (from 7 hours to 8 hours per completed pay period) and that an additional accrual increment of one hour of annual leave per completed pay period (9 hours) be provided to employees who achieve 25 years of state service.

It is further recommended that the amount of annual leave that can be carried over from one year to the next be increased consistent with current policy. However, to contain any possible cost of such a change, it is recommended that there be no increase in the current maximum payment limit an employee would receive upon separation.