SAN JOSE -- Cash-strapped San Jose, whose retirees have the highest payouts for unused vacation and sick leave in the Bay Area, is moving toward ending some of the costly perks -- at least for new employees.
City officials and three unions have agreed to eliminate for new hires the sick-leave cashouts that cost the city millions each year.
The deal with unions representing city engineers, architects and mid-level management personnel, which the City Council is scheduled to approve Tuesday, marks the city's first agreements with employees limiting an expensive benefit unheard of in private business.
"We think that's a really important step at least to not continue this into the future for people we're hiring now," said Deputy City Manager Alex Gurza. "It's significant that we reached agreements and they were ratified by overwhelming margins."
However, the changes aren't expected to deliver savings for years to come because they affect only new hires in a limited number of job categories -- which don't include police officers and firefighters who enjoy far more generous sick-leave retirement cashout benefits than other city workers. The agreements call for further talks about reducing sick-leave cashouts for current employees in future contract talks.
City Manager Debra Figone also has proposed ending sick-leave cashouts for new hires in executive management and other non-union positions.
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The sick-leave perk is now starting to bite Bay Area cities as they face a wave of retirements from aging Baby Boomers and government downsizing amid a struggling economy, costing hundreds of thousands to millions of dollars a year.
This newspaper analyzed thousands of public employees' salaries recently and found more than 370 Bay Area government workers who retired last year took home final paychecks of more than $50,000 apiece -- much of it for unused sick time. San Jose in 2011 topped Bay Area cities with retirement leave cashouts totaling $11.8 million. That figure also includes unused vacation payouts, but San Jose and other cities put tighter limits on vacation accrual because it is part of employees' earned compensation that must be paid out. The city argues that sick leave cashouts are a negotiated benefit that can be changed in bargaining.
San Jose has what Gurza called a "very generous" sick leave policy that allows most employees who have worked at least 15 years to bank as many as 30 weeks -- 1,200 hours -- of unused time and cash it out at their final pay rate. Police and firefighters after 20 years on the job can cash out unlimited sick time, allowing many top officials to collect six-figure bonus checks when they retire.
The City Council last year voted to eliminate sick leave cashouts for both current and future employees starting this year in four civilian unions representing electricians, librarians, planners, analysts and other workers. But a former librarian sued, claiming her $28,080 worth of banked sick pay is a guaranteed retirement benefit. The suit remains unresolved.
The city has asked police and firefighters to consider eliminating sick-leave cashouts for new hires but otherwise may have to resolve the issue in arbitration.
The deals to be considered Tuesday involve the City Association of Management Personnel, the Association of Engineers and Architects and the Association of Maintenance Supervisory Personnel, which together represent about 620 city workers.
John Muhkar, president of the Association of Engineers and Architects, said the city in reaching a negotiated agreement seemed to be softening its posture toward employees. Unions have criticized city leaders for imposing benefit cuts through council votes and ballot measures rather than at the bargaining table.
"Apparently the city is re-thinking its approach as to how it can retain its experienced workforce in the face of the mass exodus of non-sworn city workers leaving to other jurisdictions where they are not castigated and blamed for every ill in society," Muhkar said.
Contact John Woolfolk at 408-975-9346. Follow him on Twitter at Twitter.com/johnwoolfolk1.