Date Requested:January 26, 2008
Time Requested:02:29 PM
Agency: Personnel, Division of
CBD Number: Version: Bill Number: Resolution Number:
2008R1728 Introduced SB476
CBD Subject: SICK LEAVE CASH IN PROGRAM
FUND(S)
Sources of Revenue
General Fund,Special Fund,Other Fund
Legislation creates:
A New Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    The Division of Personnel defers to the Public Employees Insurance Agency in regard to the estimates of costs associated with this legislation. However, technical defects and special issues are noted in the "Memorandum" section of this fiscal note.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2008
Increase/Decrease
(use"-")
2009
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
    The Division of Personnel defers to the Public Employees Insurance Agency in regard to the estimates of costs associated with this legislation. However, technical defects and special issues are noted in the "Memorandum" section of this fiscal note.


Memorandum
Person submitting Fiscal Note:
Tari McClintock Crouse
Email Address:
tari.m.crouse@wv.gov
    Technical defects:
    (1) The provision in the bill that specifies that the calculation of "daily rate of pay" excludes holidays as normal noncountable time is technically defective. Holidays are days for which employees are paid. Consequently, they are countable as part of an employee's salary (pay). As such, they must necessarily be included in the calculation of the daily rate of pay; i.e., annual salary divided by number of days paid (260 days for a full-time employee). Any variation in the number of holidays from one year to the next (e.g., 13 paid holidays in 2007; 15 paid holidays in 2008) has no effect on the annual salaries of employees - their annual salaries are neither increased nor decreased based on the number of holidays.
    (2) Although the "NOTE" on the bill states that it applies to employees hired prior to July 1, 2001, the bill itself applies to "(E)very full-time state employee...".
    
    Special issues:
    (1) Currently the Auditor's Office does not maintain sick leave records for all spending units. While that office would be best able to estimate the cost of maintaining such records, an estimate of $100,000 in start up costs is conservative.
    (2) The existing Division of Personnel rule regarding sick leave is that an employee eligible to retire at the time of separation from employment may use unused sick leave to purchase extended insurance coverage upon retirement under guidelines established by the Public Employees Insurance Agency or upon retirement to acquire additional credited service in the state retirement system under guidelines established by the Consolidated Public Retirement Board. For all other separations, all accumulated sick leave is cancelled as of the date of separation. If an employee returns to eligible employment within 12 calendar months, all cancelled sick leave can be restored. However, if the employee returns to eligible employment after more than 12 calendar months no more than 30 days of cancelled sick leave can be restored. If an employee who has been laid off is re-employed in eligible employment, all cancelled sick leave is restored.
    It is reasonable to assume that employees who (1) were hired prior to July 1, 2001, and (2) plan to retire from state government employment have calculated the value of their sick leave for conversion to insurance premium payments or additional retirement service credit. Based on that assumption, it appears that employees most likely to cash in their sick leave at a rate of twenty-five cents on the dollar would be those who (1) intend to leave state government employment before they reach retirement age and would have all of their sick leave cancelled on separation; and/or (2) need the cash; and/or (3) have a specific personal situation which obviates the need for insurance coverage and/or a retirement annuity. Under current leave, insurance, and retirement programs, the leave of these employees will ultimately be removed from the OPEB liability. It appears that this program will pay to liquidate leave that would have been liquidated regardless.