Merced County CEO cashes out $40,000 in common but costly practice

A practice that allows Merced County’s top executives to claim cash for their unused vacation and sick time resulted in at least 15 public servants pocketing an extra $168,000 total in addition to their salaries in 2015, including more than $40,000 paid out to county CEO Jim Brown, a Merced Sun-Star investigation shows.

The longtime practice of vacation/sick time “sellbacks” is commonly written into contracts for public employees under the argument that they are needed to retain the best-qualified people, even though such clauses have become less common in the private sector, according to experts who spoke to the Sun-Star.

Jim Brown, who was appointed to oversee Merced County’s budget and staff in 2011, earned a salary of $231,725 in 2015 and then, in December, cashed out 320 hours of unused vacation time and 50 hours of unused sick leave for an extra $41,528.80, according to county records obtained by the Sun-Star.

The unused time was the equivalent of eight weeks of paid vacation time and more than a week of sick leave.

According to 2014 figures compiled by the watchdog group Transparent California, the most recent data available show employees of Merced County earn a median salary of $57,862.

Brown takes full sellback for first time

Last year marked the first time Brown opted to claim the full value of his sellback, which he said was set up in his contract to provide flexibility in his compensation package.

He noted that, unlike other department heads, he does not receive a car allowance, expense allowance or a communication allowance that, for example, would pay for a cellphone.

Brown’s contract, per year, allows for 96 hours of management leave in lieu of overtime pay, 12 days of sick leave and 40 days of vacation time that can roll over if they go unused. The management leave expires each year if it’s unused and cannot be cashed out.

“I had determined that, in the early years, with the fiscal challenges that we had, not to take the full amount and basically give up voluntarily some of the sellback,” Brown said in an interview. “As we stated during the budget process, we are improving, though there are still some challenges ahead. With the furloughs being restored, and with many of the negotiations, I felt like I actually waited a year longer than what I originally told the board I would do.”

Brown referenced furloughs the county implemented in December 2011 to avoid layoffs and reduce county costs by 5 percent. They lasted until December 2013, with a portion of employees beginning a separate round in April 2012 until April 2014, said Mike North, a county spokesman.

District 1 Supervisor John Pedrozo, a member of the Board of Supervisors that approved Brown’s contract, said the sellback clause is part of a contract designed to be competitive with other counties and is necessary to retain a quality CEO.

“In my tenure, we’ve been fortunate to have three very good CEOs,” Pedrozo said. “If we wouldn’t have a package like we have, I don’t know if we’d be able to attract a quality leader for the county without some of these sellbacks.

“In order to get quality people, you do have to put in a couple perks. A lot of other counties would love to have Mr. Brown.”

As the county’s chief executive, Brown is responsible for overseeing the annual budget of $537 million, which includes salaries for 2,105 public employees. His contract is subject to renewal every five years and he reports to the five elected members of the Board of Supervisors. A graduate of California State University, Fresno, he first came to Merced County as a budget analyst in 1990, working his way up to chief budget analyst and assistant CEO before being named CEO in 2011.

Brown’s sellback for unused time off in 2015 is the largest payout claimed by any of at least 15 of Merced County’s top public servants. The average value of the sellback payments was about $3,700 in sick leave and $5,500 in unused vacation.

Handful of officials turned down sellback

Lower-level county employees also can sell back unused sick leave and vacation time, but at a lesser rate. The total sellbacks given to lower-level employees was not available.

Sellbacks also are available for elected officials such as the district attorney, auditor, tax collector, county clerk and sheriff. While they are not required to keep track of their hours worked, they are covered by a county resolution pertaining to management positions not represented by unions. The sellback amounts typically are based on accrued time. Brown said the county traditionally aims to treat elected officials as it does other department heads.

County officials who left the money on the table last year included Sheriff Vern Warnke, who was elected to office in 2014, and Scott Ball, the chief probation officer.

Ball said turning down the cashout was “just a personal choice.”

“I’ve (cashed out) in the past and would do it again, but this year, it was just a personal choice I made,” Ball said.

Warnke said he found the process troubling.

“I actually had some serious questions about it,” Warnke said in an interview. “It’s not that I couldn’t use the money. I have bills like everyone else. It just really tasted bad when I saw that.”

Others who didn’t take the sellback were Public Defender David Elgin, County Librarian Amy Taylor, Retirement Plan Administrator Steven Bland and Public Works Director Dana Hertfelder.

In Stanislaus County, a cashout on vacation time is only available on a periodic basis as the budget permits, said David Jones, the county’s director of legislative affairs and communications. A sellback on sick leave is only available at retirement at a specified rate. Last year, Stanislaus County CEO Stan Risen did not receive any kind of sellback for vacation or sick leave.

Fresno County does not offer routine sellbacks for unused sick and vacation time, said Paul Nerland, the director of personnel services. There is a cash value for the unused leave, but only on separation, he said.

In Madera, no such option exists, said Susan Carter, a senior personnel analyst.

Watchdog groups disagree on ethics questions

Kris Vosburgh, the executive director of the taxpayer watchdog Howard Jarvis Taxpayers Association, called sellbacks a “serious problem” in government.

“It’s one of those things that they say ‘It’s in our contracts,’ ” Vosburgh said.

He blamed elected officials who approve such deals – in this case, the Merced County Board of Supervisors.

“It often seems to be a contest between communities to see who can brag and pay more to the government workers,” he said.

But such generous compensation packages for public servants could create resentment among taxpayers who see private-sector employees in similar positions earning less, Vosburgh said.

The median earnings for a full-time employee in the private sector in Merced County is $34,105, significantly less than a county worker.

“Nobody expects those working in government to live in squalor,” he said. “But when they become like an elite, privileged class and others are busting their tails to support their own families, that creates resentment and animosity.”

Vosburgh noted that Brown’s salary alone means he earns $100,000 more each year than Gov. Jerry Brown. The governor, who oversees a state budget of $167.6 billion and 225,000 employees, earns a salary of about $169,000, according to the state’s website.

Jessica Levinson, vice president of the Los Angeles Ethics Commission, said the sellbacks are not a question of ethics since they are outlined in contracts.

In terms of the Merced CEO’s large sellback, she said: “Sometimes it is a number, and it shocks the conscience. But sometimes there’s information behind the number.”

Jim Brown’s compensation package should be considered as a whole when compared with other counties, she said.

Merced County ranks sixth in population among the seven San Joaquin Valley counties, yet Brown is paid more than all other Valley government CEOs in total 2014 compensation. That’s defined by Transparent California as regular wages and other pay, plus health and retirement costs.

“When you’re laying out that kind of money for salaries, very often that means less money for basic public services such as improving roads and police and fire services,” Vosburgh said.

The $168,000 Merced County paid to 15 top-level employees for unused time off would more than pay for the annual salaries of three sheriff’s patrol deputies, who earn starting salaries of about $48,000. It would pay for four entry-level substance abuse counselors, five animal control officers, four entry-level social workers or four assistant road supervisors.

Ultimately, Vosburgh said, highly paid public officials aren’t the ones to blame for their salaries.

“You have to blame the public officials who approved the contracts,” he said. “It’s the responsibility of the voters to ask questions and keep an eye on things.”

Editor's Note: This story has been corrected. An earlier version incorrectly reported CEO Jim Brown's base salary.

This story was originally published February 12, 2016 at 8:02 PM with the headline "Merced County CEO cashes out $40,000 in common but costly practice."