Former state workers face long wait for payouts despite hefty payroll upgrade

Imagine waiting more than a year after you leave a job to finally get paid what the employer owed you.

It’s happening to workers right here in Hawaii, and the employer is the state.

Always Investigating found not only is this issue widespread, it’s been going on for decades. It’s rarely accounted for in the state’s budgeting process, and won’t immediately be fixed, even as the state transitions to higher-tech pay processing.

State workers who leave or retire often clock out for the last time with oodles of accrued time owed to them in the form of unused vacation and sick pay, even receipts pending repayment from the state.

Then the wait begins.

A former state worker on Hawaii Island, who wanted to remain anonymous, had one of the longest wait times we’d heard of when investigating the problem of delayed payments.

“It’s been over a year and initially, I was told that it would take approximately a few months for me to get my vacation payout,” he said.

He alone had more than $10,000 due to him.

“For my case, about two months pay. I’m sure other people have even more,” he said.

Was the problem limited to just Hawaii Island workers or could it be statewide? We started at the state office building in Hilo, but this kind of work isn’t island-specific. All the payout processing is centralized back with each department’s human resources on Oahu for auditing, then onto the state Department of Accounting and General Services for payment processing.

“I decided, you know what, I need to contact someone that can help me and the others in my position, and that’s when I decided to contact you, Gina,” the former worker said.

Randy Perreira, executive director of HGEA, the state’s largest public employees union, says it’s a longstanding problem.

“Much of it is attributed to the fact that the state is not up to par IT-wise, and as a result everything has to be done manually, and there just aren’t enough employees to do the physical manual work necessary to do this in a timely fashion,” Perreira said.

That goes back to an Always Investigating story we told you about in 2015, when we found out that much of the state’s payroll system is done on pencil and paper, and stored in boxes and file cabinets in state office buildings.

“For those retiring, there is a delay as the state must audit everybody’s employment record so proper leave balance and proper pension payment is calculated,” Perreira said.

It’s not just vacation and sick leave payouts, but also reimbursements for travel and more.

“We get a lot of inquiries about when my OT will actually be paid,” Perreira said. “It’s unfair for employees to be treated as creditors of the state, and they’re not getting any interest for the time the state is ‘using their money.'”

It’s a double-edged sword for the public workers. Their union employees are affected by the delayed payments, and union workers have to audit and process them.

“It makes it tough for us,” Perreira said. “We don’t go and complain a lot to employees, because they’re understaffed and facing an ever-growing mountain of paper.”

A mountain with thousands stacked up at any given time.

“Roughly speaking, the retirement system will tell you, in December, they turn over on an average year like 1,000, up to 1,300, 1,400 people,” Perreira said. “In any given year, you can turn over 1,500 teachers.”

Not to mention many more state workers who leave early for the private sector or change jobs, which Perreira says has “got to be in the millions.”

Those millions of dollars, he says, are unbudgeted for, so for just about every departure, the payout is a scramble.

“That position will sit vacant and the funding for that position, they’ll take the money and reimburse the guy who just retired for his vacation,” Perreira said. So when the taxpayer or the citizen who wants a service at a state office and is wondering why are these positions not filled, “this is one of the reasons.”

“What can be done about that?” Always Investigating asked.

“They’ve got to budget for it,” he replied. “Now that’s problematic, but you’ve got to try to budget for ‘X’ number of people who may choose to leave.”

Last summer, the state awarded a nearly $17 million contract to automate future time and attendance records, but the payout audit process looks back in time.

The old records must still be handwritten pen and paper. So for those old audits, Perreira said, “that’s a challenge for which I’m not so sure there’s a solution.”

They tried a legislative fix, which was rebuffed long ago.

“It resulted in us pushing legislation in the (Gov. Ben) Cayetano era to treat employees more like creditors, so if they’re not paid in 30 days, they then can get interest,” Perreira said. “The Legislature agreed, passed a bill. Cayetano vetoed it.”

“Will you go back to the Legislature and try again now that this is coming into the public realm again?” Always Investigating asked.

“Well I’d have to say given the increasing number of concerns that are being expressed, that’s something we seriously have to talk to legislators to see if there would be impetus to move such a bill,” he said.

Meanwhile, it’s every departing worker for themselves as the end of the job is just the beginning of the wait.

Always Investigating asked our former state worker what he would say to his former colleagues who are about to leave, retire, or change jobs.

“I would just suggest prior to leaving, find out exactly what the process would be time-wise, and if there’s anything you can do on your end paperwork-wise to expedite the process,” he said.

After we started asking questions, our worker got his payout processed.

The Department of Accounting and General Services provided us with the following statement:

“Each department handles their own vacation payouts and the process can vary by department. Once an employee separates from service and elects to have their vacation paid out, their department, which keeps track of their employment records and leave, will need to verify and reconcile their leave before issuing a notice to the department’s pay processing center to issue payment. Payment is made by the Department of Accounting and General Services (DAGS) central payroll division upon receipt of the requesting department’s verification of the payout amount. DAGS only processes the requests as submitted by the departments, and does not have any knowledge of any backlogs related to the payments.

“Factors that may affect the payment include when the request is initially submitted within the respective department, how much employment history needs to be reconciled, and the payroll budgeted for the period. If a long-time employee has many leave records to reconcile, this would most likely take longer than a short-term employee. Also, if the payout exceeds the amount available in the department’s quarterly payroll budget, payment may be delayed until the next period.

DAGS, through the Payroll and Time and Attendance Modernization project, plans to implement a leave management/tracking system within the time and attendance system. However, this phase of the project is not scheduled to begin until later next year.”

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