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Two city of Waupaca retirees get $72,000 for unused sick days

How to better budget for expenses related to staff retirements will be a topic of discussion in the city of Waupaca this year.

That is after the Waupaca Common Council voted 10-0 on Jan. 6 to use up to $63,000 of undesignated general reserves and up to $9,000 of sewer fund retained earnings to fund the accrued vacation and sick leave payouts of two retiring employees.

The employees work in the Public Works Department and will retire by the end of this month.

Both qualify for payouts of accrued vacation and sick leave benefits.

The payout, including employer paid taxes, is $72,000.

In a Jan. 2 memo to the mayor and council, City Administrator Henry Veleker said unaudited figures show the city’s undesignated general fund balance is about $1.5 million, which is 29 percent of the 2014 general fund budget.

The city’s fund balance policy calls for an undesignated fund balance between 15 and 25 percent of the city’s general fund expenditures.

He said that balance would have to be reduced to about $800,000 to be at 15 percent, so using the balance for the payouts will keep the city within policy.

“We got the (retirement) notices after the budget,” Veleker told the council during its Jan. 6 meeting.

In past practice, the city did not replace a retiree until it made up the difference of the retirement payouts, Mayor Brian Smith said.

“It could be six, eight months out,” he said. “The difference here is we will be down two snowplow drivers. We can’t wait six or eight months until that $72,000 is basically made up where we can handle hiring the positions.”

The two employees who are retiring have a combined 60 years of service to the city (32 years for one and 28 years for the other employee).

“If they had retired the end of April, May, we could have held out with the timing. We don’t want to go February and March without those two full-time positions for plowing,” Smith said.

Public Works Director John Edlebeck proposes filling one of the positions as soon as possible and the other in the fall.

“There are going to be impacts on snow removal,” he said, as the person hired is trained.

Ald. Jillian Petersen asked if the city could contract with Faulks Bros. Construction, Inc. or someone else for help and to save some money.

Edlebeck said the city does contract with Faulks for hauling snow and clearing some parking lots.

However, he said plowing snow involves many nuances, such as the locations of storm sewers and fire hydrants.

“That is what we are losing with the retirements. It will take years to get it back,” he said. “Contracting it out is not that simple, or I would recommend it. We may still need some assistance.”

Ald. Deb Fenske questioned why employees are paid at today’s rate for all their accrued sick time.

“Is this a law that we have to do this?” she asked.

Fenske asked why the payout could not be at the rate they earned it.

City Attorney John Hart said the only way would to be bank the sick leave as they earn it, but he said it would also earn interest.

“It’s almost impossible to figure,” he said.

City employees earn eight hours of sick time per month and may accrue up to 720 hours, Veleker said.

Prior to Act 10, accrued sick time was capped at 1,200 hours, he said.

In November of 2011, the council adopted a new employee handbook that reduced that cap to 720 hours, he said.

Under the old handbook, the accrued sick time schedule was a payout of 50 percent for those with one to five years of service. It was 60 percent for those with 6 to 10 years, 70 percent for those with 11 to 19 years and 100 percent for those with 20-plus years, he said.

Under the new handbook, the payout remains at 50 percent for one to five years and 60 percent for six to ten years.

It is now 70 percent for 11 to 15 years of service and 100 percent for 16-plus years, Veleker said.

Adjustments were made in the years of service due to the reduction in the cap of accrued sick time, he said.

Vacation time is pro-rated at the time of retirements, Veleker said.

After Fenske asked why employees are allowed to carry over sick time, the mayor said, “If you’re going to offer sick days, you almost have to offer an incentive to carry them over if they don’t use them.”

He said if sick days could not be carried over, employees would use them, and then the city would have to pay someone else to cover for the employee who was sick.

“I’m an honest person. I’ve used sick days when I’m sick,” Fenske said.

Just before the council voted on whether to use reserves for the retirement payouts, Ald. Steve Hackett said the city should be putting money into a fund, so it does not have this problem.

“We’re anticipating we may have another retirement later in the year. When we look at the workforce, staff needs to come together about how to manage, anticipate it better in the future, so we can budget for it,” Veleker said. “Obviously, we can’t dictate when an employee decides to retire.

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