Mining vacation gold at Massport
Benefit is used to increase salaries, pensions of workers
As the year ends, many employees at the public agency that runs Logan International Airport once again can expect a little extra cheer in their paychecks.
In an arrangement that is extremely rare throughout the rest of state and local government, officials at the Port Authority of Massachusetts can take advantage of a little-known benefit to add as much as 6 percent to their paychecks by "selling back" up to three weeks of unused vacation time.
About 300 Massport employees cash in some vacation time each year, including both management and union workers, costing the agency about $750,000 annually. And it is a benefit popular among those contemplating retirement, because by boosting their income, they also increase their pensions.
In the case of its highest-paid administrator, executive director Thomas Kinton Jr., the perk was worth $15,875 this year. As a longtime employee, he gets five weeks of vacation. This year, he took two and sold back the rest. That payment came on top of Kinton's $295,000 annual salary.
Kinton declined to comment, but Danny Levy, a spokeswoman for Massport, defended the benefit.
"We operate as a business and we compete for the best talent with those in the private industry," said Levy. "And to compete with the private industry in attracting and retaining talented employees, we strive to provide a competitive benefit package."
"If someone chooses not to take vacation time they have rightfully earned, we believe they should be compensated for it," she added.
Some specialists, however, say it is unwarranted.
"It's an abuse - it's not right and the public deserves better," said Fred Foulkes, a Boston University professor and director of the university's Human Resources Policy Institute. "You would be hard-pressed to find any examples like it anywhere in the workplace."
Foulkes said one danger is that managers will sell their vacation time and find other ways to string together enough days off to be the equivalent of a vacation.
"It's easy to keep track of lower-level folks, but at higher levels, there often isn't adequate record-keeping," he said. "Nobody asks a top manager for a doctor's note when he's out sick, for example. There's a high level of trust. You assume a lot. And that's risky."
Michael Widmer, head of the Massachusetts Taxpayers Foundation, a nonpartisan business-backed group, recommended that Governor Deval Patrick order a review of the benefits and compensation packages at Massport and other independent agencies.
"This is an extremely unusual and lucrative arrangement, not found in either the public or private sectors," Widmer said. Patrick administration officials declined to comment.
Levy said employees must take a minimum of two weeks vacation; after that they are free to sell their vacation time. New employees get two weeks of vacation. That increases to three weeks after one year, four weeks after eight years, and five weeks after 18 years.
Like Kinton, other top managers regularly take advantage of the opportunity. Thomas Butler, Massport director of external affairs, this year received $9,300 for the three weeks he did not use (salary, $169,000); Massport Fire Chief Robert Donahue, $9,075 (salary, $157,000); and maritime director Dennis Kay, $8,660 (salary, $150,000).
The bump in employees' projected pension benefits is also substantial. Public employees generally receive 80 percent of their "regular pay" as pensions, which includes the vacation sell-back. So for Kinton, a 32-year veteran of the agency who rose to executive director in 2006, the $15,875 in vacation sell-back pay he received this year would boost his projected pension by about $12,700 a year, up to about $248,700 a year, based on his current salary and the 80 percent formula.
Fewer than 30 percent of Massport's approximately 1,200 employees sell vacation. Among the 20 employees with the longest tenures at Massport, and most likely to retire, 70 percent sell vacation.
Massport is an independent authority established by the Legislature. Kinton answers to a board of directors, whose members are appointed by the governor. The agency is supported by fees it charges airlines to operate at Logan, parking fees, and tolls collected on the Tobin Bridge, but no direct state tax dollars. Revenues at Massport are off by 4 percent this year.
Massport is Patrick's choice to take over the Massachusetts Turnpike Authority, which is collapsing under the weight of the debt it took on for the Big Dig. Levy said it would be premature to speculate about what benefits could be extended to any former turnpike employee under a proposed merger.
Massport has run into turbulence in the past over what some considered its overly generous benefits packages. Two years ago, the agency was strongly criticized for another little-noticed perk - the sale of unused sick leave. Under that benefit, retiring employees were paid 100 percent of the value of their unused sick time, compared to only 20 percent under the state system. Some Massport payments exceeded $200,000.
Under pressure from former governor Mitt Romney and others, the Massport board of directors in 2006 scaled back the unused sick time buyback benefit to bring it in line with the state. However, the board allowed employees to keep 100 percent value of their sick time accumulated as of the end of 2006.
Kinton, for example, at that time had more than $430,000 in unused sick leave to cash in when he retires, in addition to the pension.
Amid the controversy, the Massport board in 2006 hired Mercer Human Resource Consulting to conduct a review of the agency's benefits, saying it wanted to make sure they were in line with those offered elsewhere.
Mercer found no state agency or independent authority with a vacation sell-back benefit, according to Massport records obtained by the Globe under the state public record law.
It also found only two of seven airports surveyed nationally had vacation sell-backs, and both were limited to two weeks, rather than Massport's three-week policy.
Though the Massport documents show that Mercer delved deeply into the vacation sell-back issue, its final report made no mention of the benefit, and a Mercer spokeswoman last week said vacation sell-back was not part of the scope of its contract with Massport.
Levy said the sell-back benefit "is a management tool to improve productivity and control overtime costs."
Among the state's 45,000 employees, there is no such benefit. "You use it or lose it - there is no cash-out opportunity with the state," said Paul Dietl, head of the state's Human Resources Division.
Nor is there one at the Massachusetts Turnpike Authority, MBTA, Massachusetts Convention Authority, or Massachusetts Water Resources Authority.
Employees of the Massachusetts Housing Finance Authority, however, are allowed to sell up to one week of vacation time.
Last year, the agency's general counsel, Robert Ruzzo, received $4,100 under the benefit, and its executive director, Thomas Gleason, got $3,575. 