Federal Civilian Personnel:

Cost of Lump-Sum Annual Leave Payments to Employees Separating From Government

GGD-97-100: Published: May 29, 1997. Publicly Released: May 29, 1997.

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Pursuant to a congressional request, GAO reviewed a federal civilian employee's entitlement under 5 U.S.C. 5551(a) to receive a lump-sum payment for any accumulated, unused annual leave upon separation from federal service, focusing on: (1) the governmentwide costs of providing the lump-sum annual leave payment and recent trends in these costs; (2) the basis for and consistency of agency practices in making the payment, including the sufficiency of guidance to ensure that employees who have similar pay and amounts of unused annual leave receive similar payments; and (3) any personnel cost savings that could be achieved from limiting the lump-sum leave payment to the employee's pay rate at the time of separation, instead of the current method of determining payment, which assumes the employee remains in service until the entire leave balance has expired.

GAO noted that: (1) in calendar year 1996, the cost of lump-sum leave payments to separating civilian employees was about $562 million governmentwide; (2) between 1985 and 1996, lump-sum payments averaged about $595 million per year (in constant 1996 dollars); (3) the costs ranged from a low of about $355 million in 1991 to a high of about $700 million in 1992, when downsizing resulted in large numbers of separations; (4) the Office of Personnel Management (OPM) has not provided formal written guidance regarding lump-sum payments since 1993, and the other sources of guidance that are available to agencies are insufficient to ensure consistent agency payment practices; (5) as a consequence, employees separating from different agencies with the same rates of pay and amounts of unused annual leave may not receive the same payment amount; (6) Congress gave OPM specific authority to prescribe lump-sum payment regulations in 1992, and OPM has drafted regulations and told GAO that it intends to publish them in the summer of 1997; (7) in the meantime, agencies must rely on the language of the statute and Comptroller General decisions, but these sources do not cover all situations; (8) an OPM survey of agency practices revealed that although there appeared to be a high degree of commonality in the types of pay that agencies were including in the payment, practices diverged for some types of pay; (9) based in part on GAO information and analysis, the Congressional Budget Office (CBO) estimated that agencies could realize personnel cost savings of $18 million over 5 years if lump-sum annual leave payments were limited to the rate of pay at the time of separation, instead of the current method of assuming the employee had remained in service until the entire leave balance had expired; and (10) however, such a limitation would not ensure consistent treatment of employees and might cause some workforce disruptions if it were to cause employees to use all or a substantial part of their accumulated leave before separation.

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