V.I. sending out first retroactive payments
Published: October 6, 2010
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ST. THOMAS — After two decades of protests, letters, and Senate hearings, the 10,718 government workers who are owed a retroactive salary increase soon will see some of their money.
At a Government House press conference Tuesday, Gov. John deJongh Jr. said all past and present government employees who are owed retroactive wages will be paid 16.7 percent of what they are owed on Oct. 14.
“More than 10,700 checks to current and former government workers as a substantial down payment on the retroactive wages that they are owed by this government and have too long been promised without any results,” deJongh said.
The retro will be paid as a lump sum, but it is earned income and is subject to income tax, Social Security and Medicare withholding. The GERS employee contribution of 8 percent also will be taken out.
V.I. Personnel Director Kenneth Hermon Jr., chairman of the Retroactive Wage Commission, said the most retro pay owed to an individual is $193,000. The least amount owed is $6.58.
The highest amounts are for a small group of doctors and firefighters. Hermon said there is one group of firefighters who went six years without receiving their negotiated increases.
For years, retro numbers were bandied about with no real validation. Hermon said $400 million was used for a long time, and most recently the government’s auditor estimated $300 million.
“Now I have thrown all those estimates and best guesses out the window, and I have the actual figure,” Hermon said. “Now you know it’s $219 million.”
Once the government pays about $36.5 million in retroactive wages, approximately $189 million will be left outstanding. The retro does not accumulate interest.
The problem of retro pay dates back to 1989, when unionized salary increases for government employees were negotiated. The contracts were signed, but the workers never were paid. That trend — groups of government workers that simply did not receive their agreed-upon raises — continued through 2002.
In 2006, when Sen. Carlton Dowe was elected to the 27th Legislature, he began his crusade to address the longstanding retroactive wage issue. At Tuesday’s press conference he said that he brought Sen. Celestino White Sr. on to help find a solution. He then reached out to St. Croix and tapped Sen. Usie Richards to work on it as well. To round out the effort, he asked Sen. Louis Hill — who was in the minority at the time — to join the effort. Together, the four ensured that the unions, the governor and the V.I. Senate all were on board with the proposal.
In 2007, legislation passed unanimously to establish the Retroactive Wage Commission. The commission’s role was to comb through more than 20 years worth of paper personnel files to determine who is owed retro pay and how much.
Retired government workers with experience in human resources were hired to do the work, converting the paper files to spreadsheets.
Hermon said his staff reviewed more than 21,000 personnel files, physically touching about 1.6 million documents, to create more than 10,700 individual spreadsheets for each employee who was owed retro pay. At the same time, the V.I. Finance Department staff reviewed time and attendance records for all the employees to ensure their eligibility for retro pay.
The 2007 legislation also identified a funding source for the first $45 million payment on the retro — the Insurance Guarantee Fund. The fund collects premium taxes assessed to insurance companies that operate in the territory, and the money is available in the event of a natural disaster to pay claims if the insurance company cannot.
To protect the fund, the legislation required a letter of credit to be issued by a bank or financial institution to act as a loan if the money is needed before the fund has a chance to replenish itself. DeJongh said Tuesday that a Request for Proposal for the letter of credit has gone out, and the V.I. Public Finance Authority is in the selection process.
According to the law, once the Insurance Guarantee Fund is restored to $50 million, the letter of credit will be cancelled.
The legislation provided for $45 million to be paid for retroactive wages, but after the government’s 14.5 percent contribution to the Government Employees Retirement System and the required tax obligations are paid, $36 million remained for employee payments, Hermon said.
The commission then developed a formula to pay out the money, voting to give employees 16.7 percent of what they are owed.
Hermon said employees eligible for retro payments on Monday can log into a website, beta.dopusvi.org, to see their detailed retro statement. People without computer access can go to the Division of Personnel offices in either district for a copy.
Union leaders — many of whom have been pushing for retro pay for 20 years — were invited to Tuesday’s press conference.
“I want to thank you,” United Steelworkers Union International Staff Representative Randolph Allen said. “I just ask the senators not to let 20 years pass before we get the second payment.”
Before the press conference ended, Hermon made a special presentation to deJongh, Lt. Gov. Gregory Francis, Dowe, Hill, and Richards. White was unable to attend the event because he is recovering from knee surgery.
Hermon said none of the six public figures are eligible for retro payment themselves, so he decided to give them a special gift. He handed each of them a T-shirt that said, “I paid $45 million in retroactive wages and all I got was this lousy T-shirt.”
The workers who sifted through 1.6 million pieces of paper — Gloria Joseph, Ruby Amey, Anna Sille, Glenda Goodings and Aloha Morales — were honored with plaques.
— Contact Aldeth Lewin at 774-8772 ext. 311 or e-mail email@example.com.