VI Government Owes Employees Over $300 Million In Retroactive Pay

ST. CROIX — The Government of the Virgin Islands owes some of its current and former employees just over $300 million in retroactive pay dating back 1989, according to the Office of Collective Bargaining (OCB) Chief Negotiator Dr. Valdemar A. Hill, Jr.

Hill revealed the number during a Committee on Finance budget hearing at the Frits E. Lawaetz Conference Room in Frederiksted on Friday while testifying under oath, making the case for why his office needs some $726, 686.00 for its fiscal year 2016 operating budget.

The $300 million include the last four contracts that OCB negotiated with local labor unions in 2010, where a plan to raise government employees’ salaries as a way to pay the retroactive money was agreed upon, however the plan was never implemented, Hill said.

But the owed money, almost three times the territory’s budget deficit, is so much that the government simply cannot afford to make the payments in cash alone, said senators, citing Hill’s testimony. So they suggested new offerings be brought to the table in lieu of cash.

“What are we providing [the employees] other than empty promises of future possible funds?” Sen. Sammuel Sanes asked.

Hill said in 2007 the legislature created a commission with the sole responsibility of setting up a system whereby retroactive funds could be paid to individuals. The job was very tedious, however in 2010 the system was completed, and the legislature approved a measure allowing $45 million in retro monies to be paid to employees — but the funds were never disbursed.

The $45 million promise came in July 2010, when Hill successfully negotiated contracts with four unions for pay increases in lieu of retroactive payments, and was informed by the Office of Management and Budget (OMB) that the funds were available to facilitate the pay increases.

However in the early days of 2011, “there was a proclamation that the government simply didn’t have the funds to cause those payment contracts to be  implemented,” Hill said.

Hill added that discussions were held with the former administration on finding inventive ways of making the retro payments. One such way was to have government departments and agencies include an appropriation in their budgets for the pay increase contracts that were negotiated in 2010, Hill said.

Senator Clifford Graham, on a lighter note, said it was strange that every four years, close to election time, that funds for retroactive pay becomes available, suggesting that it was a strategic move by politicians, more pointedly the sitting governor at any given time, to stay in power by promising the retro payments. But once negotiations are completed, “the money disappears,” Graham said.

Nonetheless, Graham, chairman of the finance committee, said the parties involved, including the Senate, “need to find creative, out-of-the-box ways of resolving the retroactive money that’s out there.”

“Because if we’re having a struggle making the bi-weekly payroll today — and I don’t mean a struggle in the sense that you’re not going to get paid next Week. But a difficulty with the deficit that we have, we can’t address retroactive pay in the conventional manner of giving cash, but we have to find” other ways of making those payments, Graham said.

OCB’s budget breakdown includes $416,783 for personnel expenditures; $167,160 for fringe benefits; $17,000 for supplies; 75,748 for other services; $17,500 for utilities; and $32,495 for capital outlay.

Senator Kurt Vialet, a former educator, advocated for teachers and contended that it was way passed due that they received wage increases. The freshman Democrat said he’d recently received information that revealed a mass exodus of the territory’s teachers to the U.S. mainland in the upcoming school year — many moving to Florida — because they weren’t receiving the pay that they deserve in the territory.

“In order to be a teacher you have to go away, get a bachelor’s degree — a number of them have masters degrees — and we have teachers who are in the system, who have been teaching now for eight years with a master’s degree, making $31,000 and have a tremendous amount of student loans,” Vialet said.

“So at some point we have to be creative as to how we’re going to be able to address their needs.”

Hill said he’s done his part and will continue to do so, making known that he’s successfully gotten the unions to forfeit multiple years of retroactive pay in lieu of salary increases, but the government simply hasn’t fulfilled its promise of providing funding so that employees could see those increases reflected on their paychecks.

Vialet said the situation with teachers remains extremely urgent because if the teachers leave, the education system in the territory will “fall apart,” he said. “And if it falls apart, I don’t know if we’re going to be able to fix it.”

OCB is one of the smallest agencies in the government, however it is charged with vast responsibilities. Established by statute, the agency was created under the Office of the Governor, but for funding purposes it falls under the Division of Personnel. The office serves as the exclusive representative for the executive branch and its formulation of labor policies and strategies for collective bargaining, and coordinates the government’s position in labor mediation, arbitration, civil and administrative proceedings, according to information provided at the hearing.

See OCB’s budget request breakdown, along with Hill’s testimony here.

Feature Image: Earl B. Ottley Legislative Building, St. Thomas.