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North Dakota legislators question unused vacation pay

BISMARCK - When former state Lottery Director Chuck Keller retired April 30, the state cut him a check for more than $44,000 in unused vacation pay - 1,264 hours to be exact.

Legislators who saw the figure Wednesday during a state budget presentation were astonished and perplexed.

Sen. Larry Robinson, D-Valley City, asked if the state has a limit on how much vacation an employee can carry over, just as many private sector employers have such limits.

"My concern is we have a precedent here," he said.

Rep. Ron Carlisle, R-Bismarck, asked if that payout had been anticipated in the attorney general's budget.

The discussion was at a meeting of the Legislature's Budget Section, which consists of leadership and both chambers' appropriations committees.

Kathy Roll, fiscal administrator for Attorney General Wayne Stenehjem, whose office houses the lottery, said state policy forbids state employees from carrying over more than 240 hours, but state law allows waiver of the carryover restriction in the case of a business need.

There certainly was a business need, Stenehjem said in an interview late Wednesday.

He said that the money was well worth it because Keller's workaholic ways made the lottery into a successful operation, which was up and running just one year after final approval by the 2003 Legislature.

"From a fiscal point of view, we've been able to run a profit largely due to his effort," he said, adding that the lottery has contributed $23 million in profits to the state treasury since it started in spring 2004.

"If Chuck had taken 1,200 hours of vacation hours - 10 months - we'd have had to hire at least one extra person," Stenehjem said. "We put this (anticipated payout) in our budget and explained it to the (2007) Legislature, and they approved it."

Roll and Stenehjem explained that Keller also earned compensatory time off continuously while working on the lottery, which is what employees exempt from overtime laws are awarded instead of overtime pay.

Stenehjem said the result was that, when Keller was able to take time off, he used accumulations of compensatory time, which left the vacation hours to continue building. Keller also forfeited an amount of compensatory time that was not able to be carried over, Stenehjem said.

Keller could not immediately be reached at his home Wednesday for comment.

Stenehjem said Keller's case does not set a precedent, that there is already a precedent with one of the Legislature's own employees. He said John Olsrud, the longtime Legislative Council director, took a similar or larger payout when he retired late last year.

Olsrud said his payout was slightly different, though he recalls that it, too, was around $40,000.

Much of it, Olsrud said, was decades-old compensatory time that once was allowed to be kept banked by employees. He said he can't remember the exact payment because he funneled some of what he was due into deferred compensation plans, used some of it to buy vacation time at the very end of his service and paid taxes on the lump sum.

Part of what he was paid was also for 3,000 hours of unused sick leave, he said.