Legislation would allow more feds to cash out sick leave at retirement

By Brittany Ballenstedt bballenstedt@govexec.com

  March 10, 2008

A Virginia lawmaker will introduce legislation on Tuesday that will allow more federal employees to cash out their accrued sick leave at retirement.

Rep. James Moran, D-Va., said Monday that he planned to introduce a bill that would provide employees under the Federal Employees Retirement System with a one-time payment of up to $10,000 for any remaining sick leave at retirement. The benefit also would apply to employees covered under the Foreign Service Pension System and U.S. Postal Service.

Moran spoke at the Federal Managers Association's 70th annual national convention in Arlington , Va. "Our current use-it or lose-it system under FERS hurts productivity and increases training costs," he said. "We need to be incentivizing the accrual of sick leave, not keeping a policy in place that encourages people to call in sick in the weeks leading up to retirement."

The bill would enable the government to pay 15 percent of the hourly rate of a retiree's final salary for any sick leave balance of more than 500 hours. Moran said the threshold was put in place to encourage employees to accrue at least 500 hours, or three months, in case of long-term illness or disability.

For example, a GS-12, Step 10 with an annual salary of $75,000 and 1,250 hours of sick leave would receive $4,000 upon retirement. Similarly, a Senior Executive Service employee making $120,000 a year with 1,250 hours of sick leave accrued would receive $6,500 upon retirement.

All federal employees receive 13 days of sick leave annually and may carry over unlimited amounts of sick leave from year to year. But unlike employees under the previous Civil Service Retirement System, FERS employees are not able to convert unused sick leave at retirement into an increase in their yearly annuity.

That discrepancy has prompted more FERS employees to use up their sick leave as they approach retirement. In a recent survey of FERS and CSRS employees, 85 percent of CSRS employees said they conserved as much sick leave as possible, while 75 percent of FERS employees said they would use as much sick leave as possible as they near retirement.

The Office of Personnel Management has estimated that the inconsistency between the two retirement systems costs taxpayers $68 million annually.

"The cost of sick leave used by federal employees continues to rise," said FMA National President Darryl Perkinson, "and the loss of productivity becomes more apparent as there is no incentive for federal employees to conserve sick leave."

One FMA local president at the conference told Government Executive that the legislation is a starting point, but does not go far enough. "People are going to keep burning their leave until [Congress] provides a better program," he said.