National Journal: Retirement Hangover (National Journal)

About 100,000 federal workers retire each year, and that's when they learn that some are more equal than others-at least when it comes to pay for unused sick leave.

Most federal employees hired after 1983 are covered by the Federal Employees Retirement System, which Congress created in 1986 to restructure the government's retirement benefits. When those workers retire, they don't get paid for their accrued sick leave. Participants in the older Civil Service Retirement System, however, are compensated for their unused sick time when they leave government service.

The discrepancy could explain why FERS employees use substantially more sick leave than those in the CSRS, the Congressional Research Service reported last summer and in 2004. Federal employees in both retirement systems receive 13 days of sick leave annually and may carry over unlimited amounts of leave from year to year.

Rep. Jim Moran, D-Va., is sponsoring a bill that would let the government pay 15 percent of a FERS retiree's final salary (at an hourly rate) for any sick leave balance of more than 500 hours. Payments would be capped at $10,000. Participants in the older system get full payment for extra leave, and this would not change.

"Our current use-it-or-lose-it system under FERS hurts productivity and increases training costs," Moran 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."

Congress adopted the sick leave payout in 1969 after the Civil Service Commission-the predecessor of the Office of Personnel Management-reported that retiring federal employees used an average of 40 sick days in their final year. When lawmakers again revised the retirement system in 1986, "Congress ignored the lessons learned under CSRS, and history is repeating itself," Moran says.

In a recent survey, 85 percent of employees in the older system said they conserved as much sick leave as possible; 75 percent of FERS employees said they would use as much sick leave as possible before they retired. Many management groups say that FERS employees' increased use of sick leave has hampered productivity. What's more, absenteeism is likely to worsen, as 60 percent of federal workers become eligible to retire over the next decade.

"To us, this is a management and productivity issue," said Jessica Klement, government-affairs director for the Federal Managers Association. "If you're not in the office, you're not getting your work done. And if you're near retirement, it means you're not training the person who will take your place."

Younger workers in the new system may be tempted to use sick leave liberally and then find themselves out of luck if they suffer a major health problem, Klement said. "No one plans on getting cancer or liver disease, and if that should unfortunately happen, employees will not have the sick leave needed to deal with the health problems."

OPM, which manages health and retirement benefits for federal employees, has yet to take a stance on Moran's bill. The government has no data that correlate the use of sick leave with a loss of productivity or indicate whether FERS employees are abusing sick leave, an OPM spokesman said.

"While it is true that more sick leave is used by federal employees as they near retirement, it is also true that as people age, they have more illness," the spokesman said. "It is important to note that in 2008, there are many more legitimately recognized reasons to use sick leave-such as to care for a seriously ill child or family member, or to attend a funeral-than there were 20 years ago."

Whether Moran's proposal is sufficient to deter FERS employees from burning through their leave remains in question. "The only solution to this issue is to make the treatment of sick leave the same for FERS as it is in CSRS," one employee said in an e-mail. "Then everyone is treated the same on this issue and is encouraged to not fake illness."

The issue may have to wait until the next Congress. An aide for the House Oversight and Government Reform subcommittee on the federal workforce says that the legislation is not on the panel's radar screen this year.

--The author is a staff correspondent for Government Executive magazine.

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