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Washington, D.C., March 10th – Congressman Jim Moran, Virginia Democrat, introduced legislation today providing federal employees under the FERS retirement system the ability to cash out their remaining sick leave at retirement. Rep. Frank Wolf (VA-10) is the bill’s lead Republican cosponsor.
“Our current use-it or lose-it system under FERS hurts productivity and increases training costs,” said Moran. “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. OPM estimates that this flawed policy is costing taxpayers $68 million per year. ”
The FERS retirement system, created by Congress in 1986, does not include a sick leave benefit. However, federal employees under the old CSRS retirement system (those who joined the civil service prior to 1968) are currently able to convert unused sick leave at retirement into an increase in their annual annuity.
This has not always been the case. In 1969, Congress added a sick leave benefit for CSRS employees after data showed that the use of sick leave went up dramatically nearing the time of retirement. The Civil Service Commission – the forerunner to OPM – estimated that half of all retiring federal employees had ZERO sick leave; their reports showed that retiring employees prior to 1969 used an average of 40 sick leave days in their last year of employment.
“Congress ignored the lessons learned under CSRS and history is repeating itself,” Moran added. “Our federal workforce is the best in the world; they deserve a benefit designed to reward, not punish, those who play by the rules.”
Darryl Perkinson, Federal Managers Association National President, whose organization endorses the bill said, “The cost of sick leave used by federal employees continues to rise, and the loss of productivity becomes more apparent as there is no incentive for federal employees to conserve sick leave. By placing a value on sick leave, FERS employees are encouraged to use their leave responsibly. As a result, the benefit to the government is increased productivity and morale, with minimal financial cost to taxpayers.”
A Congressional Research Service report from August 2007, found that sick leave balances are lower for FERS employees than CSRS employees. Independent studies by the Bureau of Prisons have reached the same conclusion with OPM confirming it in their own analysis.
In a recent survey of FERS and CSRS employees, 85% of CSRS employees said they conserved as much sick leave as possible. On the other hand, 75% of FERS employees said they would use as much sick leave as possible during their last years.
Highlights of the benefit:
- The incentive will provide a lump-sum payout up to $10,000 to employees under the FERS system for unused sick leave upon their retirement.
- Employees receive 15 percent of the value of all the accrued sick leave at their final salary.
- The benefit begins for all hours of accrued sick leave exceeding 500 hours. If a person has 2,000 hours of accrued sick leave, he or she will receive the payout for 1,500 hours of benefit.
- *The 500 hour threshold provides employees an incentive to accrue at least 500 hours or roughly 3 months of sick leave, in case of long-term illness or disability -- so that it is available if needed.
- Covers ALL federal employees included in the FERS system, and will include those covered under the Foreign Service Pension System, and United States Postal Service.
Examples of how the benefit will work:
- GS 12, Step 10 making roughly $75,000 in 2008 with 1,250 hours sick leave accrued: $4,000 payment received upon retirement.
- SES employee making $120,000 with 1,250 hours of sick leave accrued: $6,500 payment upon retirement.
The bill has been endorsed by the following organizations: American Foreign Service Association, FAA Managers Association, Federal Managers Association, Senior Executives Association, Federal Probation & Pretrial Officers Association, Federal Judges Secretaries Association, Federal Court Clerks Association, National Conference of Bankruptcy Clerks, National Council of Social Security Management Associations, the National Association of Postal Supervisors and the Professional Managers Association.
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