Federal employees receive excellent retirement benefits. But when it comes to sick leave, not all civil servants are treated equal.
The FERS retirement system which covers federal employees who joined the civil service after 1986 does not include a sick leave benefit. For these employees, unused sick leave at retirement is lost if it is not used.
Contrast that with federal employees under the old CSRS retirement system (those who joined the civil service prior to 1986) who are able to convert their unused sick leave at retirement into an increase in their annual annuity. For example, federal employees under CSRS with 30 years of service and 1 year’s worth of sick leave at retirement, their annual annuity is based on 31 years of service rather than 30.
CSRS employees have not always enjoyed this benefit. In 1969, Congress took action on the issue after data showed that the use of sick leave went up dramatically as employees’ neared 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.
But when it came time to create the new FERS retirement program, Congress ignored the lessons learned under CSRS. This oversight has resulted in history repeating itself with respect to sick leave use under FERS.
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 reached the same conclusion. 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 of employment. The toll of this policy is made clearer when viewed through OPM estimates, which show that lost productivity resulting from this sick leave discrepancy is costing taxpayers $68 million per year.
In an effort to replace the flawed FERS approach to sick leave, I was able to attach language to legislation giving the FDA authority to regulate tobacco, which passed the House last week. It puts FERS employees on par with their CSRS colleagues in terms of sick leave, allowing them to also put their unused sick leave at retirement towards their annual annuity. For cost purposes, during the first three years after the provision becomes law, retiring employees would receive an addition to their annuity up to 75 percent of the value of their unused sick leave. After that three-year window, 100 percent of retiring federal employees’ sick leave days would count towards their annuity.
Our federal workforce is the best in the world; they deserve a benefit designed to reward, not punish, those who play by the rules. The current use-it or lose-it sick leave system for FERS employees clearly hurts productivity and increases training costs. We should be incentivizing the accrual of sick leave, not encouraging people to call in sick in the weeks leading up to retirement. I am optimistic we will see this provision become law before the end of the year.