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MacIver Investigation Prompts Call for Sick Leave Conversion Change

Comments | Posted in News, mi investigations | By MacIver Institute | Posted October 18, 2011 9:45 PM

MacIver News Service | October 19, 2011

[Madison, Wisc…] A MacIver News investigation that revealed recent state employee retirees cashed in an average of 43 weeks of unused sick leave is prompting legislative calls for reform.

“It shows yet again how out of whack public sector benefits in Wisconsin have been compared to the private sector,” said Assembly Speaker Jeff Fitzgerald (R-Horicon). “The Assembly will be taking a look at reforming this.”

MacIver examined data provided by the Wisconsin Department of Employee Trust Funds (ETF). Nearly 2,700 new retirees had an average of 1,716.65 sick hours banked, the equivalent of nearly 43 40-hour work weeks, each.

For most State of Wisconsin employees, sick leave accrues at the rate of five hours every two weeks, to a maximum of 16.25 days a year. Unused sick leave hours accumulate from year to year and are converted at retirement to pay post-retirement health insurance premiums for the retiree and their eligible dependents. Sick leave credit conversion accounts have no cash value and do not accrue interest over time.

“The underlying problem here is that state employees get 16 and a quarter sick days each year,” said State Senator Glenn Grothman (R-West Bend). “This would be unheard of in the private sector and whether the employees are using these days for family leave or are just banking the days for their retirement, it is out of line.”

According to the ETF, the average cash value of unused sick leave under the primary six leave conversion program for the 2,699 retirees who left state service between January 1 and September 25 is $97,779.93.

The total value of unused sick leave converted by retirees through the main sick leave conversion program for that period was $263,908,031.07.

There were 1,865 new retirees who also qualified for an additional, supplemental credit accrual program ( through September 8 ). Cumulatively those who participated in the supplemental program converted $78,207,954.40 worth of sick leave.

The combined value of the payouts from the two sick leave conversion credit programs available to state employees who retired so far this year is a staggering $342,115,985.47.

“When I first read those numbers my jaw dropped,” said freshman State Representative Michelle Litjens (R-Oshkosh). “You need to have a certain number there, but maybe we need to start thinking about a cap.”

Wisconsin has two different programs for retiring state employees to convert their unused sick leave into health insurance payments.

Every state worker is enrolled in ASLCC (Accumulated Sick Leave Conversion Credit Program). That program takes the number of unused sick hours an employee has and multiplies it by their highest basic hourly pay rate.

People who have worked for the state for over 15 years are also enrolled in SHICC (Supplemental Health Insurance Conversion Credit Program). This program takes the employee’s ASLCC amount and matches a certain portion of it.

Upon a retiree’s death, surviving spouses and dependents are eligible to use credits from both programs.

Both sick leave conversion programs are pre-funded. State agencies pay ETF 1.2 percent of payroll as part of their fringe benefit rate based on what actuaries say is needed to fund the programs.

Speaker Fitzgerald promises change.

"This just another example that proves what we did through collective bargaining reform wasn’t radical, but necessary,” said Speaker Fitzgerald. “[W]e should lead by example and take a closer look at the benefits legislators have.  Representative Howard Marklein is already working on a bill to do just that."