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Retiring State Workers Converted Average of 43 Weeks Unused Sick Leave This Year

Comments | Posted in News | By MacIver Institute | Posted October 13, 2011 10:44 PM

A MacIver News Service Investigation | October 14, 2011

State Employees who retired so far in 2011 have converted more than $300 million in unused sick leave to pay for post-retirement health insurance



[Madison, Wisc…] State employees who retired between January and September converted more than $340 million of unused sick leave, which they can use to purchase post-retirement health care, the MacIver News Service has learned.

For this investigation, 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.

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.

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 the eligible dependents. Sick leave credit conversion accounts have no cash value and do not accrue interest over time.

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

Extrapolating the ETF data (97,779.93 x 2,699) reveals the total value of unused sick leave converted by retirees through ASLCC for that period was $263,908,031.07.

There were 1,865 new retirees who qualified for the SHICC program ( through September 8 ) as well. Their average value of credits accrued in this supplemental program, according to the ETF, was $41,934.56. So, cumulatively, (1,865 x 41.934.56) the SHICC participants 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 according to an analysis of data provided by the state.

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.

Proponents of public employee compensation reform have repeatedly pointed to the difference between how the public and private sectors award fringe benefits to their employees. The new revelations underscore those differences.

Coming next: Reaction from legislators, others.