Wisconsin Budget Reform Prompts Changes
MacIver News Service | November 4, 2011
Recent change in state law is bringing increased scrutiny to the sick leave benefits local governments in Wisconsin provide their employees, according to an investigation by the MacIver News Service. Cities and counties across the state are now able to take advantage of changes in the collective bargaining law for government workers and can rein in sick leave payout benefits that cost tens of millions of dollars annually.
Many existing public employee labor contracts allow individuals to carry over unused sick leave from year to year. When they retire, their unused sick leave is often either paid out in cash or converted into credits for health insurance premiums.
In October, the MNS learned this practice cost saw State Government provide $342 million dollars to-date in 2011. We have now discovered this benefit conversion practice impacts local governments to the tune of tens of millions of dollars annually.
Over the last three years, the sick leave conversion program has cost the City of Milwaukee more than $23.4 million.
In Green Bay, depending on their specific labor contract, retiring workers can either cash out their unused sick leave or transfer it into an escrow account to pay health insurance premiums. The total sick leave pay out for the city since 2009 exceeds $2.5 million.
Madison has spent over $6.1 million in retirement conversions. Additionally, the city has an annual cash out program that allows workers to cash out all sick leave they’ve accumulated that exceeds a 150 day cap. This cost the city over $3.6 million since 2009, and another annual pay out will take place in December.
The Village of Menomonee Falls had eight employees retire in 2009 with an average payout of $25,809.
In Dane County, sick leave is capped at 1700 hours. At retirement that is transferred as credits into a precision retirement account. A representative of the County told the MacIver News Service that Dane County does not know the cost of this program.
The City of Eau Claire was unusual among the municipalities contacted by the MNS. Sick leave is capped at 120 days, and there is no retirement payout.
Public sector workers tend to accumulate more sick leave than their private sector counterparts. This accumulation varies by contract, but generally, in Milwaukee city workers get 15 days a year, in Madison it’s 13 days a year, and in Green Bay, La Crosse, and Wausau they get 12 days a year. In Wausau and Marathon County, after five years workers collect 18 days a year.
In comparison, private sector employees receive an average of 8 days a year according the Bureau of Labor Statistics. Nationally, state and local government employees receive an average of 11 days a year.
Additionally, public sector workers are usually allowed to carry over unused sick leave year to year. The cap varies across the state. Among the local governments we contacted, Milwaukee has the highest cap at 245 days.
Cities and counties are beginning to curb some of this spending and they no longer have to negotiate changes to these programs with public sector unions. The City of Milwaukee currently is moving towards lowering the amount of sick leave from 15 to 12 days a year.
Milwaukee County Executive Chris Abele compromised with Board Chairman Lee Halloway last month on a plan that would cap sick leave at 960 hours, and employees would not be able to cash it out at retirement. Abele initially wanted to set the cap for 240 hours.
Starting last March, Green Bay is no longer allowing new employees to participate in the retirement sick leave conversion program.
Marathon County is looking into adopting a new sick leave policy, under which older employees will not be exempt. It currently allows retirees to convert up to 50 percent of their unused sick leave into health insurance premiums.
The MacIver News Service attempted to contact several other cities in the course of this investigation that have yet to respond to our inquiry, including Brown County, West Bend, Superior, Rhinelander, and Menomonee Falls. La Crosse County said they did not have the ability to meet to meet the request at the time. Milwaukee County and the City of La Crosse would not release any information without an open records request. La Crosse said it would also charge a fee for that information.
This is part of a continuing series of articles that looks at public sector compensation in Wisconsin. For more information, see www.MacIverInstitute.com.