Unpaid sick leave will cost taxpayers $3.4 billion over the next three decades

Ted Dabrowski

Vice President of Policy

Ted Dabrowski

John Klingner

Policy Analyst

John Klingner
March 9, 2017

Unpaid sick leave will cost taxpayers $3.4 billion over the next three decades

Top school district superintendents have used the sick-leave perk to boost their pensions by $350,000 or more over the course of their retirements.

The Illinois Senate’s “grand bargain” threatens Illinoisans with billions in tax hikes because it does virtually nothing to reform how government spends taxpayer money.

But there is a lot to reform, especially in public-sector contracts and the perks they contain.

Take unused sick leave, for example.

Government workers can accumulate their unused sick leave until they retire – up to two years’ worth in some cases. That accumulated sick leave can then be cashed in to boost their pensions.

University employees enjoy this perk. State workers do, too. As do local city and municipal workers. And K-12 teachers. In contrast, such a perk is virtually unheard of in the private sector.

The sick-leave perk’s benefits aren’t trivial. Top school district superintendents, for example, have used the perk to boost their pensions by $350,000 or more over the course of their retirements. That helps boost their already inflated pensions even more.

For example, Henry Bangser, a former superintendent of New Trier Township High School District 203, can expect to receive $7.5 million in benefits over the course of his retirement – $440,000 of which is due to accumulated unpaid sick leave.

Unpaid sick leave will cost taxpayers $3.4 billion over the next three decades

It’s not just the top pensioners who benefit from the perk.

In all, more than 70 percent of the 100,000-plus current downstate and suburban retired teachers have cashed in unused sick leave.

Illinois teachers can accumulate unpaid sick days throughout their careers, rolling over unused days from year to year to amass up to two years’ worth of sick days.

At retirement, teachers can turn their accumulated sick days into service credit that spikes their starting pension benefit, with each unused sick day treated as an additional day spent in the classroom. Essentially, teachers can receive pension benefits for up to two years they never spent in the classroom.

That can have a big impact on a retiree’s pension. A retiree with 30-plus years’ service can expect his or her pension to be boosted by more than $150,000 over the course of his or her retirement if that retiree cashes in the full two years of sick leave.

In total, the sick-leave perk will cost taxpayers nearly $3.4 billion over the next three decades – or more than $100 million a year.

And teachers aren’t the only public employees taking advantage of the perk.

Over 50 percent of retired university workers have some sick-leave credit. Nearly 70 percent of retired state workers do, too.

To be clear, the workers who benefit from sick-leave accumulation and other perks aren’t at fault. They’re simply benefitting from overly generous contracts that state and local politicians have doled out to them.

But it’s also clear that perks such as sick-leave accumulation have made pension benefits too unrealistic for state workers to count on and too rich for taxpayers to keep paying for.

To fix this, lawmakers should end accumulated sick leave as a subject of collective bargaining.

Teachers should have sick leave on a use-it-or-lose-it basis, as it exists in the private sector.

Instead of tax hikes, reform pension sweeteners

Accumulated sick leave is just one of the many perks that spike the costs of public-sector pensions for which taxpayers must pay.

Other perks include automatic end-of-career salary spikes, automatic pay raises for various levels of education, and other increases that pay public-sector employees more just for showing up from one year to the next.

Yet Illinois politicians wedded to the status quo would rather hike taxes on struggling Illinoisans than end any of those perks.

Illinoisans are already suffering under one of the nation’s worst business climates, a shrinking population, the highest unemployment rate in the Midwest, collapsing manufacturing, stagnant incomes, and the nation’s highest property taxes.

Illinois politicians should get their priorities straight. It’s just not fair to tax people who are already squeezed when there are billions in perks left to reform.

And it’s not just perks. There are many spending drivers politicians should reform before even mentioning tax hikes.

The Illinois Policy Institute has laid out a framework, Budget Solutions 2018, for politicians so they can solve Illinois’ budget crisis without hurting Illinoisans with more tax hikes.

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