Towns pay big when retirees have unused sick days

In addition to the accolades and honors Bill Williams received when he retired earlier this year from the Geneva Fire Department, he got a check from the city for $15,456.

That was no token of appreciation from the city council for 21 years of work; it was a payout for 60 days of unused sick time the fire lieutenant accumulated over his career. Williams could use the money however he wanted as he moved to Kentucky to take a job with the Louisville Fire Department as a data analyst in the prevention bureau.

Many other suburbs also pay employees for unused sick days. Critics complain towns with such policies are out of touch with current private business practices, where such perks are increasingly rare, notes Elgin Mayor David Kaptain. Others question whether towns — and taxpayers — can afford the expense. Charles Gilbert authored a study with two Western Illinois University colleagues that forecast financial calamity for governments that didn’t rein in such policies — in 1990.

“This isn’t a new concern, and it’s a big deal,” the former director of institutional research and planning at the university said. Sick days, he said, are “a benefit meant to be there if you needed it. That’s all it is. You did not earn a payout.”

Gilbert is quick to note that as a former university employee, he benefits financially from such policies. “But I’m certainly on the record saying that it’s a bad idea.”

Suburbs have different rules on sick-day payouts for retiring employees. Mundelein and Geneva are among the most liberal, with Mundelein paying for up to 125 unused sick days and Geneva paying for a maximum of 60.

“We pay it out in one lump sum,” Geneva Human Resources Manager Ellen Burmeier said.

Elgin and Algonquin also pay retiring staffers for unused sick days, with a maximum of 20 and 30 days, respectively.

A few municipalities — like Arlington Heights — are on the opposite end of the spectrum, where it’s use it or lose it. Retiring Arlington Heights employees receive nothing from the village for unused sick days, officials there said.

Then there are places like Naperville and Schaumburg that deposit sick-day payouts into “health savings accounts” for retirees to use for future medical needs. Naperville paid more than $1 million into such accounts for 45 retirees in 2010 — between $54,586 for a 38-year veteran administrator and $55 for a 20-year custodian. Schaumburg contributed more than $200,000 for eight retirees last year.

Towns differ on which employees get sick-day payouts and how much they receive.

Schaumburg requires employees to put in more than 25 years of service to the village and give at least 90 days’ notice to receive a maximum payout for 130 unused sick days, Village Manager Ken Fritz said.

Naperville’s policies will be changing soon for future employees. Currently, city employees there can receive credit for 90 unused sick days. If the city council passes amendments to the employee benefits package as expected, future employees would receive credit for only a maximum of 30 days of unused “paid time off,” which are earned days that can be used for either vacation or sick leave.

“I’m all for people getting sick days, but it’s not a retirement plan,” Naperville Councilman Grant Wehrli said. “When you have to pay over a million dollars a year in sick-day payouts, we can’t continue that practice.”

Most municipalities also have policies that allow retirees to boost their pensions by counting unused sick days toward their service time.

Hank Scheff is the director of research and employee benefits for the Chicago chapter of the American Federation of State, County and Municipal Employees union. He said sick-day payouts are part of all union compensation packages and whether it goes to retirees as a direct payment or into a health savings account, it’s “earned compensation.”

“The taxpayer shouldn’t care where the money goes,” he said. “(Workers) earn the money; it’s not the taxpayer’s money. That compensation they earned is their money. It’s another dollar in the compensation package.”

Elgin’s Kaptain believes the time is coming when municipal sick-day payouts will either be tightened or eliminated.

“I think that most everybody is seeing that there will be a lot of things on the table that weren’t discussed previously,” he said. “I think everyone realizes the rules of the game have changed for all public employees.”

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