Sick-time payouts spike as Minnesota state employee retirements rise [Pioneer Press, St. Paul, Minn.]
By MaryJo Webster, Pioneer Press, St. Paul, Minn. | |
Source: | McClatchy-Tribune Information Services |
Some get
It all depends on whether an employee has an ironman-like career -- rarely, if ever, calling in sick -- and what that employee is paid.
Unused sick days paid out at retirement, most often into health care savings accounts, usually cost state government about
Although paying out unused sick time is extremely rare in the private sector, it's common at all levels of government around the country. It's been the standard policy in
Criticism of the practice, though, is mounting nationwide. At least two ranking
Between
State
officials and union leaders say paying out unused sick time as a form of severance is good policy. It discourages sick-day abuse, offsets wages they say are lower than the private sector and serves as a reward for longtime, dedicated employees to help them pay for health care costs in retirement.
"The total money may appear large, but it's a lifeline for people," said
As
"We need to align public employees closely to the private sector as we move through these tough economic times," said Sen.
AT THE TOP:
Quistgaard, who was making almost
Two other MnSCU administrators -- the former president of
A salary cap that ties state employee pay to what the governor makes --
MnSCU, though, is exempt from the cap.
Where the top pay for the rest of state workers is
"In our world, we look at accountability and return on investment," Lamb said. "And the return on investment from these high-level administrators -- and everybody on down the line -- is really high."
Lamb noted that Quistgaard, after becoming president at
Contracts for state employees, including those not in a union, all have "severance pay" clauses. Eligibility varies, but typically the person needs to be at retirement age or have worked for the state for 20 consecutive years. In most cases, the payout for unused sick pay goes into a health care savings account, which is tax-free.
All of the plans set a limit on how much unused sick time can be paid out, and that is multiplied by the person's final pay rate. As a result, the largest checks tend to go to those with high salaries, long careers and few sick days used.
While Quistgaard's check for unused sick time was the most he could receive, it was for about a third of the time he accumulated because of the contract limits on payouts.
State managers received average payments of about
"The system isn't broken, so let's not create a solution in search of a problem," said
LOWER PAY IN THE PUBLIC SECTOR
The state and unions see the payouts as a way to offset wages, which they say fall below those in the private workforce.
But comparing public- and private-sector jobs for pay equity is difficult, researchers say. Many government jobs -- think firefighters, police officers, game wardens, corrections officers -- don't have an equivalent in the private sector.
A widely quoted study by a
A closer look at the study, though, shows public workers with less than a high school diploma are overpaid by about 20 percent. And public workers with bachelor's degrees or higher are underpaid by 30 to 40 percent.
Lamb, who heads MnSCU's human resources, said the system has pay and benefit packages, particularly for administrators and faculty, that fall well below those at peer institutions elsewhere.
Former Metro State President
"We're struggling with competitiveness, and we're trying to find ways to fight that," Lamb said.
State Sen.
"They have all the same job risks as everybody else," Goodwin said. "There was a time when having a civil-service job meant a job for life, but that's not the case anymore."
AN INCENTIVE, BUT A FLAWED ONE
Encouraging state employees to come to work, and not abuse sick leave if they had a "use it or lose it" policy, was likely the reason the payouts were included in civil service contracts predating collective bargaining, said
Tschida, who retired two years ago and received more than
"It's a well-thought-out incentive," said
Most state workers don't get post-retirement health insurance, and they use the unused sick-day payments to cover medical costs until eligible for
Even proponents of the sick leave payout acknowledge the inherent flaw in the system is that employees who need to use their sick time for an illness while they are employed don't get the extra money at retirement.
"It's unfortunate and it's unfair," said
"It was just there as part of the package a state employee gets when they retire," said Trooien, who works part time driving a transit bus. "If it wasn't there, fine. I could've lived without it."
Over the years, there have been numerous proposals or discussions to change the contracts, according to both union and state officials, but none has succeeded.
Tschida said that during his tenure heading MnSCU's human resources between 1997 and 2009, there were several talks internally about switching to a traditional severance package, which typically consists of one to two weeks of pay per year of service. They also talked about going to paid time off, or PTO, which combines sick time and vacation.
MOVE TOWARD PTO, LIMITED ACCRUAL
An annual
Businesses are even moving away from sick leave, instead offering PTO, Fegley said. This gives employees a set number of days each year to use for illness or vacation. About 17 percent of companies in the survey offer a PTO plan that pays out unused time when the person leaves.
Paying for unused vacation time is more common among all employers, but typically with year-to-year restrictions on accrual. Such limits, and even "use it or lose it" policies, help companies keep a tab on spending.
"It really is a problem for employers when they have a balance that just keeps growing and growing and they have no control over whether it's going to be used," said
Public employers, though, are having a harder time ridding themselves of these payout policies because 32 percent of their workers are in unions, said
"The thing politicians need to realize is that they're blaming the unions unfairly," Craver said. "They need to go to the bargaining table and say they don't have the money."
As of
Pension liability is the hot topic for state governments around the country right now. Shafroth said the unused sick and vacation time liabilities are a secondary issue.
"Particularly in the last five years, more and more (state and local) governments have said there's going to be a limit on accrued sick time," Shafroth said.
A
A few years ago, the
As a result, most superintendent contracts have been rewritten, but big payouts still happen. Earlier this year,
CONTRACT DEADLINES NEAR
When the
The two largest unions, AFSCME and MAPE, are in contract negotiations with the state, and the contracts will need legislative approval.
Specifically, he pointed to the zero-percent premiums for a single-person health care plan. He said they also will look at payouts for unused sick time.
"We haven't talked in depth about it," Drazkowski said. "As we look at these things as a whole, I think we'll be bringing proposals forward to bring forward private-sector practices."
SICK-TIME PAYOUTS
Who is eligible: Varies by contract, but most require the worker be retirement age or have worked for the state for 20 consecutive years.
What it is: Full-time state employees typically get about 10 sick days a year. When the employee retires, a portion of what's unused over the years is paid out.
How they are paid: Three contracts pay 35 percent of all unused sick days. The dollar amount is based on the worker's final pay rate. Other contracts pay 40 to 50 percent of unused sick days, but only up to 112 to 125 days. Several also pay 12.5 percent of unused days above that cap.
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