Ill-Gotten Gains? At CPS, Unused Sick Days Pay Off
The cash-strapped Chicago Public Schools spends tens of millions annually on a perk that few other employers offer: cash to departing employees for unused time off.
Since 2006, the district paid a total $265 million to employees for unused sick and vacation days, according to an analysis of payroll and benefit data obtained by the Better Government Association under the Illinois Freedom of Information Act.
By far the largest share—$227 million—went to longtime employees for sick days accumulated over two or three decades.
Mayor Rahm Emanuel recently ordered a halt on paying unused sick-time to non-union employees at City Colleges of Chicago after the BGA reported at least $3 million in such payouts to former employees over the last decade. Among the biggest beneficiary was former chancellor Wayne Watson, who left in 2009. Watson has received $300,000 of a promised $500,000 payout for 500 unused sick days.
"This policy is unacceptable to the Mayor and not consistent with the City’s sick day policies for its own employees," said Jennifer Hoyle, a spokeswoman for Emanuel, who also directed other city agencies including CPS to halt such payments, review their policies and devise plans to end the practice permanently.
At CPS, more than 300 longtime principals and administrators received payouts exceeding $100,000 during the six-year period from 2006 to 2011, the BGA found. The highest payout topped $250,000.
Beneficiaries included former CEO Arne Duncan, now U.S. Secretary of Education, who received $50,297 for unused vacation time when he left after nine years in January 2009, according to CPS payroll data. Duncan believes the policy should be reevaluated.
"People should take a good hard look at whether or not that policy makes any sense and whether it should be kept in place in these tight budget times," said Duncan through a Washington D.C.-based department spokesman.
The district’s policy of paying for accrued sick and vacation time drains an average $44 million annually at a time when CPS is struggling to balance its nearly $6 billion annual budget by hiking property taxes, cutting staff and dipping into reserves. The obligation to pay this accumulating benefit contributes to the district’s long-term debt, showing up as a fast-growing liability on CPS’ balance sheet.
Moreover, payouts increase the Chicago Teachers’ Pension Fund’s liabilities because employees are allowed to use sick leave payouts to boost their final average salaries, which in turn increases their annual pensions.
Approximately 19,000 employees received sick and vacation payments during the six-year period, and about 4,200 of them, or 22 percent, participated in the district’s "pension enhancement program." (see below for more on PEP)
Most private employers adopt a "use or lose it" policy for sick and vacation days to hold down costs and limit future obligations. Many question the wisdom of rewarding employees when they leave.
"What you’re doing is paying someone when they’re walking out the door, and that’s basically money walking out the door," said Mark Schmit, vice president of research for the Alexandria, Va.-based Society for Human Resource Management, a leading association for HR managers.
Only six percent of employers pay for unused sick leave, while 16 percent pay unused vacation time, according to the association’s 2011 employee benefit survey. The survey was based on responses from 600 HR managers, largely at private employers.
Public education is widely known for more generous time-off and pension benefits than the private sector, and accumulating sick leave is not uncommon. But CPS may be alone among Illinois school districts in paying cash for unused sick leave, said Thomas A. Kersten, professor emeritus of educational leadership at Roosevelt University.
"I’m not familiar with any district besides Chicago that pays for sick days," he said.
Members of the Teachers’ Retirement System, which includes Downstate and suburban teachers, can accumulate as many as 340 uncompensated sick days for up to two years of credit, allowing them to retire two years early with full pension benefits.
CPS employees get one sick day per month of work, and they can accumulate as many as 325 days. They become eligible for payouts after working at least 20 years or reaching age 65. Depending on their tenure, they receive between 85 percent and 100 percent of their accumulated sick leave value.
Vacation benefits range from 15 to 25 paid days annually for year-round employees. Teachers and others who work fewer than 12 months get 10 days, winter and spring breaks.
Special "reserve" days also are awarded at the discretion of the chief executive officer for employees who work, for instance, when schools are closed for snow days.
Here are the top payouts, according to CPS payroll and benefit data from 2006 through 2011:
- Ascencion Juarez, former chief human resources officer, collected $250,787 after he retired in 2009 after 38 years, including $200,285 in sick pay. His payout exceeded his final salary of $166,904. Reached by phone, Juarez declined to discuss his payout or the district’s benefit policy.
- Former Chief Education Officer Barbara Eason-Watkins collected $239,849 after she retired in 2010 after 35 years, including $159,843 in sick pay. Her payout exceeded her final salary of $192,850. She did not return phone calls seeking comment.
- Former Lake View High School Principal Scott Feaman received $211,641 after he retired in 2011 after 36 years, including $171,604 in sick pay. His vacation pay of $40,037 included more than $19,000 in "reserve" days, which are awarded at the CEO’s discretion. His total payout exceeded his final salary of $154,921. Feaman did not return phone calls seeking comment.
Eason-Watkins and Feaman each used sick days to sweeten their pensions. As a result, Eason-Watkins collects an additional $7,440 annually in pension payments for the rest of her life, and Feaman collects $4,425 more in annual payments, according to data obtained through the Freedom of Information Act from the Chicago Teachers’ Pension Fund.
Thousands of former Chicago Public Schools employees collect fatter pension checks because of a program that allows them to boost their final salaries by collecting unused sick time.
More than 4,200 former CPS employees who started drawing pensions during 2006 to 2011 were part of a program that bumped their annual pensions by a collective $9 million annually, according to records obtained by the Better Government Association through the Freedom of Information Act. That’s because of a little known CPS-enacted perk that counts unused sick days in pension calculations.
Here’s how it works: When eligible employees enroll in a "pension enhancement program" (PEP) by agreeing to retire on a specific schedule, they are paid for some or all of their unused sick time before separation. The payout, to a maximum of 20 percent of their salary, counts as compensation, boosting the final average salary on which their pension is based.
At least fourteen former CPS employees receive an additional $6,000 or more annually in pension payments because of the program.
CPS normally contributes 7 percent of compensation to the Chicago Teachers’ Fund, and employees contribute 2 percent, to the Chicago Teachers’ Pension fund. But PEP participants must pick up the entire 9 percent contribution on the sick-day increment.
In all, CPS paid about $295 million to the pension fund in fiscal year 2011.
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This story was written and reported by BGA Senior Investigator Patrick Rehkamp, and Barbara Rose, a freelance investigator for the BGA. To contact Patrick, email firstname.lastname@example.org or call (312) 386-9201.