Report: Unused sick leave inflates teachers’ pensions on taxpayers’ dime

By April Brown | Mar 12, 2017

CHICAGO – A new report released by Illinois Policy Institute revealed that thousands of retired state educators are being compensated for time they didn’t spend in school at the taxpayers' expense.

“No one is against teachers taking time off when they or loved ones are sick, but what we’re seeing here is a severe abuse of the system,” Ted Dabrowski, vice president of policy at the Illinois Policy Institute, said in a recent press release.

“Teachers’ and administrators’ contracts give away more sick time than most will ever use. Then, unused sick time can be carried over for decades and used to inflate educators’ pensions.”

The report details how accumulated sick leave can be converted to service credit at retirement, significantly increasing pension benefits. The majority of the school districts allow up to two weeks of accumulated sick leave over the duration of a teacher’s career, and 70 percent of retirees are taking advantage of this perk – equating to about 73,000 people. This is expected to cost taxpayers $3.4 billion over the next 30 years – a cost, the Institute says, taxpayers simply cannot afford.

The report points to this practice as a major contributing factor in the state’s massive pension debt, which is currently sitting at $130 billion in unpaid liabilities.

“The purpose of sick time is to allow people to get well without losing significant income when they face illness, not to inflate retirement benefits by tens or hundreds of thousands of dollars,” Debrowski said.

The Institute reports that more than 6,800 retirees will each receive more than $100,000 in additional benefits due to accumulated sick leave. Each of the top 10 beneficiaries will receive $350,000 or more in additional benefits. As a result, the total pension benefits accrued by Illinois teachers have increased nearly 1,000 percent between 1987 and 2015, growing at an annual rate of 9 percent a year. The report explains that this growth rate far surpasses the growth rates of state revenues and inflation, as well as the taxpayers’ ability to pay for those benefits during that same period.

Moving forward, the Institute suggests modeling the private sector by granting sick leave on annual use-it-or-lose-it basis; and that school districts be responsible for paying the annual pension costs for their employees, rather than the state, in order encourage more fiscal restraint.

It further recommends that new employees be given self-managed retirement plans, with an option for current employees to also participate. It stated that both can be done without a change to the Illinois Constitution. By enacting these reforms, the Institute believes progress can be made on the state’s looming pension crisis.

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