Order Code RL32596
Sick Leave: Usage Rates and Leave Balances for
Employees in Major Federal Retirement Systems
Updated August 26, 2008
Curtis W. Copeland
Specialist in American National Government
Government and Finance Division

Sick Leave: Usage Rates and Leave Balances for
Employees in Major Federal Retirement Systems
Summary
Full-time federal civilian employees receive 13 days of sick leave each year, and
may carry over an unlimited amount of unused sick leave from year to year. At the
time of retirement, employees in the Civil Service Retirement System (CSRS) (those
hired before 1984) receive credit in the computation of their civil service retirement
annuities for any unused sick leave they have at the time of retirement. In contrast,
employees in the Federal Employees Retirement System (FERS) (those hired after
1983 and others who transferred to FERS) generally receive no credit for unused sick
leave at the time of retirement. As a result, some believe that FERS employees will
use more of their sick leave as they approach retirement (resulting in productivity
losses) than their CSRS counterparts. The conference report for the legislation
creating FERS in 1986 urged the Office of Personnel Management (OPM) to
examine this issue. FERS employees comprise an increasing percentage of the
federal workforce, and by 2014 virtually all federal employees are expected to be in
FERS.
In 2004, CRS obtained data indicating that FERS retirees and FERS employees
in that group who were eligible to retire or approaching eligibility used substantially
more sick leave and had much lower sick leave balances than comparable CSRS
retirees and employees. In 2006, OPM similarly concluded that FERS employees
who were eligible to retire or were nearing eligibility used more sick leave than their
CSRS counterparts, but concluded that to make sick leave creditable under FERS
would cost several times more than the potential productivity savings. In April 2008,
the Treasury Inspector General for Tax Administration concluded that the lack of
compensation for unused sick leave was causing FERS employees in the Internal
Revenue Service to use more sick leave than their CSRS counterparts.
In March 2008, Representative Jim Moran introduced H.R. 5573, which would
permit FERS employees who satisfied the age and service requirements for
immediate or early retirement to receive a lump-sum payment equal to 15% of the
hourly rate of their basic pay for each hour of unused sick leave balance over 500
hours, with the total payment capped at $10,000. Union and federal manager
organizations supported the legislation, but OPM said greater sick leave use by FERS
employees could be caused by factors unrelated to differences in FERS and CSRS
policies. In July 2008, the House of Representatives passed the Family Smoking
Prevention and Tobacco Control Act (H.R. 1108), which included a section that
would permit FERS employees to receive service credit for unused sick leave.
In 2004, all except five state governments provided some type of compensation
to employees for unused sick leave at retirement, usually either as cash payments,
service credit in the computation of annuities, or payment of health or life insurance
premiums. The states generally limited these payments in some way (e.g., capping
the number of hours of sick leave payable).
This report will be updated when additional or more current data on sick leave
use become available, or if other changes in federal sick leave policies are proposed.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Federal Sick Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
CSRS and Sick Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
FERS and Sick Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Indications of Greater Sick Leave Use by FERS Employees . . . . . . . . . . . . . 8
FERS Employees Use More Sick Leave Than Their CSRS Counterparts . . . . . 9
Differences in Sick Leave Usage and Balances . . . . . . . . . . . . . . . . . . . . . 10
Sick Leave Policies in Other Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Unused Sick Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Sick Leave Policies in State Governments . . . . . . . . . . . . . . . . . . . . . . . . . 14
Cash Payment Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Service Credit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Insurance Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Policy Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
More Stringent Enforcement of Sick Leave Policies . . . . . . . . . . . . . . . . . . 17
Providing an Incentive to Conserve Sick Leave . . . . . . . . . . . . . . . . . . . . . 17
A Comparison of Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
OPM’s 2006 Study of Sick Leave Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Analysis of the OPM Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Treasury Inspector General Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Legislative Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Appendix. State Sick Leave Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
List of Figures
Figure 1. Number of FERS Employees Is Increasing . . . . . . . . . . . . . . . . . . . . . . 3
Figure 2. Number of FERS Retirement Eligibles Is Increasing . . . . . . . . . . . . . . 4
List of Tables
Table 1. FERS Employees Used More Sick Leave than CSRS Employees
as They Approached Retirement Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . 11
Table 2. FERS Employees Had Lower Sick Leave Balances than
CSRS Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Table 3. FERS Retirees Had Lower Sick Leave Balances than
CSRS Retirees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Table 4. OPM Study Shows FERS Employees Generally Used More
Sick Leave in 2005 - 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Table 5. Sick Leave Policies in State Governments . . . . . . . . . . . . . . . . . . . . . . 26

Sick Leave: Usage Rates and
Leave Balances for Employees in
Major Federal Retirement Systems
Introduction
Pensions for nearly all federal civilian employees are provided through one of
two retirement programs — the Civil Service Retirement System (CSRS) or the
Federal Employees Retirement System (FERS).1 Most federal civilian workers hired
before January 1, 1984, are covered by CSRS, whereas those hired after that date are
covered by FERS (as are employees who voluntarily switched from CSRS to FERS
during “open seasons” held in 1987 and 1998).
CSRS and FERS are similar in several respects. In both retirement systems,
employees’ annuities are a function of age, length of federal service, and final
average pay.2 The normal retirement age (without reduction of annuity) under both
CSRS and FERS is 55 for employees born before 1948 who have at least 30 years of
service.3 Both retirement systems also allow normal retirement at age 60 for
employees with 20 or more years of service, and 62 for employees with at least five
years of service. Also, employees in both systems receive 13 days (104 hours) of
sick leave each year, and may carry over an unlimited amount of unused sick leave
from year to year. Therefore, an employee who carries over an average of nine days
(72 hours) of sick leave each year during a 30-year career would accumulate 2,160
hours of unused sick leave by the time he or she is eligible to retire.
One of the many ways in which CSRS and FERS differ is in how accumulated
sick leave is accounted for at the time of retirement. In the CSRS system, retiring
employees receive service credit in the computation of their annuities for any unused
sick leave they had at the time of retirement. For example, a retiring CSRS employee
with 30 years of service and one year (2,087 hours) of accumulated sick leave would
1 Although the federal government has many different retirement plans, CSRS and FERS are
by far the largest. In this report, “federal civilian employees” refers to those in the CSRS
or FERS plans. For a more thorough discussion of these two plans, see CRS Report 98-810
EPW, Federal Employees’ Retirement System: Benefits and Financing, by Patrick Purcell.
2 FERS annuities are generally smaller than in CSRS because they are only one component
of the system. A more detailed description of the two systems is provided later in this
report.
3 The FERS normal retirement age increases for employees born in 1948 or later, and
eventually reaches age 57 for employees born in 1970 or later.

CRS-2
be considered to have 31 years of service for purposes of annuity computation.4 In
sharp contrast, FERS retirees generally receive no service credit or other type of
compensation for their accumulated sick leave.5 As a result, some observers suggest
that FERS employees will be on sick leave more frequently than CSRS employees,
particularly as they approach retirement age, thereby resulting in reduced
productivity, increased personnel costs, or both. Reports of FERS employees
actually carrying out this “use it or lose it” behavior periodically appear in press
articles.6
To discourage this phenomenon from occurring, some observers have advocated
changing FERS to provide some kind of value for unused sick leave (e.g., allowing
full or partial service credit to be used in annuity calculations, or providing full or
partial lump-sum cash payments for such leave).7 For example, in April 2006, a
coalition of federal management groups (the Federal Managers Association, the
Senior Executives Association, the Federal Aviation Administration Managers
Association, the National Council of Social Security Management Associations, and
the Professional Managers Association) called for a change in federal sick leave
policy (e.g., allowing FERS employees to apply a portion of their unused leave
toward post-retirement health care policies).8 Others, however, believe that the
CSRS sick leave benefit is excessively generous, and that FERS should not replicate
that generosity. Opponents of a policy change (and even some proponents) also point
out that use of sick leave for unauthorized reasons is inappropriate, and that FERS
employees knew (or should have known) about this policy when they agreed to the
terms of employment.9
4 The congressionally mandated number of hours in a work year is 2,087. Only full years
and months are counted in the annuity computation. For example, if a full-time employee
worked 30 years and had 835 hours (four months and 24 days) of accumulated sick leave
at the time of retirement, the employee would be credited with 30 years and four months of
service; the 24 additional days would be dropped.
5 FERS employees who transferred from CSRS receive credit for sick leave balances at the
time of the transfer or at the time of retirement, whichever is smaller.
6 See, for example, “Sick Leave and FERS: Leave Abuse? Justifiable Cheating? Flexible
Ethics?,” in FedSmith.com, available at [http://www.fedsmith.com/articles/
articles.showarticle.db.php?intArticleID=1143]; and “FERS and sick leave,” Federal Times,
April 24, 2006, p. 20.
7 For example, in testimony before the Senate Committee on Governmental Affairs on
February 4, 2004, the President of the National League of Postmasters said, “We also need
to address the issue of sick leave for FERS employees. Currently, they get no credit for
unused sick leave at retirement. We need to change this rule so they could sell back sick
leave or get credit at retirement.”
8 Deborah Funk and Stephen Losey, “Sick Leave abuse: Managers prescribe cure for use-or-
lose rules,” Federal Times, April 17, 2006, p. 1.
9 For example, in the “Sick Leave and FERS” article mentioned above, 56% of the
respondents to an unscientific survey said it was not ethical for a federal employee to use
sick leave without having an authorized medical reason for using the leave. One respondent
said “If you were hired under FERS, then you should go by the rules, and the CSRS rules
are not your concern.”

CRS-3
This report provides data that CRS obtained on sick leave usage rates by many
employees and recent retirees in the CSRS and FERS retirement systems in 2003 and
2004. It also discusses a study of federal sick leave use in 2005 and 2006 by the
Office of Personnel Management (OPM), and provides information on unused sick
leave policies in private sector and other public sector organizations (e.g., state
governments). First, though, the report provides some background information on
CSRS and FERS trends and federal sick leave policies in general.
Background
As Figure 1 below shows, because all new federal employees for more than 20
years have been put in FERS, the number of FERS employees in the federal
workforce has increased substantially, whereas the number of CSRS employees has
declined. By September 1996, more federal employees were in FERS (818,650) than
in CSRS (809,098). As of September 2007, nearly 1.3 million federal employees
were in FERS, compared with about 335,000 in CSRS. At the rate of decline in the
CSRS population since 1990, by about 2014 virtually all federal employees are
expected to be in FERS.
Figure 1. Number of FERS Employees Is Increasing
1,400,000
1,279,416
1,173,589
1,200,000
1,000,000
s
e
e

800,000
oy
pl

600,000
m
655,750
E
400,000
335,594
200,000
0
Sept 1990
Sept 1991
Sept 1992
Sept 1993
Sept 1994
Sept 1995
Sept 1996
Sept 1997
Sept 1998
Sept 1999
Sept 2000
Sept 2001
Sept 2002
Sept 2003
Sept 2004
Sept 2005
Sept 2006
Sept 2007
CSRS
FERS
Source: U.S. Office of Personnel Management Central Personnel Data File. Data include full-time,
permanent employees.
Figure 2 shows the number of employees who were eligible to retire
(“retirement eligibles”) in both the CSRS and FERS retirement systems from
September 2000 until September 2007. Although the number of CSRS retirement
eligibles at the end of this period still exceeded the number of FERS eligibles, the
difference between the two retirement systems has been steadily narrowing in recent
years.

CRS-4
Figure 2. Number of FERS Retirement Eligibles Is Increasing
160,000
136,573
140,213
139,214
137,206
136,100
140,000
128,396
108,366
115,296
120,000
100,000
69,933
80,800
80,000
51,255
60,122
60,000
42,913
30,608
36,179
40,000
25,922
20,000
0
001
004
005
007
2000
2
2002
2003
2
2
2006
2
ept
ept
pt
ept
ept
ept
ept
ept
S
S
Se
S
S
S
S
S
CSRS
FERS
Source: U.S. Office of Personnel Management Central Personnel Data File. Data are for full-time,
permanent employees.
Federal Sick Leave
Sick leave benefits provide paid time off while an employee temporarily cannot
work due to a non-work-related illness or injury. As noted previously, all federal
civilian employees receive four hours of sick leave each biweekly pay period, for a
total of 104 hours (13 days) each year. Employees must request sick leave within
such time limits as their agencies may require, and agencies may grant sick leave
only when supported by evidence they consider administratively acceptable. For
absences in excess of three days, or for a lesser period when determined necessary
by the agency, an agency may require a medical certificate or other administratively
acceptable evidence before approving sick leave requests.
The federal sick leave program has been expanded several times, allowing the
benefit to be used for purposes other than personal medical attention. For example:
! the Federal Employees Family Friendly Leave Act of 1994 (P.L.
103-388) permitted employees to use up to 13 days of sick leave
each year to provide medical or personal care to a family member,
or to make arrangements for or to attend the funeral of a family
member.10
10 The act guaranteed full-time employees the use of five days (40 hours) of sick leave each
year to care for family members or for bereavement purposes. Employees wanting to use
more than five days had been required to maintain a sick leave balance of at least 80 hours.
However, in 2006, OPM issued final regulations that removed this requirement. See U.S.
Office of Personnel Management, “Absence and Leave,” 71 Federal Register 47693, August
17, 2006.

CRS-5
! the Treasury-Postal Service Appropriations Act for FY1995 (P.L.
103-329) permitted the use of sick leave to pursue activities related
to the adoption of a child.
! in 2000, the federal sick leave program was again expanded,
allowing employees to use up to 12 weeks of sick leave per year to
care for family members with a serious health condition.11
According to OPM, federal sick-leave usage rates increased during this period —
from an average of 8.59 days of sick leave used per year in 1994 to 9.52 days in
2001. One possible explanation for this overall increase in sick leave use could be
the changes in policy that allowed additional uses for sick leave. As explained more
fully later in this report, though, another possible explanation could be the increasing
number of FERS employees who were approaching retirement eligibility.
From time to time, Congress attempts to broaden or otherwise change federal
sick leave policy even further. For example, in the 110th Congress, one of the
provisions in H.R. 2200 would, if enacted, exempt federal employees who are
undergoing medical treatment for a combat-related disability sustained while a
member of the armed forces from the requirement in the federal leave sharing
program that they exhaust their annual and sick leave before using any transferred
leave. S. 1649 in the 110th Congress would (among other things) require OPM to
establish a program to allow federal employees serving as caregivers to dependents
of members of the armed forces deployed overseas to use their sick leave in the same
manner as annual leave is used. (Note: A subsequent “Legislative Developments”
section of this report discusses a broader proposed change in federal sick leave
policy.)
CSRS and Sick Leave
The Civil Service Retirement Act of 1920 (P.L. 66-215) created CSRS to
provide pension benefits to federal employees. CSRS is a “defined benefit”
retirement plan in that the benefit is paid as a lifelong annuity based on years of
service and average salary in the last few years of employment. CSRS employees
accrue benefits equal to 1.5% of their highest three consecutive years of base pay
(often called the employee’s “high-three” pay) for their first five years of service,
1.75% of their “high-three” pay for each year in years 6 through 10, and 2% of their
“high-three” pay for each subsequent year. Therefore, a CSRS employee who retires
with 30 years of service would receive an annuity equal to 56.25% of the employee’s
“high-three” pay. CSRS annuities are adjusted annually for inflation and are financed
11 Office of Personnel Management, “Sick Leave for Family Care Purposes; Final Rule,” 65
Federal Register 37234, June 13, 2000. Until 2006, to use the full 12 weeks of leave,
employees had been required to maintain a sick leave balance of at least 80 hours. However,
in 2006, OPM issued final regulations that removed this requirement. See U.S. Office of
Personnel Management, “Absence and Leave,” 71 Federal Register 47693, August 17,
2006.

CRS-6
by contributions from both employees and the government (although the CSRS
system is currently not fully funded).12
Until 1969, CSRS employees forfeited any unused sick leave at the time of their
retirement. At that time, the Civil Service Commission (now OPM) estimated that
about half of all retiring federal employees had zero sick leave balances, and the
other half had an average of about 44 days (352 hours) of sick leave that were
forfeited at retirement. Also, a House Post Office and Civil Service Committee
report noted that retiring employees used an average of 40 days (320 hours) of sick
leave during their last year of employment.13
In 1969, Congress enacted legislation (P.L. 91-93) to permit CSRS employees
to receive service credit for unused sick leave in the computation of their retirement
annuities. This change in policy made unused sick leave highly valuable. For
example, as noted previously, an employee retiring with 30 years of service and a
year of unused sick leave would get credit for 31 years of service for purposes of
annuity computation. If this employee’s “high-three” salary was $50,000, the
additional year of service would increase his or her pre-tax retirement annuity by 2%,
or $1,000 per year. Therefore, even before indexing for inflation, if the employee
received the annuity for 20 years, the unused sick leave would be worth about
$20,000. To pay for this and other changes in the retirement system, the law
increased employee and agency contributions to the civil service retirement fund
from 6.5% to 7.0% of pay.
This change in policy was expected to reduce federal employees’ use of sick
leave and to grant limited recognition to those who prudently utilized their sick leave.
In 1986, the General Accounting Office (GAO, now the Government Accountability
Office) examined the implementation of this change in policy, and reported that
employees who retired in 1984 and 1985 had significantly higher sick leave balances
than employees who retired in 1968, before the law was changed.14 Specifically, the
average sick leave balances for employees who retired in 1984 and 1985 were 38%
and 46% higher, respectively, than the estimated average balance of 1968 retirees.
GAO concluded that the changes made in 1969 had “contributed to reducing the
overall usage of sick leave and increasing the unused sick leave balances of retiring
federal employees.”
12 See CRS Report RL30023, Federal Employee Retirement Programs: Budget and Trust
Fund Issues
, by Patrick Purcell.
13 Cited in U.S. General Accounting Office, Federal Workforce: Retirement Credit Has
Contributed to Reduced Sick Leave Usage
, GAO/GGD-86-77BR, June 1986.
14 GAO/GGD-86-77BR. Specifically, GAO reported that retirees in 1968 had an average
of 642 hours of unused sick leave. Retirees in 1984 averaged 884 hours and retirees in 1985
averaged 940 hours — about 38% and 46% higher, respectively, than the average retirees’
leave balance in 1968.

CRS-7
FERS and Sick Leave
The Federal Employees’ Retirement System Act of 1986 (P.L. 99-335) created
FERS with three basic elements — (1) Social Security, (2) a FERS basic annuity, and
(3) a thrift savings plan (TSP).
! The Social Security component is based on wages earned while a
federal employee. Employees may begin receiving reduced Social
Security benefits at age 62, but may receive a portion of that amount
in the form of a FERS supplement as early as age 55.
! The FERS basic annuity is a defined benefit plan in which
employees retiring below age 62 accrue benefits at the rate of 1% of
their “high-three” average pay per year of service. Therefore, a
FERS employee retiring at age 58 with 30 years of service will
accrue a pension benefit equal to 30% of his or her “high-three”
average pay.15 Like CSRS, FERS annuities are funded by
contributions from employees and the government, but (unlike
CSRS) FERS benefits must be pre-funded according to their full
actuarial costs. FERS annuitants over age 62 receive annual cost-of-
living adjustments, but those adjustments may be less than the
amount of inflation.16
! The TSP is patterned after the “401(k)” savings plans available in
the private sector, and encourages employees to save for retirement
by making contributions “pre-tax” and by making interest earned on
these contributions non-taxable until they are withdrawn. The
government contributes 1% of pay for all FERS participants, and
provides whole or partial matches for up to 5% of pay contributed by
FERS employees. The maximum annual employee contribution is
$15,500.17
In contrast to the approach taken with regard to CSRS employees in 1969,
Congress did not authorize FERS employees to receive service credit for unused sick
leave (except for leave carried into the system by employees who transferred to
FERS from CSRS).18 The legislative history for the 1986 act creating FERS does
15 FERS employees who have at least 20 years of service and who work until at least age
62 earn 1.1% for each year of service. Therefore, an employee who retires at age 62 with
30 years of service will accrue a pension benefit equal to 33% of his or her “high-three”
average pay.
16 For example, if the amount of inflation is more than 3%, the annuitant would receive an
adjustment equal to the amount of inflation minus 1 percentage point.
17 Employees age 50 and older can also make catch-up contributions of up to $5,000 per
year. CSRS employees can contribute to the TSP, but they receive no government matching
contribution.
18 Retiring employees who transferred to FERS receive service credit for the amount of
(continued...)

CRS-8
not explain why Congress took this approach. However, in the conference report for
the act, the conferees noted that FERS employees’ unused sick leave generally could
not be used in the computation of their annuities, and urged OPM to examine sick
leave usage by FERS employees. The conferees went on to say that they were
“concerned that without an incentive to save sick leave, the use of sick leave may
substantially increase.”19 OPM did not conduct this study until 2006, and the study
is described and analyzed later in this report. OPM representatives told CRS that
their office had not conducted the study previously because the agency’s Central
Personnel Data File does not contain data that would allow comparison of sick leave
usage rates or sick leave balances by employees in different retirement plans.20
Indications of Greater Sick Leave Use
by FERS Employees

There have been indications for some time that FERS employees may be using
sick leave more often than their CSRS counterparts, particularly as they approach
retirement. As noted previously, average sick-leave usage rates for all federal
employees increased by more than 10% from 1994 to 2001 (rising from 8.59 days per
year in 1994 to 9.52 days per year in 2001). One possible explanation for this
increase is the additional uses for sick leave that were allowed during that period
(e.g., to care for sick family members or to adopt a child). However, another
explanation could be the increasing numbers of FERS employees in the federal
workforce and the fact that they receive no benefit for accrued sick leave at
retirement. The percentage of full-time, permanent federal civilian employees in
FERS increased from about 46% in 1994 to about 62% in 2001.21
Also, a May 2004 survey suggested that FERS employees may be more likely
to use sick leave as they approach retirement than their CSRS counterparts. FPMI
Solutions, Inc., a human resources services, staffing, and training company primarily
for federal agencies, conducted an unscientific online poll of its subscribers (current
and retired federal employees) regarding sick leave usage. Of the more than 2,300
participants in the poll, 51% said they were under CSRS and 49% said they were
under FERS. Although both groups of participants said they were strongly in favor
of sick leave conservation, the groups diverged regarding sick leave use in the last
year before retirement. Whereas nearly 85% of CSRS employees and retirees said
they would or did conserve as much sick leave as possible, more than 75% of FERS
employees and retirees said they planned to use as much sick leave as possible during
their last year before retirement. One respondent said that there is “a huge incentive
for CSRS and offset employees to conserve sick leave and a very large disincentive
18 (...continued)
unused sick leave they had at the time of transfer or the time of retirement, whichever is less.
19 Committee on Post Office and Civil Service, U.S. House of Representatives, Committee
Print 99-8, 99th Congress Second Session June 12, 1986, p. 127.
20 Telephone discussions with the Confidential Assistant to the Director and Chief,
Administration, Office of Congressional Relations, OPM, May-June 2004.
21 These percentages include employees in federal retirement systems other than FERS or
CSRS (e.g., employees in the foreign service retirement system).

CRS-9
for FERS employees to do the same.”22 Another respondent said that this incentive
structure causes “a lot of productivity to go down the drain.” However, other
respondents said that, this incentive structure notwithstanding, the use of sick leave
when not sick was morally “the wrong thing to do.”
A more scientific study of sick leave use within the Bureau of Prisons from
1994 through 2003 indicated that FERS employees in the agency were, in fact, using
more sick leave than those in CSRS, even when controlling other possible factors
(e.g., race, gender, education, age, and sick leave balances of employees).23 The
authors concluded that the study’s findings “strongly suggest that the apparent
difference between the incentive systems in the CSRS and FERS systems regarding
the use of sick leave is translated into actual differences in behaviors of CSRS and
FERS employees.”24
FERS Employees Use More Sick Leave Than Their
CSRS Counterparts
Although OPM’s Central Personnel Data File does not contain data on sick
leave usage rates by employees in different retirement systems, those data are
available from each federal agency or, more centrally, through organizations that
administer payroll functions for multiple federal agencies. For example, the Defense
Finance and Accounting Service (DFAS) administers payroll functions for nearly
700,000 civilian employees in the Department of Defense and the Executive Office
of the President.
In 2004, CRS requested data from DFAS on sick leave usage rates and sick
leave balances for employees and retirees in the agencies they service. We focused
on full-time, permanent employees in General Schedule (GS) and Wage Grade (WG)
(or equivalent) pay systems, which included more than 500,000 employees in CSRS
and FERS — about one-third of the full-time permanent workforce outside of the
Postal Service, intelligence agencies, and law enforcement.25 Our data request was
essentially in two parts. First, for employees who did not retire during the one-year
period from June 1, 2003, through May 29, 2004, we requested the average number
of sick leave days used during that period and average sick leave balances as of the
end of that period for the following categories:
22 CSRS “offset” retirement generally applies to employees who had a break in service that
exceeded one year and ended after 1983, and had five years of creditable civilian service on
January 1, 1987. When these employees become eligible for Social Security benefits, their
annuities will be offset by the value of the Social Security Benefit earned during CSRS
offset service.
23 Scott D. Camp, and Eric G. Lambert, “The Influence of Organizational Incentives on
Absenteeism: Sick Leave Use Among Correctional Workers,” Criminal Justice Policy
Review
, vol. 17, no. 2 (June 2006), pp. 144-172.
24 Ibid., p. 168.
25 The GS and WG pay systems are the major white-collar and blue-collar pay systems,
respectively, in the federal government.

CRS-10
! employees in CSRS and (separately) employees in FERS who were
“eligible to retire” without penalty as of June 1, 2003 (i.e., at least 55
years of age and with at least 30 years of service, or at least 60 years
of age and 20 years of service, or 62 years of age and 10 years of
service).26
! employees in CSRS and (separately) employees in FERS who were
eligible to retire and “almost eligible to retire” (defined as being
within two years of retirement eligibility in terms of any
combination of age or service — e.g., an employee who is 53 with
30 years of service or 55 with 28 years of service, or an employee
who is 58 with 20 years of service or 60 with 18 years of service).
! employees in CSRS and (separately) employees in FERS who were
eligible to retire and “nearing eligibility to retire” (defined as being
within five years of retirement eligibility in terms of any
combination of age or service — e.g., an employee who is 50 with
30 years of service or 55 with 25 years of service, or an employee
who is 55 with 20 years of service or 60 with 15 years of service).
Second, for employees who retired during the June 1, 2003, through May 29, 2004,
period, we asked for the average number of sick leave days used per pay period when
they were working and their average sick leave balance as of their date of retirement.
Differences in Sick Leave Usage and Balances
The Defense Manpower Data Center acted as DFAS’s agent to generate the sick
leave information that we requested.27 As Table 1 shows, the data indicated that
FERS employees in the agencies that DFAS supports who were eligible to retire or
approaching eligibility generally used more sick leave than their CSRS counterparts
during the one-year period ending May 29, 2004. The differences between the two
groups were greatest for GS employees as they approached or achieved retirement
eligibility. For example, whereas FERS employees in the GS pay system who were
either eligible to retire or were within five years of retirement eligibility used only
slightly more sick leave during the year than comparable CSRS employees (89 hours
versus 85 hours, respectively), FERS employees who were eligible to retire or within
two years of eligibility used 25% more sick leave than their CSRS counterparts (105
hours versus 84 hours, respectively). FERS employees who were eligible to retire
used nearly 35% more sick leave than comparable CSRS employees (119 hours
versus 89 hours, respectively). FERS employees in the WG pay system who were
eligible to retire or were within two years of eligibility also used somewhat more sick
26 Although the minimum retirement age increases slightly for employees born after 1947,
in this study CRS used age 55 consistently because the differences in eligibility were
minimal.
27 According to its website ([http://www.dmdc.osd.mil/about.html]), the Defense Manpower
Data Center supports the information requirements of the Office of the Under Secretary of
Defense for Personnel & Readiness and other members of the Department’s manpower,
personnel, and training communities.

CRS-11
leave than their CSRS counterparts (e.g., 139 hours versus 127 hours in the “eligible
to retire” category), but the differences between FERS and CSRS employees were not
as significant as in the GS pay system.28
Table 1. FERS Employees Used More Sick Leave than
CSRS Employees as They Approached Retirement Eligibility
Average Hours of Sick Leave Used in Previous Year
GS/Equivalent
WG/Equivalent
Status as of May 2004
Employees in
Employees in
CSRS
FERS
CSRS
FERS
Eligible to retire
89
119
127
139
Eligible or within two
84
105
114
119
years of retirement
eligibility
Eligible or within five
85
89
110
102
years of retirement
eligibility
Source: DFAS.
Differences between CSRS and FERS employees were even more pronounced
when considering their average sick leave balances as of May 2004. As Table 2
shows, FERS employees’ sick leave balances in all three retirement eligibility
categories were only about half as large as their CSRS counterparts (and in some
cases were less than half as large). The differences between FERS and CSRS
employees were about the same in both the GS and WG pay systems.
28 The number of WG employees in each of these categories was also significantly smaller
than the number of GS employees. For example, there were more than 33,000 CSRS
employees in the GS system who were eligible to retire, compared to about 5,500 WG
employees in that category.

CRS-12
Table 2. FERS Employees Had Lower Sick Leave Balances
than CSRS Employees
Average Sick Leave Balance (in Hours) as of May
2004
Status as of May 2004
GS/Equivalent
WG/Equivalent
Employees
Employees
CSRS
FERS
CSRS
FERS
Eligible to retire
1,364
715
804
438
Eligible or within two
1,222
540
761
323
years of retirement
eligibility
Eligible or within five
934
463
604
331
years of retirement
eligibility
Source: DFAS.
As Table 3 shows, for employees who retired from June 2003 through May
2004, FERS retirees’ sick leave balances at the time of retirement were significantly
smaller than the sick leave balances of CSRS retirees. CSRS retirees (particularly
within the GS pay system) also had lower average days of sick leave used per pay
period prior to their retirement than their FERS counterparts.
Table 3. FERS Retirees Had Lower Sick Leave Balances
than CSRS Retirees
GS/Equivalent Retirees
WG/Equivalent Retirees
CSRS
FERS
CSRS
FERS
Sick Leave
1,029
313
537
119
Balance (in Hours)
at Retirement
Average Hours of
7.4
9.9
10.4
10.6
Sick Leave Used
Per Pay Period
Before Retirement
Source: DFAS.
Some (and perhaps most) of the differences in leave balances between
employees in CSRS and FERS may be due to differences in length of service rather
than their retirement systems. For example, the DFAS data indicated that CSRS
employees who were eligible to retire had an average of nearly 34 years of service,
compared with nearly 24 years of service for FERS employees. Similarly, CSRS
employees who retired averaged nearly 32 years of service, compared with nearly 24
years of service for employees in FERS. However, differences in longevity between
these groups do not explain why FERS employees’ use of sick leave and FERS

CRS-13
retirees’ use of sick leave just before retirement was greater than their CSRS
counterparts.
Sick Leave Policies in Other Organizations
According to the Bureau of Labor Statistics (BLS), 57% of workers in private
industry received paid sick leave in March 2007.29 That figure rose to 68% for full-
time workers, and to 80% for employees in management, professional, and related
occupations. On the other hand, only 39% of employees in service occupations had
access to paid sick leave in 2007, and only 23% of part-time workers. Large
employers were more likely to offer sick leave; 67% of employers with at least 100
workers offered the benefit, compared with 48% of employers with fewer than 100
workers. Other studies have indicated that the absence of sick leave can have a wide
range of negative effects on family members and coworkers.30
Other BLS data indicated that 53% of full-time employees with paid sick leave
in medium and large private establishments in 1997 were allowed to carry over
unused sick leave from year to year.31 Seventeen percent were allowed to obtain cash
in exchange for unused sick days at the end of the year. Where a cash-in provision
was provided, roughly half (9%) also had a provision in their plan allowing leave to
be carried over from year to year. For 36% of employees, neither carrying over nor
cashing in of unused sick leave was allowed; any leave not used in the year it was
earned was forfeited.
BLS data indicate that all (100%) full-time employees in state and local
government were provided sick leave in 1998.32 These employees generally received
a fixed number of days per year, most commonly between 10 days and 15 days. State
and local employees with sick leave were much more likely than their private sector
counterparts to be able to carry over unused sick leave from year to year (94% versus
53% in medium and large private sector establishments), with about 12% of state and
local employees able to both carry over sick leave and receive cash payments
(compared to 9% in medium-to-large private sector firms). Only 3% of state and
local employees forfeited any unused sick leave at the end of the leave year
(compared to 36% in the private sector).
29 U.S. Department of Labor, Bureau of Labor Statistics, National Compensation Survey:
Employee Benefits in Private Industry in the United States, March 2007
, Summary 07-05
(August 2007).
30 Institute for Women’s Policy Research, No Time to Be Sick: Why Everyone Suffers When
Workers Don’t Have Paid Sick Leave
, Washington, D.C., June 2004.
31 U.S. Department of Labor, Bureau of Labor Statistics, Employee Benefits in Medium and
Large Private Establishments, 1997
, Bulletin 2517 (September 1999). Of the employees
who were allowed to carry over unused leave, nearly 80% faced some type of limit on the
amount of leave that could be carried over, with the precise amount varying from fewer than
10 days to more than 130 days.
32 U.S. Department of Labor, Bureau of Labor Statistics, Employee Benefits in State and
Local Governments, 1998
, Bulletin 2531 (December 2000).

CRS-14
Unused Sick Leave. The BLS data did not include specific information on
how unused sick leave was treated at retirement in either the public or private sectors.
However, some surveys of public sector organizations’ personnel policies did contain
that information. For example, according to a 2002 survey of 428 agency members
of the International Personnel Management Association, 58% of the agencies cashed
out sick leave at retirement, 45% offered cash for unused sick leave, 11% converted
sick leave to vacation time, 9% converted sick leave to insurance at retirement, and
3% converted sick leave to disability insurance.33 In some cases, though, the
agencies limited the amount of sick leave that employees could carry over from year
to year or limited the amount payable at retirement.34
Federal regulations sometimes provide compensation for unused sick leave at
retirement for non-federal employees. For example, employees in federal Fishery
Management Councils may accumulate unused sick leave without limit (with Council
approval), and “distributions of accumulated funds for unused sick leave may be
made to employees upon his or her retirement, or to his or her estate upon his or her
death, as established by the Council.”35 Police officers, firefighters, and teachers in
the District of Columbia who retire on an immediate annuity receive service credit
for unused sick leave.36
Sick Leave Policies in State Governments
In one of the most comprehensive assessments of employee benefits in state
governments, Workplace Economics, Inc., reported that as of January 1, 2004, most
states provided their employees with a fixed number of sick days per year (most
commonly between 12 and 15 days), but in several states the amount of sick leave
accrual was tied to years of service, date of hire, or both. For example, in Hawaii,
state employees hired before July 2, 2001, accrue 21 days of sick leave per year, but
employees hired after that date accrue 15 days per year for the first nine years of
employment and 21 days per year thereafter. Most states placed no limit on the
amount of sick leave that could be accumulated; those that did (nine states) most
often limited accumulated leave to between 90 and 150 days.
33 Reported in “Sick Leave Abuse: A Chronic Workplace Ill?,” Public Management, 84
(June 1, 2002), p. 32.
34 Surveys conducted by other organizations confirm these findings. For example, a 1995
survey of more than 2,600 cities and nearly 900 counties conducted by the International
City-County Management Association indicated that nearly half of the local governments
(49.6%) paid employees for unused sick leave, and 13.3% permitted conversion of sick
leave to vacation leave. See E.R. Moulder and G. Hall, Employee Benefits in Local
Government, Special Data Issue
(Washington, D.C: International City and County
Management Association, 1995), reported by Soonhee Kim, “Administering Family Leave
Benefits and New Challenges for Public Personnel Management: The New York State
Experience,” Review of Public Personnel Administration, 18 (Summer 1998), pp. 42-57.
35 50 CFR 600.120(d). Fishery Management Councils were created by the Magnuson-
Stevens Fishery Conservation and Management Act to manage living marine resources up
to 200 miles offshore.
36 Department of the Treasury, “Federal Benefit Payments Under Certain District of
Columbia Retirement Plans,” 65 Federal Register 77500, 77503, December 12, 2000.

CRS-15
The study also indicated that 45 states provided some form of compensation for
unused sick leave at retirement.37 These states’ compensation plans generally fell
into three categories:
! states that provided employees with a cash payment for some portion
of their unused sick leave,
! states that provided service credit for the leave in the computation of
retirement annuity, or
! states that used the unused sick leave to fund some type of health or
life insurance for retirees.
The type and amount of compensation provided varied substantially within these
three categories, and in some cases the states provided employees with options across
the categories (e.g., allowing employees to choose either service credit for annuities
or health insurance payments), or provided more than one form of compensation. For
example, in Nevada, employees were paid for unused sick leave over 30 days to a
maximum of $8,000. In addition, Nevada state employees could receive
compensation for 50% of the hours in a special sick leave account as either a lump
sum payment, advanced payment of an insurance premium, or to purchase additional
service credit.38
Cash Payment Plans. In 28 states, retirees were provided a cash payment
for a portion of their unused sick leave. In each of these states, the size of the
payment was limited in some way — for example, paying employees for a percentage
of their final sick leave balance (most commonly 25% or 50%), capping the number
of days or hours of sick leave payable or the size of the payment itself, or calculating
the size of the payment based on a formula. In many cases, the states used a
combination of these or other factors in determining the amount payable. For
example:
! In Virginia, state employees were paid for 25% of their unused sick
leave, with the amount of the payment capped at $5,000.
! In New Hampshire, employees were paid for 33% of their unused
sick leave, up to 40 days.
! Arkansas used a combination of a formula and a cap on the size of
the payment: employees with less than 50 days of unused sick leave
on the date at retirement received no payment, employees with 50 to
59 days were paid for 50% of their sick days at 50% of their salary,
37 The five states that generally provided no compensation for unused sick leave were
Alaska, Indiana, Maine, Oregon, and Vermont. In Vermont, though, a limited number of
employees are covered by a retirement plan in which 50% of unused sick leave is added to
an employee’s average final compensation.
38 After accruing 90 days of sick leave, Nevada state employees could carry over 50% of
unused sick leave each year in a special account to be used for long-term illnesses.

CRS-16
with the scale gradually rising to where employees with 80 to 120
days of unused sick leave received payment for 80% of their sick
days at 80% of their salary. The maximum payment for unused sick
leave was $7,500.
In some states, other limits were placed on whether and, if so, how much
compensation would be provided to their employees for unused sick leave. For
example, in Illinois, unused sick leave earned by state employees from January 1,
1984, through December 31, 1997, was paid at 50% of its value at separation. In
Michigan, only retiring employees hired before October 1, 1980, were compensated;
they received payment for 50% of their unused sick leave based on their last rate of
pay.
Service Credit Plans. In 14 states, employees received service credit for
unused sick leave in computing retirement benefits (as is currently done for CSRS
employees in the federal government), but several states placed conditions or limits
on the use of sick leave in this manner. For example, in Georgia, unused sick leave
could be used to compute retirement benefits only if the combined balance of sick
and annual leave at retirement totaled 120 hours. In Oklahoma, a maximum of one
year service credit was allowed, but any credited service of six months or more was
rounded up to a full year. In South Carolina, employees could convert up to 90 days
of sick leave to retirement service credits, thereby adding up to 4.5 months of service
time in calculating the size of their annuity.
Insurance Plans. In seven states, the value of some portion of unused sick
leave could be credited toward retiree health or life insurance premiums. For
example, in Utah, retirees could use unused sick leave to purchase health insurance,
with eight hours of sick leave equal to one month of individual coverage. As in the
previous categories of compensation, states often placed limits on the use of sick
leave in this manner. For example, in Idaho, half of the monetary value of unused
sick leave earned since July 1, 1976, or 600 hours (whichever is smaller), could be
used to pay the retiree’s premiums for group health programs.
Policy Options
The data presented in this report indicate that FERS employees have been using
more sick leave than their CSRS counterparts, particularly as they approached
retirement. Although higher sick leave balances for CSRS retirees, retirement
eligibles, and near eligibles may be partially a function of longevity, the differences
in average usage rates between employees in the two retirement systems lends
credence to a longstanding hypothesis — that FERS employees, who get no value for
their unused sick leave, will use that leave rather than simply forfeiting it back to the
government at retirement. Various policy options are available to reduce FERS
employees’ sick leave use, with some designed to entice the employees to conserve
their leave balances (i.e., a “carrot” approach), and some designed to more strictly
enforce the conditions under which federal employees are allowed to use sick leave
(i.e., a “stick” approach).

CRS-17
More Stringent Enforcement of Sick Leave Policies
As noted previously, federal agencies may grant sick leave only when supported
by evidence that they consider administratively acceptable (e.g., a medical
certificate). Therefore, if policy makers decide to address this issue, one approach
to the apparent greater use of sick leave by FERS employees as they approach
retirement would be to enforce existing regulations more stringently — requiring
some type of evidence to support the use of sick leave for more than a certain number
of days within a particular period of time. Alternatively, or additionally, agencies
could use training and other management practices to reduce sick leave use.39 The
advantage of this overall approach is that it could reduce sick leave productivity
losses without incurring other costs. However, the success of this approach in
encouraging the use of sick leave only when needed would depend on how rigorously
it was implemented by the agencies. Also, if employees are able to produce the
required documentation easily (e.g., convincing their doctors to provide some
evidence of medical treatment or condition), its success in reducing sick leave use
may be limited.
Providing an Incentive to Conserve Sick Leave
The other general approach is to provide FERS employees an incentive to
conserve their sick leave. The previous discussion about sick leave policies in state
governments suggests that a wide variety of options are available within this
approach. One such option would be to allow FERS employees to use unused sick
leave in the computation of their annuity. The experience of CSRS employees when
they were offered service credit suggests that doing so would have the desired effect.
However, FERS annuities are generally much smaller than their CSRS counterparts
(because they are only one part of the FERS retirement package), and each additional
year of service has less value in FERS than in CSRS (1% instead of 2%). Also, this
alternative could prove to be much more expensive than other options over the long
term, as larger annuities are payable for as long as the retiree receives a pension. One
way to lessen this expense would be to provide partial service credit. For example,
if an employee had a year (2,087 hours) of unused sick leave, the employee could be
provided six months of service credit, thereby increasing his or her annuity by one-
half of one percent. It is unclear, however, whether this relatively small increase in
their annuities would be enough to encourage FERS employees to retain their unused
sick leave until retirement. For example, a FERS employee with a “high three” salary
of $80,000 per year would, under this scenario, increase his or her pre-tax annuity by
about $400 per year.
Another option would be to provide employees with a cash payment for their
unused sick leave. The experience of the states suggests that this payment be limited
in some way — for example, paying employees for 25% or 50% of their final sick
leave balance, capping the number of days or hours of sick leave payable or the size
of the payment itself, or calculating the size of the payment based on some type of
39 See, for example, Bob Gilson, “Preventing Sick Leave Problems — Steps an Agency Can
Take to Reduce Problems,” Fedsmith, January 3, 2007, available at
[http://www.fedsmith.com/articles/articles.showarticle.db.php?intArticleID=1121].

CRS-18
formula. From the employees’ standpoint, cash payments are likely to have the
added appeal of immediacy when compared to the annuity-based incentive, allowing
employees to see a relatively fast, tangible benefit to reserving their sick leave.
Formula-based systems can be complicated, but can have the advantage of building
in additional incentives to save sick leave. For example, a system that pays for 50%
of sick leave over a certain level (e.g., 500 hours) avoids de minimus payments while
encouraging employees to maintain a roughly three-month cushion of sick leave for
longer-term disabilities. On the other hand, employees with smaller sick leave
balances may see little or no benefit as a result of this policy, and may continue to use
sick leave at a relatively rapid rate.
Finally, the experiences of the states suggest that federal policymakers could
permit FERS employees to use their unused sick leave to help pay for health, life, or
other insurance in retirement. Again, the amount of the payment could be capped
either in terms of the proportion of sick leave convertible to this purpose or by a fixed
dollar amount. This option was least common in state governments, and may have
the least appeal to retiring employees (who could use a cash payment to pay for
insurance or any other purpose).
A Comparison of Costs
Any of these options to provide value for unused sick leave would likely be
viewed by FERS employees as more advantageous than the current policy of
providing no value for unused sick leave. Less clear, though, is whether the amount
of the perceived advantage would be sufficient to prevent the additional sick leave
use. Should Congress decide to adopt one of these approaches, the Federal
Employees’ Retirement System Act requires that FERS benefits be pre-funded
according to their full actuarial costs. Therefore, some increase would likely be
needed in the employees’ contribution to FERS, the federal government’s
contribution, or both, with the size of the increase dependent upon the approach
taken. Given the hidden lost productivity costs associated with the current policy,
though, it appears that a change in federal sick leave policy could (depending on how
it is constructed) provide a net benefit to the government.
For example, the data CRS obtained from DFAS indicated that FERS employees
in the GS and WG pay systems who were eligible to retire used an average of about
28 more hours of sick leave in the one-year period ending in May 2004 than their
CSRS counterparts.40 OPM data for 2004 indicate that full-time, permanent federal
employees who were ages 55 to 59 and had 30 to 34 years of service (indicative of
those “eligible to retire”) were paid an average of nearly $80,000 per year, or about
$38 per hour. Therefore, the 28 additional hours of sick leave used by FERS
retirement eligibles may have cost the federal government about $1,064 per employee
40 The FERS-CSRS difference for GS and equivalent workers was 30 hours per year, and
the difference for WG and equivalent workers was 12 hours. Because there were about
seven times as many GS workers as WG workers in 2004, the weighted average FERS-
CSRS difference is 28 hours.

CRS-19
in lost productivity (28 hours times $38 per hour).41 OPM data indicate that there
were 51,255 FERS retirement eligibles as of September 2004. Assuming that the
sick leave patterns revealed in the DFAS data can be extrapolated to the rest of the
government, the total lost-productivity cost in that year of the additional sick leave
for all FERS eligibles would therefore be about $55 million ($1,064 times 51,255
employees). Greater sick leave use by other FERS employees, particularly those
nearing retirement eligibility, would push this lost-productivity cost even higher.
These costs occur year after year, and are likely to grow larger, given the increasing
number of FERS employees in the government as a whole, and particularly those
nearing retirement.
Conceivably, the cost to the federal government of providing FERS retirees with
some type of value for their unused sick leave could be substantially less than the
cost of the current policy — even if the full cost were paid by the federal government.
For example, in 2004 there were about 42,000 voluntary retirements
governmentwide. If we assume that 10,000 of these retirees were in FERS, that they
had an average “high three” salary of $80,000, and that they had an average leave
balance of 1,050 hours,42 giving these FERS retirees full service credit (at 1% per
year for six months) would increase their annual annuities by about $400 ($80,000
times 0.01 times 0.5). Over a 20-year retirement, the value of this annuity increase
(before any inflation adjustments) would be about $8,000. However, if the
employees were given 25% of that value as a lump-sum payment at the time of
retirement, each retiree in this example would get $2,000. Therefore, the total cost
of this incentive would be about $20 million ($2,000 times 10,000 FERS retirees).
While not as generous as the CSRS incentive,43 this lump sum payment could be
enough to encourage reduced sick leave use by FERS employees and, if successful,
would be substantially less than the estimated lost productivity costs.
OPM’s 2006 Study of Sick Leave Usage
In May 2006, CRS contacted DFAS in an attempt to obtain more recent data on
federal employees’ sick leave usage rates. OPM responded to CRS, indicating that
it was conducting its own study in response to a request from a Member of Congress
(who had reminded OPM that Congress had urged the agency to conduct such a study
in 1986). In October 2006, OPM reported to the Member of Congress on the results
of the study, and the Member’s office shared those results with CRS. The overall
design of the study was similar to the design that CRS used in its 2004 study, but the
41 These costs are presented as productivity losses because agencies pay their employees the
same amount whether they are on sick leave or in regular duty status.
42 This 1,050 hour estimated sick leave balance is higher than the actual average balance of
FERS retirees in 2004 because CRS assumed that the incentive will encourage employees
to retain their sick leave.
43 In this example, CSRS retirees with a high-three salary of $80,000 and with a leave
balance of 1,050 hours would receive an additional $800 per year in additional pension.
Therefore, over the course of a 20-year retirement (before any inflation adjustments), the
sick leave would be worth an additional $16,000.

CRS-20
data covered more employees. Specifically, OPM obtained sick leave use data on
full-time permanent, non-Postal Service employees from the four major federal
payroll providers: DFAS (the organization providing data to CRS in 2004), the
Department of the Interior’s National Business Center, the Department of
Agriculture’s National Finance Center, and the General Services Administration’s
National Payroll System. The study focused on the amount of sick leave used by
three groups of FERS and CSRS employees between April 2005 and March 2006:
(1) those already eligible to retire without penalty; (2) those “nearly eligible” to retire
(i.e., within two years of being eligible); and (3) all other employees. OPM also
examined sick leave use by FERS and CSRS employees who had retired during this
period.
Some of the OPM study’s results appear similar to the results of the earlier CRS
study. As Table 4 below shows, the OPM study indicated that FERS employees who
were eligible to retire used an average of 20.2 more hours of sick leave per year from
April 2005 through March 2006 than their CSRS counterparts. (As described in
Table 1 above, the CRS study indicated that white-collar FERS employees who were
eligible to retire used 30 hours more sick leave per year in 2003 and 2004 than their
CSRS counterparts; blue-collar FERS employees who were retirement eligible used
about 12 hours more sick leave per year than similar blue-collar CSRS employees.)
Among employees who were within two years of retirement eligibility, OPM
reported that FERS employees used an average of 13.5 more hours of sick leave per
year than CSRS employees. (In the CRS study, the FERS-CSRS difference for
employees eligible and nearly eligible to retire was 21 hours for white-collar
employees, and five hours for blue-collar employees.) OPM reported that there were
only minor differences in leave usage rates between other FERS and CSRS
employees.
Table 4. OPM Study Shows FERS Employees Generally Used
More Sick Leave in 2005 - 2006
Average Hours of
Average Hours of
Sick Leave Used
Sick Leave Used
FERS minus
Employee Group
per Year by
per Year by
CSRS Difference
CSRS Employees
FERS Employees
Eligible to retire
84.7
104.9
20.2
Nearly eligible to
80.9
94.4
13.5
retire
Other
75.1
73.2
-1.9
Source: OPM.
However, in one area the results of the OPM study differed substantially from
the CRS study. Among employees who had retired between April 2005 and March
2006, the OPM study indicated that FERS employees used an average of 3.3 hours
less sick leave per year than employees who were in CSRS (22.8 hours per pay

CRS-21
period for FERS compared with 26.1 hours per pay period for CSRS).44 (In contrast,
the CRS study indicated that white-collar employees in FERS who retired in 2003
and 2004 used 2.5 more hours of sick leave per pay period than their CSRS
counterparts. For blue-collar workers the FERS-CSRS difference was 0.2 hours
more per pay period.)
OPM said it did not believe that the higher rate of sick leave use by FERS
employees who were eligible and nearly eligible to retire was solely attributable to
the fact that they do not receive retirement credit for unused sick leave. The agency
said other possible explanations included demographic differences between
employees in the two retirement systems and the increased number of ways that sick
leave can be used. Nevertheless, using what it characterized as “the unproven
assumption that the entire difference in sick leave usage ... is solely attributable to the
fact that FERS employees do not receive retirement credit for unused sick leave,”
OPM estimated that the lost productivity caused by increased use of sick leave by
FERS employees who were eligible or nearly eligible to retire cost the federal
government $68 million during the April 2005 through March 2006 period. OPM
estimated that providing FERS employees with service credit for unused sick leave
would increase costs to the retirement fund by about $180 million annually, and
would increase the retirement fund liability by about $2 billion, amortization of
which would require annual payments of about $137 million over 40 years. In total,
OPM said “to pay for future costs and to amortize the cost of benefits based upon
past service would have an annual cost of about $317 million.” Therefore, OPM
concluded that “to make sick leave creditable under FERS would cost several times
more than the potential savings.”
Analysis of the OPM Study
Several elements of the OPM study could have affected OPM’s conclusions.45
First, the reasons that OPM suggested as alternative explanations to why FERS
employees are using more sick leave than CSRS employees can be questioned. OPM
said one such reason could be the differences in the demographic characteristics of
employees in the two retirement systems (e.g., age differences between FERS and
CSRS employees). However, these hypothesized effects can be tested statistically,
and the results of such tests in one federal organization do not appear to support
OPM’s conclusions. As noted earlier in this report, a 2005 study of employees at the
Federal Bureau of Prisons concluded that demographic differences between FERS
and CSRS employees could not explain differences in sick leave use rates between
employees in the two retirement systems.46 Instead, the authors concluded that
44 It is not clear how OPM determined an annual rate of sick leave usage for employees who
retired in the first few months of this one-year period.
45 CRS raised these and other issues with officials in both the OPM pay group that did the
study and OPM’s office of congressional relations in October 2006. CRS also requested the
leave usage data that OPM used in its study to verify the results of the study. Despite this
and several other subsequent inquiries, as of March 2008, CRS has not received a response
from OPM.
46 Scott D. Camp, and Eric G. Lambert, “The Influence of Organizational Incentives on
(continued...)

CRS-22
differences in sick leave use were directly attributable to differences in how unused
sick leave is treated in the two retirement systems. Another reason that OPM said
could cause the FERS-CSRS difference in sick leave use was the increased number
of ways that sick leave can be used (e.g., for adoption of a child or to care for a sick
family member, up to specified limits). However, this seems an unlikely explanation
for FERS-CSRS differences in leave usage within the same time period, particularly
since both FERS and CSRS employees could use their sick leave for all of these
purposes.
Second, at least some of the data that OPM used in the study appear to be of
questionable validity. For example, OPM said that CSRS employees who had retired
between April 2005 and March 2006 used 26.1 hours of sick leave per pay period,
while FERS employees who retired during this period used 22.8 hours per pay
period. Because each federal pay period is 80 hours, OPM’s data suggest that CSRS
retirees were on sick leave nearly one-third of the time that they worked during their
last year of service, and FERS retirees were on sick leave nearly as much. While
these levels of sick leave use are possible, the levels seem unusually high (i.e., nearly
600 to 700 hours per year on an annual basis), and are about three times higher than
the DFAS data that were provided to CRS just two years earlier. Also, the OPM data
indicated that CSRS employees (who receive significant value for their unused sick
leave) used more sick leave per pay period than FERS employees (who receive
nothing for unused sick leave) — again, counter to what the DFAS data indicated in
the CRS study, and counter to what one would expect given the current incentive
structure.
Also, OPM did not explain in any detail how it arrived at its estimates of the
cost of lost productivity, or its estimate of the cost of providing FERS employees
with service credit for their unused sick leave balances. For the lost productivity
estimate, OPM said that it was a function of the number of FERS employees eligible
or nearly eligible to retire times the employees’ average salary times the difference
in the number of hours of sick leave used. OPM identified the number of employees
in each retirement system who were eligible or nearly eligible to retire, as well as the
average differences in sick leave use for each group, but did not indicate what
value(s) it used for the average salary of these employees. Based on its $68 million
productivity cost estimate and knowing the other variables, though, it appears OPM
assumed an average salary of nearly $54 per hour, or about $112,000 per year.
However, OPM data on the federal workforce as a whole in March 2006 indicate that
the average salary for full-time, permanent employees was less than $66,000 per year
(or less than $32 per hour). For such employees who were ages 50 to 54 with 25 to
29 years of service (i.e., those close to retirement eligibility), the average salary was
less than $77,000 per year (or less than $37 per hour). Therefore, assuming all other
factors in the equation stayed the same (number of FERS employees eligible and
nearly eligible to retire, and leave usage patterns for employees in those groups),
OPM’s estimate of the annual cost of lost productivity for these FERS employees
may be accurate.
46 (...continued)
Absenteeism: Sick Leave Use Among Correctional Workers.”

CRS-23
Finally, and most notably, the only policy option that OPM appears to have
considered in its study was to give FERS employees full service credit for unused
sick leave — an option that was characterized by one retirement expert as the “most
obvious — and most expensive” option.47 However, as the discussion of non-federal
sick leave policies earlier in this report makes clear, a number of other, less
expensive policy options are potentially available to encourage FERS employees to
save their sick leave, including partial service credit, lump sum payments for a
portion of unused sick leave (based on either the cash value of the sick leave or the
value of the service credit), or applying all or a portion of the value of an employee’s
sick leave balance to the cost of the employee’s retirement health care premium. Had
OPM considered these other options, its conclusions regarding the economic
feasibility of providing value for unused sick leave may have been different.
Different approaches and formulas might be tested with focus groups of federal
employees to determine which method yields the greatest incentive at the least cost
to the government.
On the other hand, and as suggested earlier, a completely different way to reduce
sick leave use by FERS (and CSRS) employees is to impose more stringent
management policies and controls on the use of sick leave. Or, perhaps some
combination of “carrot” and “stick” approaches could be tried. The first step,
though, may be to have OPM or some other entity conduct a comprehensive,
transparent, and methodologically defensible study of federal sick leave usage trends,
with defensible estimates of the costs associated with various policy options that
Congress could consider.
Treasury Inspector General Report
On April 24, 2008, the Treasury Inspector General for Tax Administration
(TIGTA) issued a report concluding that Internal Revenue Service (IRS) employees
in FERS were more likely to use sick leave than CSRS employees, especially as they
approached retirement.48 TIGTA said it believed that “the lack of compensation for
unused sick leave at retirement has contributed to the higher amount of sick leave
used by FERS employees,” and recommended that the IRS Chief Human Capital
Officer ensure that all IRS managers receive training on leave policies to increase
awareness of sick leave abuse and improve sick leave administration. The Chief
Human Capital Officer agreed with the findings, but questioned how training would
resolve the issue of increased sick leave use by FERS employees. Overall, TIGTA
reported that 97,000 IRS employees took more than 15 million hours of sick leave
in 2005 and 2006, costing IRS $450 million in salary plus lost productivity.
47 Reg Jones, “Study compares use of sick leave under CSRS, FERS,” Federal Times,
February 21, 2005.
48 Treasury Inspector General For Tax Administration, “Lack of Compensation for Unused
Sick Leave at Retirement Has Contributed to Higher Use by Employees in the Federal
Employees Retirement System,” Report Number 2008-30-093, April 24, 2008, available at
[http://www.treas.gov/tigta/auditreports/2008reports/200830093fr.html].

CRS-24
Legislative Developments
On March 10, 2008, Representative Jim Moran introduced H.R. 5573, which
would compensate employees under FERS and the Foreign Service Retirement
System for a portion of their unused sick leave at the time of retirement. Specifically,
the legislation would permit employees49 who satisfied the age and service
requirements for immediate or early retirement in those systems to receive a lump-
sum payment equal to 15% of the hourly rate of their basic pay for each hour of
unused sick leave balance over 500 hours, with the total payment capped at $10,000.
For example, an employee with a salary of $75,000 (i.e., $35.90 per hour) and a sick
leave balance of 1,250 hours at the time of retirement could receive about $4,000 for
her unused sick leave in excess of 500 hours (i.e., 750 hours times $35.90 per hour
times 0.15 = $4,039). The legislation indicates that the payment “shall be payable
by the agency from which the employee was separated,” and “shall be considered pay
for taxation purposes only” (e.g., not for purposes of calculating an employee’s “high
three” average salary in determining her pension). H.R. 5573 was referred to the
House Committee on Oversight and Government Reform on the date it was
introduced.
Representatives from the Federal Managers Association reportedly supported
the measure, saying it would discourage many federal employees from taking
unnecessary sick days.50 The bill was also supported by the National Treasury
Employees Union as “a reasonable and welcome step to correct some of the disparity
in treatment for FERS retirees.”51 However, one FMA local president said the bill
did not go far enough, and that “People are going to keep burning their leave until
[Congress] provides a better program.”52 An OPM official reportedly remained
cautious about whether differences in sick leave usage rates between FERS and
CSRS employees would be addressed by the legislation.53
On July 30, 2008, the House of Representatives passed the Family Smoking
Prevention and Tobacco Control Act (H.R. 1108), and the legislation was referred
49 The bill defines “employee” to mean an employee as defined in 5 U.S.C. 2105, and also
includes employees of the U.S. Postal Service and the Postal Regulatory Commission, but
does not include a congressional employee as defined in 5 U.S.C. 2107.
50 Stephen Losey, “FMA praises bill to credit unused sick leave at retirement,” Federal
Times
, Mar. 11, 2008, available at [http://www.federaltimes.com/index.php?S=3417468].
51 See [http://www.nteu.org/PressKits/PressRelease/PressRelease.aspx?ID=1231] for the
NTEU press release.
52 Brittany Ballenstedt, “Legislation would allow more feds to cash out sick leave at
retirement,” Government Executive, Mar. 10, 2008, available at
[http://www.governmentexecutive.com/story_page.cfm?articleid=39484&dcn=todays_m
ost_popular].
53 For example, she said FERS has more women than CSRS, and women may use more sick
leave than men because of family responsibilities. Stephen Barr, “Bill Would Give Retirees
Partial Pay for Unused Sick Leave,” Washington Post, Mar. 11, p. D04, available at
[http://www.washingtonpost.com/wp-dyn/content/article/2008/03/10/AR2008031002708
.html].

CRS-25
to the Senate on August 1, 2008. Section 407 of the bill, as amended, would permit
FERS employees to receive service credit in the computation of their annuities for
any unused sick leave they had at the time of retirement — just as CSRS employees
are currently able to do (although FERS employees receive only a 1% increase in
their annuities for each additional year of service, not the 2% that CSRS employees
receive). To phase in the program, those who retire in the first three years after the
bill is enacted would receive credit for only 75% of their unused sick leave.
Representative Moran reportedly said that the bill would cost $70 million in the first
five years, and $337 million in the first 10 years.54 The Federal Managers
Association and the National Treasury Employees Union have expressed support for
the bill.55 The Senate version of the Family Smoking Prevention and Tobacco
Control Act (S. 625) does not contain a comparable section pertaining to FERS sick
leave.
54 Stephen Losey, “Credit for Unused Sick Leave May Be On the Way,” Federal Times,
August 3, 2008.
55 Louis C. LaBrecque, “Federal Employees Would Receive Credit for Unused Sick Leave
Under House-Passed Bill,” Government Employee Relations Report, August 5, 2008, p. 875.

CRS-26
Appendix. State Sick Leave Policies
The following information on sick leave policies in state government are drawn
from the 2004 State Employee Benefits Survey, published by Workplace Economics,
Inc. The data are as of January 1, 2004. Where more than one accrual rate or
maximum accumulation is listed, the rate depends on length of service or other
factors. An asterisk (*) indicates that there are additional or qualifying details in the
survey. For example, in Colorado, employees are generally limited to 45 days
maximum leave accumulation, but employees hired before July 1, 1988, are limited
to their accrual as of that date plus 45 days.
Table 5. Sick Leave Policies in State Governments
Annual
Maximum
Payment for Unused Sick
State
Accrual
Accumulation
Leave at Retirement
Rate
Alabama
13 days
150 days
Cash payment for 50% of leave
balance.
Alaska
15 days
No limit
None.
Arizona
12 days
No limit
Retiree may select cash payment
or deposit funds into fund to pay
future health premiums as
follows: 25% of hourly rate for
500 to 749 hours; 33% of hourly
rate for 750 to 999 hours; 50%
hourly rate for 1,000 to 1,500
hours.
Arkansas
12 days
120 days
Cash payment, to a maximum of
$7,500, as follows: less than 50
days, no payment; 50-59 days,
50% of days at 50% of salary;
60-69 days, 60% of days at 60%
of salary; 70-79 days, 70% of
days at 70% of salary; 80-120
days, 80% of days at 80% of
salary.
California
12 days
No limit
Service credit used to determine
retirement benefits.
Colorado
80 hours
45 days*
Cash payment for 25% of leave
balance.
Connecticut
15 days
No limit
Cash payment for 25% of leave
balance, not to exceed 60 days’
pay.
Delaware
15 days
No limit
Cash payment for 50% of leave
balance, up to 90 days.

CRS-27
Annual
Maximum
Payment for Unused Sick
State
Accrual
Accumulation
Leave at Retirement
Rate
Florida
13 days
No limit
Cash payment for 25% of leave
balance.
Georgia
15 days
90 days
Service credit used to determine
retirement benefits, but only if
120 days of combined unused
sick leave and forfeited sick and
annual leave.
Hawaii
15 days/
No limit
Service credit used to determine
21 days*
retirement benefits.
Idaho
12 days
No limit
Value of 50% of sick leave used
to pay retiree’s premiums for
group health insurance.
Illinois
12 days
No limit
Cash payment for 50% of sick
leave, but only if earned from
1/1/84 through 12/31/97.
Indiana
9 days
No limit
None.
Iowa
18 days
No limit
Cash payment to maximum of
$2,000.
Kansas
12 days
No limit
Cash payment as follows: 8
years of service and 100 days
accumulated, 30 days pay; 15
years and 125 days, 45 days pay;
25 years and 150 days, 60 days
pay.
Kentucky
12 days/
No limit
Service credit used to determine
22 days/
retirement benefits.
32 days
Louisiana
No limit
Partial payment based on
actuarial calculation.
Maine
12 days
120 days
None.
Maryland
15 days
No limit
Service credit used to determine
retirement benefits.
Massachusetts
15 days
No limit
Cash payment for 20% of sick
leave.
Michigan
13 days
No limit
Cash payment for 50% of sick
leave, but only if hired before
10/1/80.

CRS-28
Annual
Maximum
Payment for Unused Sick
State
Accrual
Accumulation
Leave at Retirement
Rate
Minnesota
13 days
No limit
Cash payment for 40%of sick
leave, but only for mandatory
retirement or employees with 10
years of service or age 65 or
older.
Mississippi
12 days/
No limit
Service credit used to determine
10.5 days/
retirement benefits.
7.5 days
Missouri
15 days
No limit
Service credit used to determine
retirement benefits (with every
168 hours credited as one
additional month of service).
Montana
12 days
No limit
Cash payment for 25%of sick
leave.
Nebraska
12days/
No limit
Cash payment for 25%of sick
14 days/
leave.
18 days
Nevada
15 days
No limit*
Cash payment for excess over
30 days to a maximum of
$8,000. Also, any leave in
special leave account may be
taken as cash payment,
insurance payment, or to
purchase service credit.
New Hampshire
15 days
90 days/ 105
Cash payment for 33% of sick
days/ 120 days
leave, up to 40 days.
New Jersey
15 days
No limit
Cash payment for 50%of sick
leave, up to $15,000.
New Mexico
12 days
No limit
Cash payment for up to 400
hours of sick leave if hours
previously cashed in on annual
basis exceeds 600 hours.
New York
8 days/
200 days/ 1,500
Up to 165 days may be used as
10 days/
days
service credit to determine
13 days
retirement benefits, and up to
200 days may be used to pay for
health insurance during
retirement.
North Carolina
12 days
No limit
Service credit used to determine
retirement benefits.

CRS-29
Annual
Maximum
Payment for Unused Sick
State
Accrual
Accumulation
Leave at Retirement
Rate
North Dakota
12 days
No limit
Cash payment for 10% of sick
leave after 10 continuous years
of service.
Ohio
10 days
No limit
Cash payment for 50% of sick
leave.
Oklahoma
15 days
No limit
Service credit used to determine
retirement benefits. A
maximum of one year credit is
allowed, with six months or
more rounded up to one year.
Oregon
12 days
No limit
None.
Pennsylvania
13 days
300 days
Cash payment for up to 163
days of sick leave, paid under
certain full retirement situations.
Rhode Island
104 hours
125 days
Cash payment for 40-hour
employees as follows: 50% of
total from 468 hours to 720
hours; 75% of total from 721
hours to 1,000 hours. For 35-
hour or non-standard employees,
50% of total from 390 hours to
630 hours; 75% of total for 631
hours to 875 hours
South Carolina
15 days
195 days
Service credit used to determine
retirement benefits. A
maximum of 90 days (4.5
months service time) credit is
allowed.
South Dakota
14 days
No limit
Cash payment for 25% of sick
leave (for those with 7 years of
service) to a maximum of 480
hours.
Tennessee
12 days
No limit
Service credit used to determine
retirement benefits, with one
month of service credit for every
20 days of sick leave.
Texas
12 days
No limit
Service credit used to determine
retirement benefits, with one
month of service credit for every
160 hours (or fraction thereof)
of sick leave.

CRS-30
Annual
Maximum
Payment for Unused Sick
State
Accrual
Accumulation
Leave at Retirement
Rate
Utah
13 days
No limit
Retiree may use 25% of sick
leave to purchase health
insurance (eight hours sick leave
buys one month of individual
coverage)
Vermont
6 days/
No limit
Generally none, although a
12 days/
limited number of employees
18 days/
are covered by a contributory
21 days
retirement plan in which 50% of
unused sick leave is added to
their average final
compensation.
Virginia
8 days/
No limit
Cash payment for 25% of sick
10 days/
leave (for those with 5 years of
15 days
service) to a maximum of
$5,000.
Washington
12 days
No limit
Cash payment for sick leave
hours over 480 hours at 25% of
current salary.
West Virginia
18 days
No limit
Service credit used to determine
retirement benefits or converted
to credit for health insurance.
Wisconsin
16.25
No limit
Sick leave converted to credits
days
to pay group health insurance.
Wyoming
12 days
No limit
Cash payment for 50% of sick
leave, to a maximum of 480
hours.