SPECIAL REPORT: City working to mitigate impact of sick pay payouts

The concept is relatively simple: if you don’t call in sick, you bank sick hours, and when you retire, quit or get fired, you get paid for those hours in the form of a sick leave payout at your current pay rate.

Those payouts can hurt the budgets of municipal governments. For example, in Florida, state workers were in line to receive $154 million in payouts and a police major in Pennsylvania reportedly received $142,000 after retiring.

ABC-7 looked at what the City of El Paso is doing to manage costs associated with sick leave payouts. We requested the names of the top 10 sick day payouts for the past three years.

The biggest payout, by a huge margin, went to former City Manager Joyce Wilson. After nearly a decade in that position, Wilson cashed out 990 hours of sick time. That’s roughly six months worth of hours for a payout of nearly $114,000.

Wilson, however, was the anomaly.

Most city employees don’t get paid for unused sick time, but Wilson negotiated a clause into her contract, as did the current city manager and city attorney.

The other people on those lists were firefighters and police officers, whose unions negotiated for it. Those payouts were in the $30,000 to $60,000 range.

“Like every other budget, we utilize the data, we develop a forecast and haven’t seen anything out of the ordinary the last few years,” said Robert Cortinas when as asked about sick day payouts. Cortinas tracks the city’s financial health as the Director of Management and Budget.

In El Paso, payouts for unused sick time are available to the police and fire departments through their collective bargaining agreements. Other city employees don’t get the benefit.

“We haven’t seen any large fluctuations either up or down. So, I think we have a good grasp on what those expenditures will look like on an annual basis right now,” added Cortinas.

Dionne Mack, Deputy City Manager for Public Services, sees the payouts as a necessary recruiting and retention tool.

“We certainly know that some of these things that we may see as a cost of doing business are really an incentive that may be the thing that keeps an officer here longer,” said Mack.

ABC-7 reviewed police payouts the last 3 years. In fiscal year 2015 and 2016, the city paid out approximately $850,000 followed by a dip last year to $564,000.

So, what is the city doing to control costs?

Since 2011, firefighters can cash out the past year’s unused sick leave at the end of each year, instead of only cashing out as they leave, at their highest pay level. The numbers show a big difference.

In fiscal year 2015, approximately $600,000 was paid out. The following year, $390,000 was paid out, and this past year, less than 10,000 hours were paid out at a cost of $283,000.

Mack told ABC-7 the City would prefer to payout for sick leave because it has less of an impact on the budget when compared to overtime. “For example, for fire we have to have, by standard, a certain number of firefighters always on the clock. So, for us not to have a firefighter available because they are out sick would mean, in that case, I’m paying overtime,” said Mack.

The idea is this: if the firefighter knows he can cash-in on that sick day later, he or she would just go to work and that’s better for the City because it does not have to pay overtime to firefighter who covers for the sick colleague. “It is actually less expensive for us to pay straight time as a payout for sick leave rather than pay overtime,” added Mack.

Thom Reilly oversaw a study on sick leave practices in the public and private sector — including a survey of 150 cities. El Paso was not one of them.

“If we look at cost drivers for local government, we know pensions and unfunded pensions are at the top of the list as far as concerns, as well as retiree health care. But, paid sick leave comes in at third as far as a cost driver,” said Reilly.

ABC-7 asked Reilly how El Paso compares to the majority of cities in his study on sick day payouts. “Overall, when you look at the numbers nationally, large municipalities and how they deal with sick leave, El Paso seems to be on the forefront in actually dealing with cost-containment ventures,” said Reilly. “It does seem El Paso is being prudent in their cost-savings measures. I think the policies El Paso has implemented are very reasonable.”

ABC-7 then asked Reilly where there is room for improvement by the City. He pointed to the firefighters cashing out their sick days annually being only voluntary, not required.

“Many individuals would want to keep that near the end because they are going to get a buyout at the highest rate,” said Reilly, “So, one measure they could look at for the city to negotiate is to see if there could be some required buyouts so the costs are measured and predictable year-to-year instead of waiting until the very end.”