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
April 24, 2008
Reference Number: 2008-30-093
This
report has cleared the Treasury Inspector General for Tax Administration
disclosure review process and information determined to be restricted from
public release has been redacted from this document.
Phone Number |
202-622-6500
Email Address | inquiries@tigta.treas.gov
Web Site |
http://www.tigta.gov
April 24, 2008
MEMORANDUM
FOR
CHIEF HUMAN CAPITAL OFFICER
FROM: Michael R. Phillips /s/ Michael R. Phillips
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – Lack of Compensation for Unused Sick Leave at Retirement Has Contributed to Higher Use by Employees in the Federal Employees Retirement System (Audit # 200730023)
This report presents the results of our review of sick leave usage within the Internal Revenue Service (IRS). The overall objective of this review was to identify the trends and patterns of IRS employees’ sick leave use and the policies, programs, and procedures that have been implemented to reduce the opportunity for abuse. This review is part of the Treasury Inspector General for Tax Administration Fiscal Year 2007 Annual Audit Plan coverage, under the major management challenge of Human Capital at the IRS.
Impact on the Taxpayer
A recent Congressional Research Service report[1] estimated that all
Federal Government employees will be in the Federal Employees Retirement System
(FERS) by Calendar Year 2014. An
analysis of sick leave use by IRS employees reflects that
FERS employees are more likely to use sick leave than their counterparts in the
Civil Service Retirement System, which indicates that FERS employees are using
sick leave as a supplement to annual leave because the FERS does not provide a service credit in
computing their retirement annuities. The higher use of sick leave by FERS employees
has financial implications and can have a detrimental impact on productivity
and customer service.
Synopsis
Federal Government employees earn 13 days (104 hours) of sick leave each year. Any unused sick leave remaining at the end of the year can be carried forward into the next year, and there is no limit on the number of sick leave hours an employee can carry forward throughout his or her career. While employees in the Civil Service Retirement System receive compensation for unused sick leave upon retirement, employees in the FERS do not receive the same benefit. The potential abuse of sick leave by FERS employees has become a topic of concern and controversy in the Federal Government. Many people in the Federal Government believe that employees in the FERS are more likely to use sick leave as a supplement to annual leave, given that they would forfeit any unused sick leave at retirement without compensation in the form of a service credit.
Our analysis of time and attendance records for current IRS employees as
of January 6, 2007, showed that approximately 97,000 IRS employees took more
than 15 million hours of sick leave in Calendar Years 2005 and 2006, costing
the IRS $450 million in salary plus lost productivity.[2] Revenue officers[3]
alone took 959,030 hours of sick leave, resulting in $256 million in potential
lost revenue from uncollected taxes (based on an average collection rate of
$267 per hour).[4] According to the sick leave use information
contained on the Treasury Integrated Management Information System (TIMIS),[5] IRS employees
took an average of 11 days of sick leave in 2006 and had only an average
balance of 43 days of accumulated sick leave at the end of the year.
A significant number of IRS employees have also been
advanced sick leave because they used all of their accumulated sick leave. For example, TIMIS data showed 6.5 percent[6]
of IRS employees had a negative sick leave balance at the end of 2006. Our survey of IRS managers[7] showed that 50
percent[8] of the managers
had approved advanced sick leave to an employee in the past year. According to information provided by the IRS, 494
employees separated in 2006 with 38,681 hours of advanced sick leave costing around $830,000. The IRS has collected approximately $412,000
from these former employees. Our manager survey also showed that while
actions are being taken to address improper use of sick leave, managers need additional
training on sick leave administration.
We believe that the lack of compensation for unused
sick leave at retirement has contributed to the higher amount of sick leave used
by FERS employees. For example, we found
that FERS employees are more likely to use sick leave than employees in the Civil
Service Retirement System, especially as they approach
retirement. While we did not compare
sick leave use by IRS employees to that of employees in other Federal
Government agencies, these results are consistent with the recent Congressional
Research Service report and indicate that changing the FERS to grant employees
some form of compensation for unused sick leave at retirement might be
warranted, if the change is determined to be less expensive than the current
policy. The day of the week also had a
significant impact on sick leave use. Specifically,
sick leave use is highest on Mondays and Tuesdays. Other factors that can affect sick leave use besides
an employee’s retirement plan include gender, age, grade, and position.
Recommendations
We recommended that the Chief Human Capital Officer ensure that (1) all IRS managers receive training on updated leave policies to ensure proper sick leave administration and increased awareness of possible abuse, and (2) additional analysis is performed to identify factors contributing to the advancement of sick leave to a significant number of IRS employees and to identify what measures can be taken to both reduce the number of employees that separate with a negative sick leave balance and increase the collection of outstanding debts.
Response
The Chief Human Capital Officer responded that he appreciated our review of IRS sick leave use. He also agreed to all of our recommendations and outlined the corrective actions that the IRS is committed to taking. Among other things, the IRS is committed to updating its sick leave policies, procedures, and training. The IRS will also review negative sick leave balances and use the results to provide guidance on advancing sick leave and identifying abuse so corrective actions can be taken.
Even though actions are being taken to implement all our recommendations, the Chief Human Capital Officer criticized our report in five areas. First, he stated the report is not clear about how training will resolve the issue of higher use of sick leave by employees covered by FERS. Second, he indicated our report provides no evidence that supports sick leave abuse in the IRS. Third, he criticized us for not providing benchmark information from other agencies or the private sector for comparability purposes. Fourth, he thought that presenting the use of sick leave by age and gender is misleading without an analysis of contributing factors. Fifth, he believes that we did not sufficiently emphasize the impact of legislative and regulatory changes on sick leave. Management’s complete response to the draft report is included as Appendix V.
Office of Audit Comment
While we are pleased that the IRS is implementing all of our recommendations, some comments are warranted to clarify the concerns expressed by the Chief Human Capital Officer. We acknowledge that training alone will not completely resolve the issue of higher sick leave use by FERS employees and revised the text accordingly for clarity purposes (page 15). However, the fact that a number of IRS managers believe it is acceptable to improperly use sick leave suggests the need for additional guidance and training.
We agree that the report does not provide evidence of sick leave abuse in the IRS nor does it provide benchmark information since this was not the intent of the review. As stated in the report, our objective was to identify the trends and patterns of sick leave use in the IRS and the policies, programs, and procedures that have been implemented to reduce the opportunity for abuse. We do not agree that presenting the use of sick leave by age and gender is misleading. We reported that other factors such as gender, age, grade, and position can affect sick leave use besides an employee’s retirement plan.
Finally,
we believe we sufficiently addressed legislative and regulatory changes to
expand the criteria for using sick leave.
As stated in our report, the justification for using sick leave has been
expanded to permit its use to care for
a family member and for bereavement purposes. However, regular sick leave is still the
primary category used by IRS employees when taking sick leave.
Copies of this report are also being sent to the IRS managers affected by the report recommendations. Please contact me at (202) 622-6510 if you have questions or Margaret E. Begg, Acting Assistant Inspector General for Audit (Small Business and Corporate Programs), at (202) 622-8510.
Sick Leave Use Was Higher
for Employees in the Federal Employees Retirement System
Sick Leave Use Was Highest
on Mondays or on Tuesdays Following a Monday Holiday
Employee Gender, Age,
Grade, and Position Also Affected Sick Leave Use
Appendices
Appendix
I – Detailed Objective, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix
III – Report Distribution List
Appendix
IV – Results of Manager Survey
Appendix V
– Management’s Response to the Draft Report
Abbreviations
|
ALERTS |
Automated Labor and Employee Relations
Tracking System |
|
CSRS |
Civil Service Retirement System |
|
FERS |
Federal Employees Retirement System |
|
IRS |
Internal Revenue Service |
|
SETR |
Single Entry Time Reporting |
|
TIMIS |
Treasury Integrated Management Information
System |
Federal Government employees earn 13 days (104 hours) of sick leave each year. Any unused sick leave remaining at the end of the year can be carried forward into the next year, and there is no limit on the number of sick leave hours that an employee can carry forward throughout his or her career. Prior to 1993, employees were authorized to use sick leave primarily for their own personal illness. Enactment of the Family and Medical Leave Act of 1993 [9] and the Federal Employees Family Friendly Leave Act [10] expanded the circumstances for which an employee may use sick leave. For example, employees may now use sick leave to pursue adoptions, to provide general care for a family member who is ill or receiving medical examination or treatment, to care for seriously ill family members, or to make arrangements necessitated by the death of a family member or attend the funeral of a family member, in addition to using it for personal illness.
The Federal Government has
been concerned about the use of sick leave by its employees for decades. Abuse of sick leave occurs when employees use the leave for conditions not
authorized in the guidelines established by public law. Sick leave abuse is a serious problem that
can adversely affect an agency’s productivity and its ability to achieve stated
goals and objectives. As a result,
proper administration of sick leave by Internal Revenue Service (IRS) managers is
essential to prevent its abuse by IRS employees. Proper administration of sick leave by IRS managers
includes:
·
Informing employees of the conditions
authorized for using sick leave and the proper procedures for requesting sick
leave.
·
Verifying the circumstances of the absence,
to justify approval of an employee’s request to use sick leave.
·
Maintaining accurate records of sick
leave use and ensuring that sick leave is charged appropriately in the
timekeeping system.
·
Being alert to possible abuse of sick leave,
addressing any concerns with employees suspected of improperly using sick leave,
and initiating disciplinary action for unauthorized absences or failure to
follow established leave procedures.
Many people in the Federal Government have long suspected that the lack of a service credit in computing retirement annuities for unused sick leave at retirement for employees in the Federal Employees Retirement System (FERS) contributes to the higher use of sick leave by these employees. Prior to the establishment of the FERS on January 1, 1987, Federal Government employees were in the Civil Service Retirement System (CSRS). Until enactment of the Civil Service Retirement Amendments of 1969 (hereafter referred to as Public Law 91-93)[11] on October 20, 1969, employees in the CSRS had no incentive not to use sick leave because they had to forfeit any unused sick leave at retirement. The Civil Service Commission (now the Office of Personnel Management) estimated that, prior to enactment of Public Law 91-93, about one-half of all retiring Federal Government employees had a zero sick leave balance. Public Law 91-93 provided future retiring CSRS employees with a service credit for accumulated sick leave in computing their civil service retirement annuities. In 1985, the General Accounting Office (now the Government Accountability Office) was asked to determine whether the 1969 law authorizing a retirement credit for unused sick leave had the intended effect of encouraging employees to use sick leave appropriately. In June 1986, the Government Accountability Office reported[12] that employees retiring in 1984 and 1985 had a significantly higher average balance of unused sick leave than those who retired in 1968, which it attributed in part to the change in the law.
Unlike CSRS employees, FERS employees do not receive compensation in the form of a service credit at retirement for unused sick leave. Almost all Federal Government employees hired after December 31, 1983, are in the FERS. With the continual retirement of CSRS employees, the percentage of FERS employees has increased. A recent Congressional Research Service report[13] estimated that all Federal Government employees will be in the FERS by Calendar Year 2014. With many FERS employees now becoming eligible for retirement, there is once again growing concern within the Federal Government that many employees are opting to use their accumulated sick leave rather than forfeiting it at retirement. According to the Congressional Research Service report, a 2006 Office of Personnel Management study found that FERS employees eligible to retire or nearly eligible to retire use more sick leave per year, on average, than CSRS employees in these same categories. Our analysis focused on comparing sick leave use by FERS employees to that of CSRS employees. We did not examine the specific circumstances surrounding the actual sick leave taken. Consequently, we did not conclude whether the leave was proper or improper.
This review was performed at the IRS National
Headquarters in
Our analysis of time and attendance records for current IRS employees as
of January 6, 2007, showed that approximately 97,000 IRS employees took more
than 15 million hours of sick leave in Calendar Years 2005 and 2006, costing
the IRS $450 million in salary plus lost productivity.[14] Revenue officers[15]
alone took 959,030 hours of sick leave, resulting in $256 million in potential
lost revenue from uncollected taxes (based on an average collection rate of
$267 per hour).[16] According to the sick leave use information
contained on the Treasury Integrated Management Information System (TIMIS),[17] IRS employees took
an average of 11 days of sick leave in 2006 and had only an average balance of 43
days of accumulated sick leave at the end of the year.
A significant number of IRS employees have also been
advanced sick leave because they used all of their accumulated sick leave. For example, TIMIS data showed 6.5 percent[18]
of IRS employees had a negative sick leave balance at the end of 2006. Our survey of IRS managers[19] showed 50 percent[20] of the managers
had approved advanced sick leave to an employee in the past year. According to information provided by the IRS,
494 employees separated in 2006 with 38,681 hours of advanced sick leave costing around $830,000. The IRS has collected approximately $412,000
from these former employees. Our manager survey also showed that, while
actions are being taken to address improper use of sick leave, managers need additional
training on sick leave administration.
In addition to the salary costs and lost productivity, non-judicious use of sick leave may have a detrimental impact on the IRS’ ability to accomplish its mission. We believe that the lack of compensation for unused sick leave at retirement has contributed to the higher amount of sick leave used by FERS employees. For example, we found that FERS employees are more likely than CSRS employees to use sick leave, especially as they approach retirement. While we did not compare sick leave use by IRS employees to that of employees in other Federal Government agencies, these results are consistent with a recent Congressional Research Service report and indicate that changing the FERS to grant employees some form of compensation for unused sick leave at retirement might be warranted, if the change is determined to be less expensive than the current policy. The day of the week also had a significant impact on sick leave use. Specifically, sick leave use is highest on Mondays and Tuesdays. Other factors that can affect sick leave use besides an employee’s retirement plan include gender, age, grade, and position.
Sick Leave Use Was Higher for Employees in the Federal Employees Retirement System
According to TIMIS data, the IRS had 100,954 current employees as of
January 6, 2007.[21] As shown in Figure 1, 78,643 (78 percent)
were in the FERS and 21,200 (21 percent) were in the CSRS. Due to the relatively small number of
employees involved, we did not attempt to determine the reason why 1,111employees
(1 percent) were
not reflected in either FERS or CSRS according to TIMIS data. With the continual retirement of CSRS employees,
the percentage of IRS employees in the FERS will continue to grow.
Figure 1: Distribution
of Employees by Retirement Plan
Figure 1 was removed due to its size. To see Figure 1, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
Our analysis of the TIMIS data for Calendar Year 2006 showed that FERS
employees used more sick leave than CSRS employees during the year.[22] For example, FERS employees took an average
of 11.27 days of sick leave for the year, while CSRS employees took an average
of only 10.83 days. Figure 2 illustrates
the difference in sick leave use, based on years of service, between employees in
the FERS and the CSRS.
Figure 2: Average Number of Sick Leave Days Used in
2006 by Retirement Plan and Years of Service
Figure 2 was removed due to its
size. To see Figure 2, please go to the
Adobe PDF version of the report on the TIGTA Public Web Page.[23]
The disparity in sick leave days taken by FERS and CSRS employees is
greatest as employees approach retirement eligibility. For example, there is less than a half-day use
difference for employees with 10 years through 19 years of service. However, that difference increases to more
than 2 days for employees with 30 or more years of service. This difference indicates that FERS employees
are more inclined to use sick leave as they near retirement because any unused accumulated
sick leave will be forfeited without compensation when they retire.
The higher use of sick leave by FERS employees over time created a
larger disparity in the average balance of accumulated sick leave between CSRS
and FERS employees. For example, as
shown in Figure 3, the average balance of accumulated sick leave for CSRS
employees exceeded the amount for FERS employees by only 4 days for employees
with fewer than 10 years of service. However,
the difference in the average balance of accumulated sick leave had increased
to 36 days for employees with 30 or more years of service.
Figure 3: Average Balance of Accumulated Sick Leave
Days by Retirement Plan and Years of Service
Figure 1 was removed due to its
size. To see Figure 1, please go to the
Adobe PDF version of the report on the TIGTA Public Web Page.
Sick Leave Use Was Highest on Mondays or on Tuesdays Following a Monday Holiday
Our analysis of biweekly time and attendance records input to the IRS’ Single
Entry Time Reporting (SETR)[24] system for Calendar
Years 2005 and 2006 showed that both FERS and CSRS employees most often took sick
leave on Mondays or on Tuesdays following a Monday holiday. As shown in Figure 4, 24 percent of all sick
leave taken by employees during non-holiday weeks is on Monday. For weeks that have a holiday falling on a
Monday, 27 percent of all sick leave taken is on Tuesday. Sick leave use by employees decreases during
the remainder of the week.
Figure 4: Percentage of Sick Leave Used by Day of the Week
Figure 4 was removed due to its size.
To see Figure 4, please go to the Adobe PDF version of the report on the
TIGTA Public Web Page.
We also found extreme cases of questionable sick leave use. For example, 1 employee used sick leave on 13
of the 14 Tuesdays following a Monday holiday during the 2-year period.
Employee Gender, Age, Grade, and Position Also Affected Sick Leave Use
In addition to the retirement system, an IRS employee’s gender, age, grade,
and position affected the use of sick leave. As shown in Figures 5 and 6, females averaged
a higher number of sick leave days taken in Calendar Year 2006 than males. The disparity was greatest as they approached
retirement eligibility. As shown in Figure
7, the higher use of sick leave by females over time created a larger disparity
in the average balance of accumulated sick leave between males and
females. As shown in Figure 8, the
difference in sick leave balances between male and female employees increased from
28 days for employees with 10-19 years of service to 96 days for employees with
30 or more years of service.
Figure 5: Average Number
of Sick Leave Days Used in 2006 by Gender and Retirement System
Figure 5 was removed due to its size.
To see Figure 5, please go to the Adobe PDF version of the report on the
TIGTA Public Web Page.
Figure 6: Average
Number of Sick Leave Days Used in 2006 by Gender and Years of Service
Figure 6 was removed due to its size.
To see Figure 6, please go to the Adobe PDF version of the report on the
TIGTA Public Web Page.
Figure 7: Average Balance
of Accumulated Sick Leave Days by Gender and Retirement System
Figure 7 was removed due to its size.
To see Figure 7, please go to the Adobe PDF version of the report on the
TIGTA Public Web Page.
Figure 8: Average
Balance of Accumulated Sick Leave Days by Gender and Years of Service
Figure 8 was removed due to its size.
To see Figure 8, please go to the Adobe PDF version of the report on the
TIGTA Public Web Page.
For both FERS and CSRS employees, we found that
the age of the employee also can affect the amount of sick leave taken each
year. As shown in Figure 9, the number
of sick leave days taken generally increased as the employee aged. For example, employees between the ages of 20
and 30 took an average of 10.64 days of sick leave in 2006, while those over
age 60 took 12.73 days of sick leave.
The average balance of accumulated sick leave also increased as the age
of the employee increased, except for employees who were 60 or more years of
age. The employees with the highest
amount of accumulated sick leave were between the ages of 55 and 60, with an
average balance of 66.55 days.
Figure 9: Average Number of Sick Leave Days Used in 2006 and Average Balance of Accumulated Sick Leave Days by Age
Figure 9 was removed due to its size.
To see Figure 9, please go to the Adobe PDF version of the report on the
TIGTA Public Web Page.
The pay grade[25]
and position of an employee also affected the amount of sick leave taken each
year. As shown in Figure 10, lower grade
employees averaged
more sick leave taken in 2006 and had a lower amount of accumulated sick leave
than their higher grade counterparts. IRS
executives used the least amount of sick leave and had the highest balance of
accumulated sick leave. For example,
employees in grades 2-4 took 11.23 days of sick leave in 2006, while IRS
executives took only 7.33 days. The
disparity in the accumulated sick leave balances was much more significant. However, many employees in the higher grade
positions have likely been employed by the IRS for a longer period of time.
Figure
10: Average Number of Sick Leave Days
Used in 2006 and Average Balance of Accumulated Sick Leave Days by Pay Grade
Figure 10 was removed due to its size.
To see Figure 10, please go to the Adobe PDF version of the report on the
TIGTA Public Web Page.
When analyzing sick leave usage by position,
we found that employees in a team leader or managerial position took less sick
leave in the year and maintained a higher balance of accumulated sick leave.[26] As
shown in Figure 11, IRS employees not in a lead, team leader, or managerial
position took an average of 11.47 days of sick leave in 2006 and had a balance
of only 34.93 days, while employees serving as a supervisor took an average of
only 9.21 days of sick leave and had an average balance of 89.10 days of
accumulated sick leave.
Figure 11: Average Number of Sick Leave Days Used in 2006 and Average Balance of Accumulated Sick Leave Days by Position
Figure 11 was removed due to its size.
To see Figure 11, please go to the Adobe PDF version of the report on
the TIGTA Public Web Page.
Regular Sick Leave Was Used Most Often,
Despite the Expansion of Sick Leave by Family-Friendly Leave Policies
In recent years, the Federal Government has expanded the justification
for using sick leave to permit its use to care for a family member and for bereavement purposes. Figure 12
shows that, even with the expanded justification for using sick leave under the
family-friendly leave policies, regular sick leave is still the primary category
used by IRS employees when taking sick leave.
Figure 12: Percentage of Sick Leave Hours Taken by Category
Figure 12 was removed due to its size.
To see Figure 12, please go to the Adobe PDF version of the report on
the TIGTA Public Web Page.
A Survey of Managers Reflects Actions Have Been Taken to Address Improper Use of Sick Leave, but Additional Training Is Needed
To ensure proper administration of sick leave, managers must be alert to
possible abuse of sick leave, raise their
concerns with employees suspected
of improperly using sick leave, and initiate disciplinary action for unauthorized
absences or failure to follow established leave procedures. Our survey of IRS
managers[27]
indicates that they are noticing improper use of sick leave by employees and
are taking actions to address it. For
example, managers have:
However, our survey of IRS managers also reflected that
additional training on administration of sick leave is needed to increase
awareness of the abusive use of sick leave and help minimize improper use of sick
leave. Managers believe that:
·
It is acceptable for employees to use
sick leave in lieu of annual leave when they approach retirement or separation
(12 percent).[32]
·
Employees should be allowed to use sick
leave whatever the situation (11 percent).[33]
·
They have not received adequate
training in administering employee use of sick leave (12 percent).[34]
In addition, we found that the Automated Labor and Employee
Relations Tracking System (ALERTS)[35] includes very few
cases for employees that we identified with questionable sick leave use
patterns during our analysis of SETR data for Calendar Years 2005 and
2006. We considered employees to
have questionable sick leave patterns if they took sick leave on 7 or more of
the possible 14 Tuesdays following a Monday holiday or used sick leave on the
same day (Monday, Tuesday, Wednesday, Thursday, or Friday) 45 or more times within
the 2-year period. We identified 214
employees with questionable sick leave usage. However, we were able to locate only 4 case
files on the ALERTS.[36] The low number of cases may be attributable
to the fact that managers can counsel employees and place employees on leave
restriction without establishing an ALERTS case file. Additional information was also provided by
responsible officials to support that managers are taking steps to address
improper use of sick leave.
Specifically, management stated that 2,743 cases (25 percent) of the 10,803
administrative misconduct cases entered on ALERTS in Calendar Years 2005 and 2006 included
absence and leave as an issue.
The cost of sick
leave is substantial, and we believe that the higher use of sick leave by FERS
employees can adversely affect morale, productivity, and the IRS’ efforts to
accomplish its mission. The results of our analysis of
sick leave use and the manager survey indicate that additional training is
needed to ensure proper administration of sick leave. Representatives from the Employee Support
Services organization explained that the Time and Leave Handbook and IRS
guidelines are being updated, due to recent changes in leave policies, and they
hope to provide new managers with online training after the guidelines have
been updated. We suggest that once the guidelines have been updated, current managers
should be provided the online training. However, we acknowledge that training alone
will not completely resolve the issue of higher sick leave use by FERS
employees.
Recommendations
Recommendation 1: The Chief Human Capital Officer should ensure that all
IRS managers receive training on updated leave policies to ensure proper sick leave administration and increased
awareness of possible abuse.
Management's Response: The Chief Human Capital Officer agreed with
this recommendation. The IRS will
update regulatory and policy guidance on sick leave to assist managers in
properly administering sick leave provisions and will revise the administrative
procedures for managers to clearly address managerial responsibilities and
instructions regarding sick leave approval.
In addition, the IRS will develop online managerial training on the new procedures
and review the curriculum for mandatory frontline manager training to ensure
that updated leave policies are incorporated and effectively communicated. However, the Chief Human Capital Officer
stated the report is not clear about how training will resolve the issue of
higher use of sick leave by employees covered by FERS.
Office of Audit Comment: We revised the report to clarify that
we acknowledge training alone will not completely resolve the issue of higher
sick leave use by FERS employees.
However, the fact that a number of IRS managers believe it is acceptable
to improperly use sick leave suggests the need for additional guidance and
training.
Recommendation
2: The Chief Human Capital Officer should ensure that additional
analysis is performed to identify factors contributing to the advancement of sick
leave to a significant number of IRS employees and to identify measures that
can be taken to both reduce the number of employees that separate with a negative
sick leave balance and increase the collection of outstanding debts.
Management's Response: The Chief Human Capital Officer agreed with this recommendation. The IRS will review data on current and separated employees with negative sick leave balances and will provide guidance regarding criteria for approving advanced sick leave as well as appropriate management actions for identifying sick leave abuse and taking corrective action. The IRS also provided written procedures on employee separations involving negative leave balances to payroll center staff to enhance the IRS’ ability to expeditiously identify employees who have separated with a negative sick leave balance and increase the likelihood of collecting outstanding debts. The IRS will review these new procedures to determine their impact on outstanding sick leave balances due. However, the Chief Human Capital Officer also indicated our report provides no evidence that supports sick leave abuse in the IRS and criticized us for not providing benchmark information from other agencies or the private sector for comparability purposes. In addition, the Chief Human Capital Officer thought that presenting the use of sick leave by age and gender is misleading without an analysis of contributing factors and believes that we did not sufficiently emphasize the impact of legislative and regulatory changes or IRS contractual obligations on sick leave.
Office of Audit Comment: We agree that the report does not
provide evidence of sick leave abuse in the IRS nor does it provide benchmark
information since this was not the intent of the review. As stated in the report, our objective was to
identify the trends and patterns of sick leave use in the IRS and the policies,
programs, and procedures that have been implemented to reduce the opportunity
for abuse. We do not agree that
presenting the use of sick leave by age and gender is misleading. We reported that other factors such as
gender, age, grade, and position can affect sick leave use besides an
employee’s retirement plan. Finally, we
believe we sufficiently addressed legislative and regulatory changes to expand
the criteria for using sick leave. As
stated in our report, the justification for using sick leave has been expanded
to permit its use to care for a family
member and for bereavement purposes. However,
regular sick leave is still the primary category used by IRS employees when
taking sick leave. We did not address contractual obligations
that the IRS has with the National Treasury Employees
Appendix I
Detailed Objective, Scope, and Methodology
The overall objective of this review was to identify the trends and patterns of IRS employees’ sick leave use and the policies, programs, and procedures that have been implemented to reduce the opportunity for abuse. To accomplish this objective, we:
I.
Profiled
the use of sick leave by IRS employees and analyzed it for patterns.
A. Obtained personnel and payroll
information on the TIMIS[37] for current IRS employees as of January
6, 2007. We assessed the reliability of
the TIMIS data supplied to us by the IRS by comparing the number of employees in
the TIMIS data against the count of employees obtained by conducting an online
query of the TIMIS database. The TIMIS
data appeared to be reasonably accurate for the purposes of this audit, and we
performed no additional data validity tests.
B.
Obtained biweekly time and attendance
records processed on the SETR[38] system for all IRS employees in Calendar
Years 2005 and 2006. We assessed the
reliability of the SETR system data supplied to us by the IRS by comparing the
number of employees in the SETR system data against the count of employees
obtained by conducting an online query of the TIMIS database. The SETR system data appeared to be
reasonably accurate for the purposes of this audit, and we performed no
additional data validity tests.
C.
Analyzed employee leave data on the SETR system
and the TIMIS to determine if patterns exist in sick leave use and to identify
trends in sick leave use by occupation, grade, retirement system, gender, location,
service computation date,[39] and birth date.
II.
Analyzed ALERTS[40] data provided
to us by the IRS to identify IRS employees with reported labor relations
problems related to leave use. We matched
employees on the ALERTS database with the employees’ SETR system leave data to
identify patterns and trends. The ALERTS data appeared to be reasonably
accurate for the purposes of this audit, and we performed no additional data
validity tests.
III.
Surveyed
295 IRS managers[41] to determine how sick leave use is
managed within their programs and whether they have experienced any problems or
weaknesses in administering sick leave policies.
IV.
Determined
the policies and procedures in place to reduce the opportunity for improper use
of sick leave by reviewing Office of Personnel
Management and IRS requirements for sick leave use and
documentation.
V.
Calculated
the cost of potential sick leave abuse in terms of IRS salary and the potential revenue cost of sick leave on
compliance results for revenue officers.[42]
Appendix II
Major Contributors to This Report
Daniel R. Devlin, Assistant Inspector General for Audit
(Small Business and Corporate Programs)
Margaret E. Begg, Acting Assistant Inspector General for
Audit (Small Business and
Corporate Programs)
Frank J. Dunleavy, Director
Van A. Warmke, Audit Manager
Meaghan R. Shannon, Lead Auditor
Earl C. Burney, Senior Auditor
Ted J. Lierl, Senior Auditor
Appendix III
Commissioner C
Office of the Commissioner – Attn: Chief of Staff C
Deputy Commissioner for Operations Support OS
Deputy Commissioner for Services and Enforcement SE
Commissioner, Large and Mid-Size Business Division SE:LM
Commissioner, Small Business/Self-Employed Division SE:S
Commissioner, Tax Exempt and Government Entities Division SE:T
Commissioner, Wage and Investment Division SE:W
Deputy Human Capital Officer OS:HC
Chief, Agency-Wide Shared Services OS:A
Director, Employee Support Services OS:A:ESS
Director, Leadership, Education and Delivery Services OS:HC:LE
Director, Workforce Progression and Management Division OS:HC:WRT
Chief Counsel CC
National Taxpayer Advocate TA
Director, Office of Legislative Affairs CL:LA
Director, Office of Program Evaluation and Risk Analysis RAS:O
Office of Internal Control OS:CFO:CPIC:IC
Audit
Liaisons:
Deputy Commissioner for
Operations Support OS
Deputy Commissioner for Services and Enforcement SE
Chief Human Capital Officer OS:HC
Appendix IV
The
survey was removed due to its size. To
see the survey, please go to the Adobe PDF version of the report on the TIGTA
Public Web Page.
Appendix V
Management’s Response to the Draft Report
The response was removed due to its
size. To see the response, please go to
the Adobe PDF version of the report on the TIGTA Public Web Page.
[1] Congressional Research Service, Report to Congress. Sick Leave: Usage Rates and Leave Balances for Employees in Major Federal Retirement Systems, August 29, 2007.
[2] The calculation for sick leave hours taken and associated costs did not include any sick leave taken on weekends for employees whose tours of duty included a Saturday or Sunday.
[3] Revenue officers are IRS employees who are responsible for collecting delinquent tax accounts and securing delinquent tax returns.
[4] We do not consider revenue officers to use more or less sick leave than other IRS employees. Instead, we cited revenue officers as an example, based upon available data, to calculate potential lost revenue.
[5] The TIMIS is the IRS’ official automated personnel and payroll system.
[6] We did not compare the percentage of IRS employees with advanced sick leave to the percentage of employees in other Federal Government agencies with advanced sick leave.
[7] We surveyed 295 IRS managers. The survey included 41 questions addressing administration of sick leave. The number of managers responding varied among questions, with a minimum of 257 respondents and a maximum of 293 respondents. Appendix IV contains the detailed results of our survey.
[8] Question 28: 138 of the 274 managers who responded stated that they had approved advanced sick leave to an employee within the past year.
[9] Pub. L. No. 103-3, 107 Stat. 6 (codified as amended at 29 U.S.C. §§ 2601-2654 (2006)).
[10]
Pub. L. No. 103-388, 108 Stat. 4079 (1994)
(amended 5 U.S.C. § 6307) (expired 1997). Prior to its expiration, the
Office of Personnel Management issued final regulations at 5 C.F.R. §§ pt. 630,
subpt. D in order to continue to permit the use of sick leave for family care
and bereavement purposes.
[11] Pub. L. No. 91-93, 83 Stat. 136 (codified as amended
in scattered sections of 5 U.S.C. §§ 8331-8351 (2006)).
[12] Federal Workforce: Retirement Credit has Contributed to Reduced Sick Leave Usage (GAO/GGD-86-77BR, dated June 1986).
[13] Congressional Research Service, Report to Congress. Sick Leave: Usage Rates and Leave Balances for Employees in Major Federal Retirement Systems, August 29, 2007.
[14] The calculation for sick leave hours taken and associated costs did not include any sick leave taken on weekends for employees whose tours of duty included a Saturday or Sunday.
[15] Revenue officers are IRS employees who are responsible for collecting delinquent tax accounts and securing delinquent tax returns.
[16] We do not consider revenue officers to use more or less sick leave than other IRS employees. Instead, we cited revenue officers as an example, based upon available data, to calculate potential lost revenue.
[17] The TIMIS is the IRS’ official automated personnel and payroll system.
[18] We did not compare the percentage of IRS employees with advanced sick leave to the percentage of employees in other Federal Government agencies with advanced sick leave.
[19] We surveyed 295 IRS managers. The survey included 41 questions addressing administration of sick leave. The number of managers responding varied between questions with a minimum of 257 respondents and a maximum of 293 respondents. Appendix IV contains the detailed results of our survey.
[20] Question 28: 138 of the 274 managers that responded stated they had approved advanced sick leave to an employee within the past year.
[21] The number presented includes all IRS employees (full-time, part-time, seasonal, etc.).
[22] The analysis of TIMIS data included only employees that earned 104 hours (13 days) of sick leave during 2006. Therefore, the analysis included full-time employees and full-time seasonal employees, but did not include part-time employees.
[23] CSRS employees account for a small percentage of the total population of IRS employees with fewer than 20 years of service. There are only 273 CSRS employees with fewer than 20 years of service. FERS employees account for a small percentage of the total population of IRS employees with 30 years or more of service. There are only 538 FERS employees with 30 years or more of service.
[24] The SETR system provides an online timekeeping function that allows the virtual timekeeper to enter, validate, and transmit timecard information to the manager for an online approval.
[25] The pay grade is used in determining an employee’s salary based on the General Schedule pay plan, General Management pay plan, and Internal Revenue pay plan. The Internal Revenue pay grades were converted to match those on the General Schedule.
[26] Employee positions include (1) lead and team leader, who are work leaders who, as a regular and recurring part of their assignment, lead three or more employees and are responsible to their supervisors for ensuring that the work assignments of the other employees of the team are carried out; (2) management official, who is an individual who formulates, determines, or influences the policies of the agency; and (3) supervisor, who is an individual employed by an agency having authority in the interest of the agency to hire, direct, assign, promote, reward, transfer, furlough, layoff, recall, suspend, discipline, or remove employees. The other category represents all employees not classified as a lead, team leader, management official, or supervisor.
[27] We surveyed 295 IRS managers. The survey included 41 questions addressing administration of sick leave. The number of managers responding varied among questions, with a minimum of 257 respondents and a maximum of 293 respondents. Appendix IV contains the detailed results of our survey.
[28] Question 24: 101 of the 273 managers who responded stated that they had counseled employees for improper use of sick leave within the past year.
[29] Question 25: 59 of the 273 managers who responded stated that they had denied a request for sick leave within the past year.
[30] Question 26: 50 of the 273 managers who responded stated that they had had an employee on leave restriction within the past year.
[31] Question 27: 26 of the 274 managers who responded stated that they had initiated a disciplinary action based on improper use of sick leave within the past year.
[32] Question 2: 35 of the 292 managers who responded stated that they strongly agree or somewhat agree it is acceptable for employees to use sick leave in lieu of annual leave as they approach retirement or separation.
[33] Question 35: 31 of the 273 managers who responded stated that they strongly agree or somewhat agree that employees should be allowed to use sick leave, whatever the situation.
[34] Question 1: 36 of the 293 managers who responded stated that they strongly disagree or somewhat disagree they have received adequate training for administering employee sick leave.
[35] The ALERTS tracks labor/employee relations case data. It uses a single, standardized record format that is the repository of case data for all official employee misconduct and labor-management relations cases processed by the IRS.
[36] When using the ALERTS to identify associated case files for employees we considered to have questionable sick leave patterns, we matched against all ALERTS case files categorized as absence and leave issues.
[37] The TIMIS is the IRS’ official automated personnel and payroll system.
[38] The SETR system provides an online timekeeping function that allows the virtual timekeeper to enter, validate, and transmit timecard information to the manager for an online approval.
[39] Service computation date is a tool used to calculate amounts of government service and is used to determine how much service is creditable toward eligibility for a specific benefit or entitlement.
[40] The ALERTS tracks labor/employee relations case data. It uses a single, standardized record format that is the repository of case data for all official employee misconduct and labor-management relations cases processed by the IRS.
[41] The IRS randomly selected 600 managers from of a population
of 8,691, who were sent an email by the IRS containing a link to the
survey. Based on the survey results that
we obtained on October 17, 2007, a total of 295 managers took the survey,
resulting in a 95 percent confidence level with a precision rate of ±6 percent
and a 6.75 percent expected error rate.
[42] Revenue officers are IRS employees who are responsible for collecting delinquent tax accounts and securing delinquent tax returns.