In an effort to reduce salary costs, many school districts have begun to offer teachers financial incentives to retire early. Often, however, these districts have limits on the number of cumulated unused sick leave days that teachers may receive cash payments, credits toward future health insurance, or retirement credits for, at retirement. Thus, one might expect that in addition to stimulating early retirement, early retirement incentive programs may interact with sick leave provisions and provide an unintended incentive for increased teacher absenteeism. To the extent that less learning occurs when regular teachers are absent and student motivation to attend school is also reduced, student academic performance may suffer. This surely would be an unintended side effect of these policies. To address these issues, this paper, which is based on an extensive data collection effort by the authors, presents an econometric analyses of variations in teacher and student absenteeism across the over 700 school districts in New York State in 1986-87 and of how such variations influence student test score performance.