As a teacher that had perfect attendance last year, I think positive incentives would inspire more teachers to avoid frequently taking time off. I am lucky enough to have administrators that acknowledged the feat of perfect attendance (and we were ALL lucky enough to have several snow days as 'mental health days'), but knowing my name was in the hat for the attendance lottery the same number of times as others that had taken 3, 4, maybe 10 days that year was a bit discouraging.
If the lottery is the way to go, why not do it more than once a year? How about once a semester, and your name goes into the lottery once for each sick or personal day you earned but didn't take? Or once a year, and your name goes in once for each sick or personal day you earned but didn't take?
Also, I'm not sure if the $500 bonus is still the reward for 2 consecutive years of perfect attendance, but that seems like a farfetched goal to physically be able to achieve. How many people have actually gotten that bonus in the last few years? That would be an interesting number to know.
Also, I do like the idea of being able to "cash in" sick days, especially for those teachers that have spent decades in the school system and are looking towards retirement. What happens to those days if a teacher retires and has a few hundred of them? Their time earned should not just disappear.