This is the first time I have been at a company offering PTO. They still track sick time separately. They believe there is a reason why they need to, but no one can articulate why. Any ideas?

I think that the short answer is they don't have to track it.

But the longer answer is that it depends on how they got to the PTO policy. If prior to that policy they had a traditional vacation and sick days policy, then they might have grandfathered (banked) accrued sick days at the conversion. Then you have to keep tack of sick days at least for anyone with a grandfathered benefit.