Press of Atlantic City - 'Report cites Atlantic City for retirement payouts'

Scathing N.J. report details millions of taxpayer dollars spent on municipal employee perks Tuesday, December 1, 2009 Last updated: Tuesday December 1, 2009, 8:50 PM BY GIOVANNA FABIANO The Record STAFF WRITER Hundreds of North Jersey municipal employees are guaranteed paid time off — at taxpayers’ expense — to go Christmas shopping, attend weddings, and even donate blood, according to a scathing report released Tuesday by the State Commission of Investigation. The 108-page report examined a cross-section of local government contracts and policies across the state, finding that tens of millions in taxpayer dollars are being wasted to fund luxurious benefits for municipal employees. Among North Jersey’s biggest offenders are Englewood Cliffs, Fort Lee and the Passaic Valley Sewerage Commissioners, which each doled out massive lump-sum cash payouts for unused sick time and personal and vacation leave. Several other towns, including Englewood and Paterson, were cited for shelling out “exceptional perks,” such as paid days off — in addition to regularly allotted vacation and personal time — for getting married or donating blood. “At a time of economic distress unprecedented since the Great Depression – with government budgets depleted and austerity the theme of the day even in the private sector – the gravy train continues to roll without impediment for select groups of employees on the public payroll,” states the report. “Startling amounts of taxpayer-funded booty continue to be dispensed across New Jersey without regard for the common good,” stated the report, titled: “The Beat Goes On: Waste and abuse in local government employee compensation and health benefits.” The SCI, which examines crime and corruption and reports to the Legislature, said it discovered $39 million in extravagant payouts after reviewing 75 towns, counties and local authorities. State employees can receive a maximum of $15,000 for unused sick time, but such limits aren’t standard at the local level. Many of the workers’ benefits were included in policies and contracts written years ago, sometimes shrouded in bureaucratic language. In 2006 and 2008, Englewood Cliffs paid five of its employees a combined $1.2 million in lump-sum cash benefits at retirement. According to the report, the employees shared: $561,886 in payouts for unused vacation leave $330,482 for unused sick days $291,000 in cash bonuses based on years of service $13,810 for accumulated personal leave The bulk – more than $931,000 – was divided between three ranking police officials: Lawrence Whiting, the former chief, who collected a total of $348,749; former Captain William Gallagher, who was paid $292,339; and former Captain Martin Barrett, who received $290,320. Mayor Joseph Parisi, who is currently in the midst of contract negotiations with the police department, said binding arbitration is to blame. “I’m sitting here going line by line pulling my hair out in negotiations, but if it goes to arbitration, the arbitrator probably won’t change much of the contract, citing past practices,” he said. “The state legislature should change the arbitration from binding arbitration, because it handcuffs the town... the state says we’re wasting money, and we’re saying, ‘state, you’ve got to help us out here.” Taxpayers in Fort Lee are on the hook for more than 30,000 days of unused leave banked by the borough’s 408 full and part-time employees. If all of this accrued leave were to be cashed in at once, the tab would exceed $7 million – an amount equal to 11 percent of Fort Lee’s annual budget of $63.6 million, the report reads. Between 2004 and 2008, the borough paid retiring employees a combined sum of more than $1.4 million for unused sick, vacation, holiday, terminal and other leave. More than one third of the payout – approximately $547,000 – was for accrued sick time. The Passaic Valley Sewerage Commissioners have also arranged for special lump-sum departure payments to certain administrative employees. Under the terms of his current contract, Commission Executive Director Bryan Christiansen, if terminated, is guaranteed a cash severance benefit equal to six months’ salary for every year employed, up to a maximum of 24 months. Christiansen, the agency’s top administrator since March 2004, is budgeted to be paid a salary of $316,216 for 2009. In exchange for his promise to retire in May 2007, former Deputy Executive Director James Krone, whose position was eliminated, received a severance payment of $88,400, in addition to more than $7,100 for unused accumulated sick time. The report also casts a spotlight on municipalities who grant their employees “special perks.” In Fort Lee, police officers receive one or two days off if they qualify at the firing range as expert or distinguished expert marksmen, the report states. Rutherford has a lottery system that awards cash payments to civilian municipal employees who have perfect attendance for a certain period of time. Between 2004 and August 2009, these sick leave incentives totaled $12,600. In Union City, all civilian municipal employees receive one day’s leave at full pay every year for Christmas shopping. Englewood gives its fire and police personnel a paid day for moving, and city police officers get three additional paid days when they get married. Robert Gorman, the human resources director, called it an “outlandish practice.” “These are policies that have been in place for decades... we’re trying to eliminate them, but it remains to be seen whether it will be successful,” Gorman said, adding that the city is in the midst of contract negotiations. In Paterson, all police officers qualify for a day off for donating blood to a colleague — a provision Mayor Jose “Joey” Torres said he didn’t know existed. Torres said he encouraged blood donations by city employees, but he doubted whether any member of the police department had actually benefited from the policy, adding that he would seek data on the issue. “Obviously this is something that should be negotiated, but at what cost,” he said in terms of any possible trade off to take it out of the contract. The state also highlighted towns that had put in place cost-saving measures. Teaneck imposed a sliding scale of caps on sick leave redemptions for various classes of municipal employees. No employee hired after September 1989 can carry over more than two years’ worth of unused vacation time, and employees are not permitted to cash in on unused leave while actively employed. In 2002, the city discontinued the practice of awarding two extra days off per year to the police and fire chiefs. “It shows the way Teaneck has tried to conduct business, trying to get the services that the residents are looking for while stretching the tax dollar as far as we can,” said Mayor Kevie Feit. E-mail: fabiano@northjersey.com. Staff Writers Joseph Ax and James Yoo and Star-Ledger reporter Chris Megerian contributed to this article.

N.J. investigations unit reports huge payouts by local government

By Chris Megerian/Star Ledger, Statehouse Bureau

December 01, 2009, 6:00PM

They receive paid days off for Christmas shopping, donating blood and weddings. And when these public employees retire, they can cash in tens of thousands of dollars worth of unused sick time and vacation days.

Extensive taxpayer-funded benefits for some local government employees are straining the budgets of New Jersey municipalities, according to a report the State Commission of Investigation released today.

SCI, a fact-finding agency that examines crime and corruption and reports to the Legislature, cited examples of "patently excessive" benefits paid to public workers in several municipalities. In Union City in Hudson County, all civilian employees receive one day of paid leave to go Christmas shopping.

Despite a recession that has depleted tax revenue and forced layoffs, the report says, municipalities continue to spend tens of millions of dollars on big payouts to retiring workers.

"The gravy train continues to roll without impediment for select groups of employees on the public payroll," it reads. "Startling amounts of taxpayer-funded booty continue to be dispensed across New Jersey without regard for the common good."

The SCI, which examines crime and corruption and reports to the Legislature, said it discovered $39 million in extravagant payouts after reviewing 75 towns, counties and local authorities. State employees can receive a maximum of $15,000 for unused sick time, but such limits aren’t standard at the local level.

Many of the workers’ benefits were included in policies and contracts written years ago, sometimes shrouded in bureaucratic language.

Robert DeNardo, who retired as chief of the approximately 20-officer Bradley Beach police department in 2006, left with $194,069 for unused sick days — in addition to his $95,592-a-year pension.

DeNardo also took eight months off with full pay and benefits leading up to his official retirement day, according to the report, which called the practice "terminal leave."

The former chief, now working security at Brookdale Community College in Wall, said the benefits were earned after 33 years on the force.

"It’s one of those things that was just given to everyone over the years," he said. "It was there before I got there."

A lifelong Jersey Shore resident, DeNardo said he always wanted to be a cop.

"I didn’t join the department because of the benefits," he said. "I wanted the job, and I wanted to be a police officer."

SCI Chairman Cary Edwards said the contracts are "absurd" and drive up property taxes.

"We just don’t pay those kind of severance packages in governments. That’s not what public service is about," he said. "But they’re legal because they haven’t closed that loophole."

According to the report, one of the state’s worst offenders for excessive payouts is Camden. Between 2004 and 2008, 20 retiring city workers shared in $2.3 million of unused sick days, vacation time and benefits.

The largest excesses cited came from within the law enforcement community. Former Hoboken police chief Carmen LaBruno left his post with $350,000, which included $200,000 in unused time off, according to the report.

William Dressel, executive director at the League of Municipalities, said state mandates have driven up the cost of benefits for police officers and firefighters.

The SCI report is a black eye for municipalities who have clamored for more state assistance to help cope with the recession. Lawmakers on both sides of the aisle expressed outrage over the expensive perks.

"It shocks the conscience," said Assemblyman Lou Greenwald (D-Camden), who pledged legislation to cap severance payments. "The taxpayers have every right to be offended."

Sen. Kevin O’Toole (R-Essex) said New Jersey should declare a state of emergency to renegotiate contracts.

Mary Forsberg, interim director at the nonprofit think tank New Jersey Policy Perspective, said towns have lagged the state in addressing employee costs.

"We have not paid attention to how local governments spend their money," she said.

The SCI recommended several changes, including caps on payouts for unused time off. The report said municipal workers should contribute at least 1.5 percent of their salaries to their health care coverage, like state employees were required to do in 2007. The report estimates savings of 10 percent of the $400 million it costs annually to keep municipal workers in the state health plan.

Montclair State University Brigid Harrison expects political power struggles if the state cracks down on employee benefits at the local level.

"Counties are often political fiefdoms," she said. "County freeholders or executive boards get to pad the ranks of public employees with political supporters."

Press of Atlantic City - Report cites Atlantic City for retirement payouts

By MICHAEL CLARK and MICHAEL MILLER Staff Writers | Posted: Wednesday, December 2, 2009

Atlantic City Police Chief John Mooney received more than $218,000 when he was promoted to deputy chief in 2006 for 390 unused sick days. Mooney also gained an additional $31,000 for unused vacation and personal leave based on a special provision in his contract.

TRENTON — Atlantic City wasted almost $19 million in huge payments to municipal employees for accumulated sick and vacation time over a five-year period, the State Commission of Investigation said in a report released Tuesday.

Click here to read the complete report.

The commission investigated 75 New Jersey municipalities and found about 80 percent of them provided questionable or excessive employee benefits. The report also singled out Avalon, which doled out $172,000 in accumulated vacation, sick and personal time to retiring Police Chief Stephen Sykes in 2007, the same year the borough increased its budget 4 percent.

The report offered recommendations for better policies, including establishing limits on employee leave and eliminating terminal leave, the amount of money paid to employees upon retirement in lieu of their accrued time off.

The commission named Vineland as a town with model benefits procedures.

In Atlantic City, 160 retiring police officers and firefighters were paid more than $13.7 million for accrued unused sick leave from 2004 to 2008. The payments came on top of regular pensions. The report referred to payouts for former Fire Chief Benjamin Brenner and current Police Chief John J. Mooney III as examples of government waste.

When he retired in March 2004. Brenner received a payout of more than $567,000, despite undergoing two surgeries and missing about 70 days from a heart attack while serving as chief. Brenner also collects $107,661 in annual pension payments.

“I’m a beneficiary of the system,” Brenner said Tuesday. “Should I have said, ‘Oh, wait a minute, this is wrong?’ No.”

Brenner did acknowledge that there is a problem with the process, adding that city officials must be more careful when stepping to the bargaining table with union leaders.

“When they allow the unions to negotiate these types of benefits, they initially seem like not that much. But those contracts go on and on, and the price keeps going up,” he said. “It’s easy for me to say what it shouldn’t be. Twenty years ago I might not have said that.”

Mooney’s payout history also “illustrates the magnitude of what can be at stake in this practice,” according to the report. The chief received more than $218,000 when he was promoted to deputy chief in 2006 for 390 unused sick days. Mooney also gained an additional $31,000 for unused vacation and personal leave based on a special provision in his contract.

Mooney said Tuesday that the commission informed him in late October that he would be mentioned in the report. The chief responded with a letter defending his payments, insisting his payouts could have been much larger and that several efforts were made to limit the amount he collected.

The chief also took issue with the commission’s reference to a special provision in his contract that allowed him to earn an additional $31,000 in unused time. Mooney said that “embedded” provision was part of a lawsuit settlement.

Mooney referred to his letter when reached by phone Tuesday, declining to comment further.

A tax burden

Gov.-elect Chris Christie said local-government abuses like this are part of the reason why state taxes are so high.

“This stuff is ridiculous and it’s the kind of stuff that drives the voters crazy. Drives them ... crazy,” Christie said. “... And we’re coming down here to change it. That’s the way it’s going to be, and it’s not going to be pretty, and it’s not going to be easy, but it’s got to be done.”

Christie said he supports following the federal model of barring retiring workers from cashing out their sick time.

“Either use sick leave or you don’t, but you don’t cash it out,” he said. “You cash out vacation time, and I understand that. There’s a value that has been delivered to the taxpayer for that, and that makes sense to me. But cashing out sick time makes no sense to me. I just don’t believe that’s what sick time was for. Sick time is for when you are sick. And if you’re fortunate enough not to be sick, should you be paid for not being sick? I mean, really, it just doesn’t make any sense to me.”

Avalon’s payback?

In its report on Avalon, the commission said Sykes was not the only municipal employee to benefit from a generous retirement package. In 2008, the borough paid retiring Public Works Director Harry DeButts $78,000 in unused leave.

“Payouts of this magnitude were made possible by unique contractual provisions for select Avalon employees and by a special off-contract arrangement involving Sykes,” the report said.

The contract provided a payout called terminal leave that provides employees with four free days of pay for each year of service. Sykes received $91,000 in terminal leave.

Mayor Martin Pagliughi noted that the borough ended these payouts for new employees in 1989. But the borough honors agreements with employees hired prior to that year.

“I still want to know what that report said we did wrong?” he said. “If you look at the other 14 towns in this report, I think we’re leading by example here.”

The mayor disputed the assertion that the payouts had any effect on the borough’s tax rate. The only alternative was for the borough to renege on its employee contracts, he said.

“But we didn’t feel like getting involved in lawsuits. What’s the difference between what these people got and what people get out of a major corporation in a severance package?” he asked.

Pagliughi said the report was political payback for Avalon’s successful lawsuit over New Jersey’s beach-access rules. Avalon forced the state Department of Environmental Protection to repeal rules requiring towns to open their beaches 24 hours per day or risk losing state funding for beach projects.

Avalon and other beach towns wanted to close their beaches at night for public safety.

“I guarantee this is payback over the beach rules,” he said.

The report also noted that taxpayers collectively spend about $400 million per year to enroll municipal government workers in the State Health Benefits Plan, but could save about $40 million if local government employees contributed just 1.5 percent of their salary to pay for the health plan. State employees already make that contribution.

Atlantic City enrolled in the state’s health plan this year with hopes of saving about $6 million, a figure frequently cited during Mayor Lorenzo Langford’s re-election campaign. However, a rise in rates appears to be pushing that savings amount down. Latest estimates put the savings at about $3 million.

But the commission projects Atlantic City could save almost $1.5 million if it implemented a 1.5 percent deduction in employee salaries for health care.

Vineland’s good policy

Tuesday’s report was not all bad news for the municipalities examined. The commission noted Vineland’s limitations on accumulated sick leave and vacation days as one of a few local government’s taking “direct action to rein in public employee benefits through tougher personnel policies and ordinances and more aggressive collective bargaining.”

Vineland limits all police, fire and civilian personnel to $15,000 in unused sick leave upon retirement. The city also limits vacation days to a maximum of 30 days and provides no terminal leave, severance pay or longevity raises.

Vineland Mayor Bob Romano said the limits have been in place for some time and predate him.

“It’s a cost-saving measure,” Romano said. “It is a good policy.”

He said employees aren’t allowed to roll over vacation, except in rare cases requiring special approval.

Atlantic City has taken some steps to limit its payouts. In 2008, the city passed a new version of the Policy and Procedures Manual, which limits civilian administrators and other white-collar professionals to a $15,000 cap on unused sick leave. However, that applies only to employees hired after Jan. 1, 2000.

Blue-collar employees can receive as much as a full year of terminal leave or a maximum of $15,000 based on their remaining balance of accumulated sick time.

But police and fire personnel can still convert between six and 18 months’ worth of unused sick leave for cash.

Union presidents representing high-ranking police and fire officials did not return requests for comment.

PBA President David Davidson, who represents rank-and-file officers, credited city officials for taking recent steps to avoid the big payouts, but said more can still be done.

“We’ve had some discussions in the past to change some terminology in the contracts to avoid these big payouts,” Davidson said. “But if we can’t move from the (bargaining) table to an agreement, this is what you’re stuck with.”

Atlantic City Business Administrator Michael Scott mostly declined comment, saying the report “speaks for itself.” He did claim the administration has discussed the problem.

City Council President William “Speedy” Marsh said the city’s business administrator and the revenue and finance director ultimately must approve employees’ vacation days, sick days, personal days, etc. However, Marsh said it is unrealistic to think two people can keep track all of those days. He said the records should be moved through the Human Resources Office.

Scott said the administration is working to do just that through implementation of a new time clock system. However, that system has been installed for more than a year and many employees are still not enrolled.

The commission’s report notes that this is not its first probe into the abuse of public-employee benefits, but many of the problems found years ago continue today. Brenner said it is not his fault for taking advantage of a flawed system, the blame rests with public officials for not fixing it.

“I did nothing wrong,” Brenner said. “I don’t feel like I screwed the system. I worked within the boundaries of the system.”

Press staff writers Derek Harper and Daniel Walsh contributed to this report.

Contact Michael Clark:

609-272-7204

Michael.Clark@pressofac.com

Contact Michael Miller:

609-463-6712

MMiller@pressofac.com

 print