The following article showcases a big-ticket item that materially effects Jersey City, year upon year. Our annual budgetary set-aside for this negotiated obligation is substantial, now over $7 million from operational dollars. And the police and fire unions' current contracts will soon be ending, meaning that a far-sighted administration & Council will have an opportunity to re-think this policy - and its inflated costs - and devise a more fiscally-sound, equally-fair method of compensating the uniformed service members for "unused" days. Like having unused time cashed in at the end of every fiscal year - at that year's pay rate - rather than rolling over for decades.

Here's the article:

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N.J. owes $1B to retiring employees, for unused sick days, vacation time

[from "The Asbury Park Press, October 24, 2009]

Call it the billion-dollar retirement bill.

New Jersey's taxpayers owe almost $1 billion to municipal workers for not taking sick, vacation and comp time during their careers, budget figures show.

Add in the total accumulated sick time owed public school employees, and taxpayers' collective bill likely will climb toward the $2 billion mark, according to an Asbury Park Press review of municipal and school budgets.

How does it work? If an employee banks 200 days of sick and vacation time, he can cash in on it upon retirement ? at his final rate of pay. It's an institutionalized practice that has been going on for decades.

It's a little-known element of governmental costs, which adds to New Jersey's rising property tax burden, the highest in the nation.

Recent examples include two police captains in Long Branch who received payouts of $179,126 and $176,487. A police lieutenant cashed out for $156,570.

The projected payout for all municipal employees in Monmouth County is $59.2 million in the coming years. For Ocean towns, it is $48.4 million. That's a total of $107.6 million.

The public school tally for both counties ? $109.9 million ? doubles taxpayers' payout obligation.

Statewide, for the towns that reported their numbers to the state Department of Community Affairs, the tally is $747.4 million. School payouts are likely to double that amount.

"The taxpayers are paying for time people did not work," said Jerry Cantrell, president of the New Jersey Taxpayers' Association, Randolph.

But how much will the final bill be for New Jersey's taxpayers?

No one knows. There is no comprehensive fiscal tracking system for the 566 municipalities, 605 school districts and 400 other taxing authorities in the state. Newark, the state's largest city, Camden, and 116 other towns failed to report their employee liabilities to the state. Newark officials provided no details to the Press. Its budget documents were unclear. Camden's liability was $24.3 million in 2008.

And in New Jersey's fractured governmental system, there also is no cumulative tally for payouts made to state and county workers.

What is known is that taxpayers already have paid hundreds of millions of dollars to retired employees ? and they'll continue to for decades despite changes in state rules that limits some payouts.

The modifications, which went into effect July 2007, set payout caps of $15,000 for elected municipal officials and certain high-ranking administrators. But all workers hired before July 2007 were grandfathered into the old payout scheme.

Sick-time policy

It's a kind of public employees' lottery: Hang in long enough, notch a few promotions during your career, don't come down with an illness that will eat up much sick time, and you can retire with hundreds of thousands of dollars in your pocket ? on top of your pension.

The payouts have been going on for years. When the Press tracked municipal buyout tallies in 1994, the figure was almost $50 million in Monmouth and Ocean ? meaning, the sums have more than doubled in 15 years.

Most officials interviewed termed the liability sums "unrealistic."

Local officials said that unless towns go out of business and every worker cashes in on their contractually stipulated IOU, the money owed departing workers annually is substantially less than what is budgeted for planning purposes.

That's small comfort to taxpayer advocates who wonder how and why New Jerseyeans started paying their public servants for time they did not work.

"Sick time is intended for sickness, not as a bonus when you leave your job," said Cantrell, of the taxpayers' association.

Yet over the course of time, labor unions have negotiated contracts for an estimated 400,000 municipal employees, including police, fire and sanitation workers, that permit payouts upon retirement for sick days not taken, for vacation time not used and compensatory time.

The numbers game

Payout plans differ from town to town. Amounts range from thousands to hundreds of thousands of dollars. Workers take payouts in lump sums or in increments, typically over a three-year period.

Also typical is the fact, municipal finance officials say, that a worker retiring this year will get paid for unused time banked in 1985 or 1995 or 2005 at his 2009 rate of pay.

"In the real world," said Jim Mumolie, a member of the Manalapan-Englishtown Board of Education and a resident of Manalapan, "no one gives you breaks like that."

At the state level, workers have a $15,000 cap on sick leave payouts, according to Lisa Ryan, spokeswoman for the state Department of Community Affairs. State employees also cannot carry forward more than one year's allotment of vacation time.

Following a series of high-cost retirement bonuses, top schools administrators are capped at payouts of $15,000, once their contracts are renewed.

In the federal civil service system, soon-to-be retirees are generally allowed to convert their accumulated sick time into pension credits.

Payout details

This year in Toms River, a police captain will be owed a total payout of $99,867 for accumulated sick and vacation time upon his retirement Dec. 1, according to township Payroll Manager Bonnie Fine. A senior patrolman will be owed $55,717 when he retires Nov. 1, while a golf course supervisor officially retiring Nov. 16 will be owed $56,526.

Payouts already clocked in 2009 in Toms River for accumulated sick and vacation time include $74,842 by a construction code official; $55,440 by a foreman in the shade tree division; and $40,669 paid to the estate of the late Robert H. Chankalian, the former business administrator.

According to Toms River Chief Financial Officer Chris Manolio, in fiscal year 2009, the township paid out to retirees $379,495 for unused sick and vacation time.

In Long Branch, according to Chief Financial Officer Ronald J. Mehlhorn, payouts of unused sick days are dispersed over time.

Since contracts differ from town to town, Mehlhorn said, the terms of every town's payout policy is different. Some pay only for sick and vacation time, others also for accrued comp time. "The biggest payouts are normally public safety. They have the biggest lobby."

Longevity also plays a key role in the amount of the payouts, said Scott Pezarras, administrator for Brick.

Payouts for police generally are high, Pezarras said, because "they have a lot of accrued time because of their contracts. They also have injury time off in their contracts so they don't have to take sick time (for injuries sustained on the job). Of our $7 million (liability), $3,310,735 is attributable to our PBA's 127 officers."

The top liabilities in Brick today are Pezarras, a 25-year township veteran, owed $91,080; Township Clerk Virginia Lampman, 28 years, $87,749; and Police Chief Nils Bergquist, 29 years, $86,649.

Because each town's payout policy is different, records are kept differently as well.

In Howell, where the payout obligation is $1.9 million for some 6,783 days of accrued time, Chief Financial Officer Jeffrey Filiatreault can pinpoint that if the township police chief were to retire today, his payout would be $76,115 while the township manager's would be $39,186.

Of actual retirees this year, Filiatreault reported a total payout of $110,477, with the highest amount of $34,700 going to a senior police officer.

The payout plans take up sizable chunks of money even in smaller towns.

Atlantic Highlands' liability for this year is $1.2 million, up from a little more than $835,000 in 2008.

"The number grew so much because of longevity," said Gerard Gagliano, borough treasurer, a part-time post. "We have so many people who have been (employed) here such a long time."

Actual payouts for Atlantic Highlands are, as in other towns, far less than the liabilities. In 2009, a retiring police captain was paid about $80,000, Gagliano said, while last year a police sergeant was paid about $50,000.

"A snapshot in time"

While the numbers may look alarming, municipal officials say they only represent what could be owed if every worker in every town retired at once.

"It's just a snapshot in time," said Lakewood Chief Financial Officer Bill Rieker. "The figures (from the Department of Community Affairs) are unrealistic. At least half the people never retire from here; they change jobs."

Pezarras, the Brick administrator, said that the township ? like many others ? has set up a trust fund for accrued liabilities. Brick also spreads out its payments over the course of three years, lessening the immediate burden to taxpayers, Pezarras said.

Yet local taxpayers, such as Michael Billig of Lakewood, are just as angry at the concept of workers being paid for unused vacation time as they are about the payout amounts.

" "Use it or lose it' should be the sick-time policy," Billig said. "I understand that sometimes, with regard to vacations, it's hard to get away. But you should never be able to carry over time for more than one year. It used to be that public employees thought they were underpaid. They are overpaid, if anything. It's passe to think public-sector people are underpaid."

If that's the prevailing sentiment, said Jim Ryan, spokesman for the state Policemen's Benevolent Association, then elected officials need to address the issue at contract time.

"The whole picture is changing in collective bargaining," Ryan said. "Too many political units are focused on the short term. Elected officials agree on these contract. Then they complain."

Taxpayer advocate Cantrell believes payouts for unused sick time in particular must be stopped.

"The starting point for stopping this is that language must be changed in future labor contracts," Cantrell said.

Ryan said taxpayers' concerns about unused sick time being paid out upon retirement is valid and "something that should be addressed at the bargaining table. But it's very rare to hear from local government officials, "Hey, we want to look at sick time.' You know, I pay taxes, too."

Mehlhorn recalls that a couple decades ago, "I used to sign documents for our cops to get food stamps ? that's how low they were paid."

Times, Mehlhorn said, have changed.

"This is prime time to hate public employees," Mehlhorn said. "But hate the game, not the player."

? Andrea Clurfield