New Jersey municipalities have borrowed millions of dollars to cover retirement bonuses promised to public employees, years after a push by former Governor Chris Christie to curb the practice, according to a State Commission of Investigation report issued Wednesday.
Jersey City last year paid $8.1 million for so-called “terminal leave” payments, a type of severance that also provides compensation for unused sick days, according to the report. Paterson, the state’s third-largest city and one of its poorest, borrowed roughly $24 million over nine years for such employee payouts. To cover the bill recently, the analysis found, the city scrapped a planned park clean-up and the purchase of public-works vehicles.
“Taxpayers should not have to fund outsize retirement bonuses or give checks to workers who were fortunate enough not to need their allotted sick leave,” wrote the commission, an independent agency that investigates waste, fraud and abuse of tax dollars. For this inquiry, the staff surveyed 50 government units among 565 municipalities, 21 counties and thousands of state and local authorities.
The 25-page report concluded that the severance payments are foisting an added burden on taxpayers, whose highest-in-the-nation property taxes hit an average $8,767 in 2019. Christie, who enacted some reform to limit public-employee bonuses, referred to the retirement payments — not uncommonly in the hundreds of thousands of dollars — as “boat checks” because of their size.
Alyana Alfaro, a spokesperson for Governor Phil Murphy, a Democrat, didn’t immediately respond to an email for comment on the report and its recommendations, which include uniform payout limits. Murphy has broad support from public-worker unions, which in the past rejected lawmakers’ attempts to rein in payments, saying any changes should be addressed during contract negotiations.
Englewood Cliffs, with about 5,400 residents living 3 miles (4.8 kilometers) from the George Washington Bridge, paid $599,877 to its retiring police chief last year, investigators found. That included $119,401 in terminal leave, according to the report. All the borough’s employees qualify for retirement payouts of two to six months pay, the report found.
New Jersey local employees hired after 2010 were limited to $15,000 payouts, the same as state workers, under a law signed by Christie, a Republican. He objected to another law — to cap all local employees regardless of hire date — because he wanted ultimately to enact a ban on the payments entirely, according to the report.
“While the 2010 law was clearly a step in the right direction, it will take nearly a generation — when those hired since its enactment retire — before it has any discernible financial impact,” the commission wrote.
Investigators found some positive practices, including towns that have limited the bonuses to less than $15,000. Seaside Park, an Atlantic Ocean resort town with about 1,500 year-round residents, ended cash-ins of unused sick time.
“However, the commission also identified several other entities that permitted local public employees to cash in unused sick time on an annual basis, enabling some workers to exceed the limits set at retirement in the span of a few years,” the commission wrote.
The agency wrote that it first documented the practices more than 20 years ago, and many of its reform suggestions haven’t been enacted.
In the report it called for laws applicable to all local governments, including capping annual non-holiday paid time off to 15 sick days and 25 vacation days; ending severance bonuses and annual payouts for unused time; removing longevity compensation from pensionable salaries; and eliminating “non-traditional leave, such as paid days off for participation in a wedding or Bar Mitzvah, etc.”
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