UPDATE: This story has been updated to include comments from officials in Holmdel, Freehold Township, Toms River, Wall and Middletown.
Many New Jersey towns — including eight in Monmouth and Ocean counties — still have policies that let them cut hefty checks to employees for unused sick leave despite reforms approved more than a decade ago banning such payments, a state investigation found.
New Jersey acting State Comptroller Kevin D. Walsh released his office's investigation Thursday morning showing that nearly all of the 60 towns it reviewed violated some part of statewide reforms approved in 2007 and 2010 that capped how much a town could pay out to employees upon retirement.
Walsh said his office found that a “staggeringly high” number of towns it reviewed were still allowing sick leave payments 12 to 15 years after laws were changed to ban them.
But officials at several of the towns at the Jersey Shore cited in the report said they already had changed the sick leave payout policies or were in the process of correcting them. At least one refuted the findings, saying their policies save their taxpayers money by reducing overtime costs by encouraging employees to only use sick time when they are actually sick.
The investigation only looked at municipalities. Those selected for review were based on their population and the size of their budgets. But Walsh said he expected to find the same problems in school districts, water commissions, sewer and parking authorities.
“New Jersey residents are being taxed and their funds are being used for unlawful purposes,” he said.
Of the nine towns reviewed in Monmouth and Ocean counties, only Holmdel appeared to be following all sick time payout reforms. Only three towns of the 60 the comptroller's office reviewed had policies that followed the state laws.
Holmdel Mayor Greg Buontempo said his township has made a concerted effort over the years to make sure its policies and its contracts follow state laws and protect taxpayers.
“Over the last several years, we have been working very hard to put the right people in place to manage our fiscal responsibility and to make sure every dollar spent is done so appropriately,” he said. “ I think this is report exemplifies the work we’ve been doing and the great people we have put in place, who are doing the right thing.”
Earlier reportingMaking taxpayers ill: $1B+ for unused sick leave
A joint investigation by the Asbury Park Press and ProPublica in 2021 found similar issues with sick leave payout abuse, including one town in North Jersey that paid out more than $460,000 over two years for sick leave counter to state law.
Of the 60 towns it reviewed, the comptroller's office found:
- 80% are letting employees cash out their sick time when they resign or change jobs. In Monmouth and Ocean counties, that included: Lakewood, Little Egg Harbor, Middletown, Red Bank, Toms River and Wall.
- 60% allow payments over the $15,000 cap. In Monmouth and Ocean counties, that included: Beachwood, Little Egg Harbor, Red Bank and Wall.
- 48% can give employees annual payouts for their unused sick days. In Monmouth and Ocean counties, that included: Freehold Township, Little Egg Harbor, Middletown and Toms River.
More:Toms River, Brick among NJ towns smacked for doling out millions in sick, vacation time
The comptroller's report took issue with Freehold Township's sick leave incentive program for police officers and another program that the township said encourages police officers to bank sick time rather than using "casually." In a letter to the comptroller's office, Freehold Township Administrator Peter Valesi wrote that policies have helped cut more costly overtime pay.
Most of Freehold's contracts eliminate sick leave payouts entirely, Valesi said.
"Freehold Township has taken steps in all areas to reduce taxpayer waste, trim extraneous benefits and remain immediately compliant with the State's battle to reduce waste at the local level," Valesi wrote.
Freehold Township's sick leave incentive program gives officers up to 40 hours of compensatory time if they use two or fewer sick days in a year, according to policies Freehold Township provided. That comp time can be paid out but only at the rate it was earned. So a first year officer could cash out 40 hours, but only at a much lower starting salary.
Freehold Township contends that the other program that the comptroller cited does not increase the township's costs.
Toms River Mayor Maurice B. "Mo" Hill Jr. began looking at the sick leave payout policies in union contracts — which were cited in the comptroller's report — when he took office in 2020 and renegotiated them to comply with the law before the state agency's report was released.
Likewise, Wall already clarified language in its union contracts that were cited by the comptroller's office, administrator Jeff Bertrand said. While the contract language may not have been clear, in practice, Wall was not paying out sick leave to those union employees who were not entitled to it under the law.
Wall is also in the process of fixing another ordinance that had been on the books well before the 2007 state law changed, Bertrand said.
"We were more than happy to participate in the survey," Bertrand said. "The comptroller told us the found and issue. We were not aware of it and are currently fixing that."
Middletown issued a statement that said the two sick leave payout laws conflicted with each other and has been a source of confusion for years.
"The comptroller’s report proves that this extreme confusion exists, especially given that 95% of the municipalities surveyed demonstrated non-compliance that can be attributed to the lack of guidance from the state," Middletown's statement said.
"Prior to this report being released, the Township had already engaged in devising a plan to recoup all funds that need to be repaid."
Noting that the potential issues are likely more widespread, Walsh, the state comptroller, said the findings should prompt taxpayers and municipal leaders to ask more question about how and why these laws were disregard.
“Someone either decided to disregard the law or was asleep at the switch,” he said.
The comptroller’s office reviewed policies in each of the 60 towns. While it did not quantify how much was wasted on sick leave payments, it did find evidence that “unlawful payments” were being made, Walsh said.
He asked the 57 towns with findings to quantify how much money each spent on illegal sick leave payouts and come up with plans to recoup that money where possible.
“If they are not forthcoming with the information, we might need to step back in,” he said. Walsh also recommended the state provide stronger oversight of the sick leave payout laws, including an agency responsible for making sure the laws are followed.
For subscribers:NJ home schooling spikes sharply amid COVID-19 pandemic
Please consider supporting local journalism by subscribing to the Press atAPP.com/subscribe.
Susanne Cervenka covers Monmouth County government and property tax issues, winning several state and regional awards for her work. She's covered local government for 18 years, with stops in Ohio and Florida before arriving in New Jersey in 2013. Contact her at @scervenka; 732-643-4229; scervenka@gannettnj.com.
