N.J. comptroller finds widespread unlawful sick leave payments to public workers
South Brunswick was one of 60 towns the State Comptroller’s Office surveyed in their investigation into sick leave payouts to public workers in New Jersey. Pictured is South Brunswick’s public works building. (Photo by New Jersey Monitor)
Local governments have failed to comply with decade-old reforms meant to end profligate sick leave payouts, the State Comptroller found in an investigation released Thursday.
In a review of 60 towns, the Office of the State Comptroller determined nearly all of them had continued to make large annual payments to public workers for accrued sick time. Just three of the towns studied complied with 2007 and 2010 laws that barred such payments in most cases.
“Legislators from throughout New Jersey thought they had reformed the state’s sick leave policies, but the reforms have largely failed with these 60 municipalities and likely many more,” acting State Comptroller Kevin Walsh said. “Municipalities are willingly and unlawfully assuming substantial financial obligations that must be paid by today’s, tomorrow’s, and future generations’ taxpayers.”
The overwhelming numbers in which the surveyed towns failed to comply with the law suggest the issue stretches past the 60 towns subject to the office’s review, Walsh said.
After multiple reviews by the State Commission of Investigation, a joint legislative panel and a gubernatorial task force recommended reforms to the state’s sick and vacation time payout laws after finding school districts and local governments regularly boosted employee pay with weighty payments for unused leave.
In 2007, the state enacted laws that capped some senior employees to $15,000 worth of sick time and barred annual payouts for unused leave, instead allowing them only at retirement. In 2010, lawmakers extended those rules to all employees hired after May 21, 2010.
Forty-one of the 60 towns studied made sick leave payments that ran afoul of those statutes between 2017 and 2021, the comptroller found. That included 13 towns that continued to make annual sick leave payments, 22 that failed to enact the $15,000 cap, and 20 that breached the 2007 law from multiple directions.
“The laws on sick leave payments are being ignored by a lot of towns, and this is putting a financial strain on taxpayers. Mayors and council members who want to lower property taxes are missing an opportunity to do so,” Walsh said.
On a press call Wednesday morning, Walsh said his office did not quantify the total waste but estimates it totaled many millions of dollars. Investigators do not believe the laws were confusing enough to cause such widespread violations, Walsh added.
The laws on sick leave payments are being ignored by a lot of towns, and this is putting a financial strain on taxpayers. Mayors and council members who want to lower property taxes are missing an opportunity to do so.
– Acting State Comptroller Kevin Walsh
The office found just three of the 60 towns surveyed — Montgomery Township in Somerset County, Upper Township, and Holmdel — avoided costly breaches of the 2010 law. Those included provisions in union and individual contracts that allowed workers to be paid for up to 130 days of sick leave and others that allowed sick leave payouts above the $15,000 cap.
And 80% of towns surveyed allowed sick leave payouts when employees resigned, died, or were fired. The law allows such payments only at retirement. Nearly half, 29, made such payments annually.
The report recommended municipalities designate one person to ensure compliance with sick and vacation time abuse laws and require employee payments above standard compensation be posted publicly and approved by the local governing board as a transparency measure.
“The danger here is that these decisions, especially as to the 2007 law, can be made by people with a financial self-interest in the decision, and that’s why transparency is extraordinarily important,” Walsh said.
It also recommended tasking a state agency with compliance oversight of sick and vacation time and suggested lawmakers should decide whether to keep in place exemptions to the law for certain senior local government workers.
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