Report Blasts 16 NJ Towns For 'Waste, Abuse' Costing You Millions

NEW JERSEY – A new state report takes 16 New Jersey towns to task for allegedly wasting millions of dollars because they engage in "questionable" practices that allows "waste and abuse" of their finances (see the towns below).

The state Commission of Investigation on Wednesday issued a report, called "The Beat Goes On and On," that says many towns "continue to engage in questionable benefit practices that needlessly cost taxpayers" despite state and local regulations that limit forms of excessive compensation and other perks.

The inquiry into public employee benefit practices across New Jersey found a wide disparity among the local government entities, the report said. While some had enacted reforms that eliminated wasteful spending, the report said, "there were others that did little to rein in extraordinary perks or authorized loopholes that enabled workers to circumvent certain benefit restrictions."

The SCI, a state government agency charged with shedding light on waste, fraud and abuse of taxpayers' dollars, found that "terminal leave" – particularly the type that rewards employees with cash bonuses at retirement – remains a huge expense for some municipalities, forcing some to make difficult financial choices in order to find adequate funds to pay for it.

“It is simply absurd that, more than 20 years after the commission first sounded the alarm about excessive compensation and questionable perks for public employees, these practices remain the norm in many areas,” the report states.

The commission identified several local governments that permit employees to cash in unused sick leave on an annual basis, enabling some workers to exceed the limits set at retirement in just a few years. Many local governments also continue to provide longevity pay, a form of additional compensation that, in some cases, can boost a worker’s salary by as much as 15 to 18 percent annually.

The leaders of two towns cited in the report, Toms River Mayor Maurice B. "Mo" Hill Jr. and Brick Mayor John G. Ducey, told The Asbury Park Press that the commission's report has inaccuracies. "The report does not fully and accurately describe how the township applies and administers its sick-leave buyback program and overstates the financial impact on the township," Hill told The Asbury Park Press.

Ducey told The Asbury Park Press he was never contacted by the Commission of Investigation, nor was he notified about the report. He said he would have told them that Brick does not allow employees to work around a cap on unused sick time.

Ocean City Public Information Officer Doug Bergen gave the following statement to Patch:

"The report selectively points out a contract provision that applies only to a small percentage of Ocean City employees, including those hired more than 20 years ago with grandfathered benefits. As a footnote in the report points out, the city has capped any potential terminal leave payments to the vast majority of Ocean City’s 268 full-time employees at $7,500. Contracts for about 20 managers and six department heads include the one-time bonuses in lieu of payment for unused sick time."

To reach these conclusions, SCI investigators said they examined relevant employment records, policies and contracts at 50 local government units, including municipalities, county governments and authorities.

The commission recommended the enactment of legislation to create a comprehensive statutory framework to explicitly address employment practices at the local government level in New Jersey.

Here are the towns cited in the report, and what the report said about them:

• Brick: The Ocean County town permits employees to trade in unused leave for cash, the report said. Between 2011 and 2019, Brick paid out $6.6 million in accumulated sick and vacation leave to 197 employees, the report said. The recipients of those payments included more than 50 employees who collected amounts totaling more than $50,000 apiece and seven employees who each amassed more than $100,000 through sellbacks, the report said. All municipal employees in Brick are eligible to cash in accumulated sick and vacation time on an annual basis, the report said. The number of days eligible for redemption and the dollar value paid for the earned time varies among different job titles, the report said.
• East Orange: In New Jersey, many local public workers are eligible to collect annual bonuses – worth a maximum of $5,000 – for waiving health care benefits provided by the local government unit that employs them. These bonuses, given at the discretion of a municipality, can carry a combined cost of more than a million dollars in some larger communities. The commission said it found that East Orange spent more than $1 million for health benefit waivers between 2015 and 2019.
• Elizabeth: Investigators say they found numerous instances in which local governments reward public employees with bonuses or additional time-off just for showing up and not using sick time. Incentive payments of $1,500 are given to police officers and firefighters in Elizabeth who do not use a sick day for an entire calendar year, the report said. Other local public employees in that Union County municipality who use no sick time all year get $550, the report said.
• Englewood Cliffs: Some entities whose generous policies for retirement pay were criticized in the SCI’s 2009 report "unabashedly" continue to engage in the same questionable practices, the report said. Emblematic of these ongoing taxpayer-subsidized giveaways was the $599,877 payout – including $119,401 in terminal leave – handed to the retiring police chief of Englewood Cliffs in 2019, the report said. Indeed, all retiring employees in that Bergen County community qualify for retirement cash bonuses ranging in value from two to six months’ pay depending on years of service, the report said.
• Franklin Township (Somerset County): Franklin police officers who accumulate more than 150 hours of unused sick time can redeem that leave time for 85 percent of its value, the report said. Any money due to the officer is deposited into the employee’s township-sponsored deferred compensation account until reaching the maximum amount of $6,000 per year, the report said.
• Harrison: If strict terms delineating benefits and compensation for local public employees were formally memorialized in state law, it would prevent local entities from engaging in the type of "questionable activity" the commission discovered in the Hudson County town of Harrison, the report said. Officials in the town – to the benefit of an employee – selectively reversed a municipal policy prohibiting payments for unused sick leave, the report said. Nine months before the chief’s planned retirement, Harrison agreed to renegotiate the terms of his contract to include payment for unused sick time. While the bulk of the $90,183 terminal leave payment the chief received was for unused vacation time, it also included $15,000 for unused sick time, the report said.
• Hoboken: The commission said it found that many local entities continue to engage in a range of other questionable benefit and compensation practices that reward employees with paid time off or cash payments for such things as perfect attendance or for donating blood. Some municipalities allow their employees to take birthdays as paid days-off. Some employees in Hoboken, which eliminated many other questionable benefit practices in recent years, still receive a paid day-off for donating blood or participating in a wedding or Bar Mitzvah, the report said.
• Jersey City: The city's terminal leave – particularly the type that rewards employees with cash bonuses at retirement – remains a "huge expense" and has forced Jersey City and others to make difficult financial choices in search of adequate funding, the report said. The city paid out $8.1 million in terminal leave to retiring municipal workers in 2019 and resorted to issuing bonds for millions of dollars to cover such payments, the report said. "Certainly not a sustainable long-term solution," the report said.
• Lodi: The borough's police contract does not explicitly mention severance payments, the report said. Rather, the borough has a long-time practice of rewarding all police officers with three months’ severance pay at retirement, the report said. The commission cast this practice as a wasteful example in which local governments doled out tens of thousands of dollars to employees for "severance" pay at retirement.
• Lodi: Commission investigators also found it is common practice for numerous members of the police department to cash in unused leave time each year. Under the Lodi police contract, officers receive 15 days of sick leave annually – the same amount that, if unused, may be sold back each year for cash, the report said. Records reviewed by the commission revealed that, typically, more than a dozen actively employed officers in Lodi sold back unused sick leave each year from 2013 to 2018 at a combined cost to local taxpayers of nearly $822,000.
• Long Branch: At the Long Branch Sewerage Authority, all employees remain eligible for an extra day’s pay if, on an annual basis, they are not involved in any accident that results in a cost to the authority and/or its insurance carriers, the report said.
• Maywood: The commission said that, in Maywood, all police officers of the Bergen County community are gifted with their service weapons at retirement.
• Ocean City: The commission’s review of local employment contracts revealed an "exceedingly generous provision" that enables some local public employees who work for more than 20 years for the municipal government in Ocean City to collect retirement bonuses worth 50 percent of their salaries, the report said. The contracts also permit department heads and certain management/professional personnel who retire from the city with as little as 10 years of service to collect bonuses worth up to 40 percent of the worker’s salary, the report said. Also, management/professional employees hired before December 31, 1999 and department heads – regardless of date of hire – qualify for bonuses equal to 35 percent of their salaries after completing just five years of service with Ocean City, the report said.
• Paterson: The city bonded for roughly $24 million over the past nine years to cover terminal leave payments, the report said. Paterson officials, as a result, recently scrapped plans to clean-up a local park and to buy new vehicles for the public works department – projects that could benefit the entire community – in order to foot the bill for retirement payouts, the report said.
• Pennsauken: "Extravagant" benefit practices also persist at the Pennsauken Sewerage Authority, a small quasi-independent entity in Camden County, the report said. It gives severance pay equal to three months’ salary to all managers when they resign, retire or separate from the authority, the report said.
• Toms River: The Ocean County municipality banned cash payments for unused sick leave at retirement for employees hired since 2014 and capped such payments for accumulated leave at $15,000 for nearly all other employees, except for police hired before 2010, the report said. Despite those limits, Toms River permits its employees to sell back unused sick and vacation time – albeit with some conditions – each year, the report said. These annual sellbacks cost the township’s taxpayers nearly $731,000 between 2014 and 2018 and have had the effect of "thoroughly undermining the limits for payouts at retirement," the report said.
• Willingboro: In Willingboro, certain employees may earn up to five additional paid personal days for using less than four sick days during the prior year, the report said.