PETERSBURG – The status of a dispute between the Upper Township Board of Education and the state’s Department of the Treasury remains unclear, after the state told the district it was liable for over $1 million due to an alleged unauthorized early retirement incentive set up in the 2000s.
According to communications spanning about eight years, which were reviewed by the Herald, the state told the district that the program improperly encouraged teachers and other school district employees to retire, causing them to dip into their state pension sooner than they otherwise would have, something the state tabulated to cost the program over $1 million in benefits it wouldn’t have had to pay out if it wasn’t for the allegedly “unacceptable” program initiated at the local level.
In letters, the state Department of the Treasury’s Division of Pensions and Benefits told the district it owed over $1.1 million to make up for the losses the allegedly unauthorized early retirement initiative caused to the pension fund. Early retirement or buyout programs are only OK if authorized by state law, the letters said.
But the district told the state it wanted to be heard on appeal and didn’t think the program was improper since it did not discriminate by age, in addition to other legal arguments.
After being put on notice by the state in December 2008 that the program was improper, the district sent several letters the following year, through the school board’s counsel, repeatedly requesting guidance from the state on how to challenge the determination and informing them they disagreed with the state’s characterization of the program. They received little direction.
Eventually, several years later, in February 2014, the state informed the district for the first time of the amount it expected: $1.3 million for the 15 members of the Teachers’ Pension and Annuity Fund who left their job, taking advantage of the program the district had set up. It later amended that number to $1.1 million.
The initial venue for the appeal was determined to be in front of a state board, not an arbitrator or judge, and the appeal was, at one point, briefed by the district and scheduled to be heard by the Teachers’ Pensions and Annuity Fund board. That determination didn’t occur until more than five years after the state’s initial determination.
The state argued it had not violated the statute of limitations, over the district’s objections, pointing out it was not seeking to collect interest on the money it said the district owed it, despite waiting so many years to facilitate the district’s desire to litigate. The district had argued in a June 2014 letter that the state was out of time to go after them for the money at that point.
When litigation eventually did move forward before the New Jersey Teachers’ Pension and Annuity Fund board, the state again asked the district for more records before it would be ready to make a determination. It’s unclear if they ever got the information they sought or if a final determination was made on the matter.
According to a June 2016 letter from the board secretary for the Teachers’ Pension and Annuity Fund to William Donio, Upper Township Board of Education’s attorney, more information was requested, and the district was to be notified when the appeal would be resubmitted to the board. However, all correspondence ends there, as far as the Herald was able to determine.
A public records request sent to the district revealed dozens of communications from 2008-2016 related to the issue, but they did not indicate any resolution before the sudden drop off. Donio is no longer the board’s attorney after being replaced by a different firm in late 2022.
Laurie Ryan, the district’s business administrator and board secretary, was not in her role when the fund was set up but is the current records custodian for the district and confirmed to the Herald nothing was being withheld from the newspaper responsive to its public records request for all correspondence between the Division of Pensions and Benefits and the district.
Vincent Palmieri, the district’s former superintendent, is also copied on some correspondence related to the matter, but he left the district at the end of 2022.
Michele Barbieri, the longtime school board president, is also a recipient of correspondence related to the matter, but she did not respond to a request from the Herald to be interviewed about the subject.
A similar Open Public Records Act request sent by the Herald to the Division of Pensions and Benefits in February has remained unfulfilled. Under state statute, public entities must respond to records requests made pursuant to the law within seven business days. Theoretically, the requested communication would mirror what the district had already provided, but that could not be confirmed after a persistent effort to obtain the records from the state in a timely fashion.
The state has, at the time of publication, provided none of the requested information and continuoually requested time extensions over the Herald’s repeated objections. There has been no material explanation for the delay in providing the public documents.
Daryl Isherwood, the communications director for the state Department of the Treasury, responded to a reporter’s inquiry about the dispute with Upper Township with an email asking for specific questions so he could “track down answers.” But when asked simply how the matter was ultimately resolved, Isherwood didn’t respond.
While the allegations date back over a decade, the potential of a looming $1 million due to the state could be a serious problem for a district that has recently statedit’s facing a “budget crisis.”
An email from Middle School Principal Jeff Leek, sent this March, encouraged parents to attend a letter writing event to implore the governor and state legislators to address the budget crisis.
Acting Superintendent Christopher Kobik echoed the call for action in an email of his own a couple days later and stated the district has had to cut $5 million from its budget since S-2 funding went into effect five years ago.
“We are hitting bone,” Kobik wrote in the email to parents.
The apparent lack of progress or attention to the early retirement matter on the part of the state doesn’tnecessarily mean the district is off the hook. The district went forward trying to litigate its appeal in 2015, even after objecting based on statute of limitations and invoking the equitable doctrines of estoppel and laches, essentially arguing that under common law, the state fatally erred in delaying the litigation of the district’s appeal. While they may have preserved that objection, they still had to litigate and there is no indication the matter was ever adjudicated.
The matter has now sat apparently untouched since 2016. Unfortunately, reviving it now might squeeze the district financially even further.
While there may still be more questions than answers surrounding the $1 million-plus dispute, one thing is clear: Neither side is anxious to answer questions about it.
To reach the reporter, Shay Roddy, email sroddy@cmcherald.com or call 609-886-8600, ext. 142.
