Cape May Authorizes Employee’s Plan to Reimburse COAH Funds

CAPE MAY – At its Aug. 16 meeting, Cape May City Council authorized a plan that allows one employee to use accumulated leave as a means of reimbursing the city for what is termed “overpayment of wages.”
The term refers to the $16,314.99 from the Affordable Housing Trust Fund paid in two bonus disbursements in 2020. Since the reimbursement is no longer in whole dollar terms, some form of employment taxes or other deduction was most likely removed from the payback.
This is not a straightforward reimbursement. 
The city has agreed to allow the employee, Deputy City Manager Louis Belasco, to repay the overpayment in accumulated leave hours at his current wage of $56.52 per hour. The agreement is for the deduction of 37 days of leave valued at $16,729.92. The additional approximate 2.5% has no explanation in the document. The resolution exhibit shows the city reimbursing the trust fund for $16,314.99. 
The arrangement is based on the use of 5 earned vacation days and 33 earned sick days that the employee “accumulated with the city to date.” The resolution also states that the agreement was reached after input from the City Solicitor and Labor Counsel. 
How this will work is somewhat complicated.
Some municipalities allow payouts to employees after departing from their position. Such a process is often a function of the employee’s retirement. This agreement states that if the employee separates from the city for any other reason other than retirement, any remaining balance of the required reimbursement will be deducted from the vacation and sick leave balances prior to any “post-employment payment” for paid time off. 
While the city’s document provides no explanation, this appears to be an acknowledgement that not all the hours in question may be appropriate for separation payout if the employee leaves before retirement. 
Still covering contingencies, the document states that if the employee is not entitled to accrued sick leave based on the manner in which employment ends, the vacation leave balance would be used. Finally, if the accumulated hours, again based on the manner of separation from employment, are not sufficient to cover the required reimbursement balance, the employee at that time agrees to make 12 monthly payments to the city until the balance is paid. 
The language does not make clear when the city will reimburse the trust fund except to say that it will be done “upon full deduction of the entire paid time off.” The final reimbursement to the city will depend on one of the contingent methodologies which may not be fully clear until a separation of service or retirement occurs. Again the document does not make the interpretation fully clear to the public. 
The item was added to the agenda following a special closed meeting of council and attorneys earlier in the day. The item was not part of the published agenda. As a result, no member of the public could have known in advance the item would be voted on, nor could anyone have raised questions about it during the period when the city invites comment on resolutions. There was no explanation given to the public as to how this reimbursement is to work. 
The final vote on the resolution was 4 to 1, with Deputy Mayor Stacy Sheehan opposed. Sheehan said she was voting no because she did not feel that “sick time should be used to pay back a debt.” She also expressed concern that the amount of sick time in the city’s reimbursement agreement with Belasco exceeded the limit the city has for any other instance. 
It is unclear whether this agreement sets up a path for repayment with leave for other individuals who received the bonus checks and are still city employees.
Mayor Zack Mullock spoke to the issue only in general terms, saying it was the city’s intention to see that the trust fund was fully reimbursed for the 2020 bonus distributions to six city employees.
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