TRENTON – The New Jersey Office of the State Comptroller (OSC) issued a report that found 95% of the municipalities studied were in violation of state rules governing the payout of accumulated leave.
The OSC studied only 60 towns across the state, with only one of those towns in Cape May County. Upper Township was one of the few municipalities studied to have no adverse findings.
The report highlighted something that many residents and taxpayers have only a vague notion of – classes of municipal employees get to bank unused leave, both sick leave and vacation leave, for a payout when they retire from municipal service.
The unused leave hours are not only banked, but they also grow in value since an employee who banks hours from early in his/her career with a municipality gets to cash them in at the rate of salary attained by retirement.
Testing a municipality’s compliance with state law is a complex process that requires a review of contracts, financial statements, and other documents.
A look at the accumulated leave liability across Cape May County towns at the end of 2021 shows a leave liability balance of over $19.6 million. That represents the amount that would be paid if all individuals who have banked leave qualified for retirement and cashed in their hours.
These numbers are based on the accumulated compensation leave balances listed in the state Department of Community Affairs’ 2021 User Friendly Budget Database.
The amount owed ranges from $6.4 million in Ocean City, followed closely by Wildwood at $4.6 million, to as low as zero accumulated absences in the three boroughs of Stone Harbor, Cape May Point, and Woodbine.
In municipalities with large balances, the bulk of the accumulated leave belongs to police officers, including 72% of the $4.6 million balance in Wildwood.
To cite these numbers is not to say that the municipalities are in violation of the two state laws, one in 2007 and one in 2010, that limited the payouts for new employees while grandfathering existing employees. That’s for the OSC to determine.
Looking at the numbers provides insight for taxpayers into a benefit many do not know exists. The private sector rules for use-it-or-lose-it do not apply in most of the state’s 565 municipalities. Instead, the benefit is a payout at retirement that can easily amount to significant dollars.
In many cases, the liability grows each year because more individuals bank hours than others are paid at retirement. It is also the case that the benefit now carries limits, although it still exists, for workers hired after 2010.
Have any thoughts and/or information on this topic? Email vconti@cmcherald.com.
