TEANECK — The township has spent more than half a million dollars in payouts for three retired employees this year, and officials have set aside more than $200,000 more for township employees who decide to retire before January.
The figure is just a piece of the $5.2 million the township owes to its employees for unused sick days, holidays, and compensatory and vacation time. The unused time is a liability some council members want to mitigate by setting aside funds each year instead of being hit with a large bill if several longtime workers decide to retire in a given year.
“Every single year we should be putting something aside. This is not something that happened overnight. This is something that happened year over year, and we continue to kick the can down the road,” Councilman Jason Castle said. “These individuals held up their end of the bargain. Now we have to hold up our end.”
Three significant retirements this year contributed to the unusually large amount of money budgeted for payouts in 2017. Last year, the township set aside $300,000 for retirement payouts.
Robert Carney, the former police chief, retired after 28 years with a salary of $191,433. Thomas Draney, the former deputy fire chief, spent 30 years with the department and left with a salary of $160,704. Kevin Lynch, the purchasing agent, retired after 26 years with the township, making $124,010.
Because the money tied to owed sick and vacation time is based on the person’s salary at retirement, the township’s liability for these longtime employees grows as they move up the ranks.
Draney received $257,262 — $25,651 in holiday pay, $92,715 for unused vacation days, and $138,895 in sick time.
Carney’s $249,467 payout included $140,445 in sick time, $85,408 for unused vacation days, $9,571 in holiday pay, $10,360 for comp time and $3,681 for “X-days,” or shift differential pay.
Lynch received $42,818 upon retirement — $27,818 in vacation time and $15,000 in sick time, which was capped under the terms of his contract.
The $5.2 million is a significant portion of the township’s budget. It is about what the township plans to spend to pay Department of Public Works employees this year, or half the amount it will spend on Fire Department salaries.
Castle has also proposed working with the unions to freeze the amount going forward for employees who are owed more than $15,000 of accrued vacation and sick time.
“I believe that is fair,” he said. “We have employees who have worked for the municipality for many years and have been loyal. But we have to send a message that we cannot afford to allow these to accrue any further.”
This is an issue municipalities across the state are facing.
In Englewood Cliffs, Michael McMorrow, the former deputy police chief, received a retirement payout of more than $441,000 in December. Donald Rossi, who recently retired as Emerson’s police chief, received about $55,000, and Hackensack’s former police director, Michael Mordaga, got a $62,705 payout for unused paid leave last year.
A state Senate bill sponsored by Sen. Jennifer Beck, R-Red Bank, would cap future sick time payouts at $10,000 and limit accrued vacation time to one year. Her bill was spurred by the upcoming retirement of Jersey City Police Chief Phil Zacche, and the $512,620 unused time payout he is set to receive.
The bill is one of 15 separate pieces of legislation that have been introduced, but have not had a hearing to address the nearly $2 billion statewide liability for unused absences for town, county and school district employees.
In 2010, Gov. Chris Christie issued a conditional veto on a bipartisan bill that would have implemented a $15,000 cap. At the time, Christie said he wanted to get rid of the payouts entirely.
These kinds of limits should be implemented on the state level, Teaneck Mayor Mohammed Hameeduddin said. Handling it during contract negotiations is difficult, he said, because arbitrators will compare the terms with contracts other local governments have signed, and both parties have to come to an agreement.
“Hopefully the state will close this and give us the remedy we need so we don’t have to do this anymore,” he said. “But usually the Legislature sleeps on things that affect municipalities.”
Over the years the township has built in caps to limit these types of payouts. Police officers hired after Jan. 1, 1996, are capped at $15,000 for unused sick days. In the Fire Department, firefighters hired after Dec. 1, 1978, have their sick day payouts capped at $15,000. Fire officers’ sick days are capped at $15,000 if they joined the department after Sept. 1, 1989. Township employees’ vacation day payouts are limited to accrued vacation over two years.
Out of 338 Teaneck employees, there are just 38 left who do not fall under the cap, Township Manager William Broughton said.
“As we move forward and those employees retire, the new hires will fall under the cap and our liability will decrease,” he said.
While the employees receiving large checks upon retirement will drop with time, over the next decade the town could be faced with scores of public workers leaving the job with big payouts.
In the mid-1990s the state offered a pension buyout program, and many police and firefighters in Teaneck took the early-retirement offer. Now those employees hired to fill their shoes are becoming eligible for retirement.
If there was a wave of retirements, Broughton said, Teaneck could use “breakage” — the difference in salary between the retired worker and lower-paid new hire — or authorize a special emergency appropriation to cover the cost of the payouts.
“We’ll be able to manage any retirements,” said Broughton. “If there was a mass retirement, that’s something where we could have a special emergency and spread the cost over a number of years.”
Councilman Alan Sohn has argued for budgeting for these payouts over time. At the end of 2015, just $400.46 was set aside for terminal leave liability. At the end of last year, there was nothing left of the $300,000 that had been reserved.
“We have a huge number of employees who pre-date the cap, and the amount they are eligible to receive grows every year. If the wrong people retire at the wrong time, we can be hit really hard,” Sohn said. “If we know the bill is coming and we don’t know exactly when, let’s set aside money every year and plan for it.”
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