In fact, all but three out of 60 towns surveyed were found to be making excessive payments to public employees for unused sick leave, in violation of state law.
“Taxpayers’ money is being wasted in ways that violate New Jersey law,” acting Comptroller Kevin Walsh said in a statement. “Year after year, towns spend taxpayer money to fund costly, wasteful year-end bonuses for public employees that are hidden from taxpayers.”
Not only have towns allowed public workers to convert unused sick days into yearly bonuses, some even promised to make large payments years down the road — potentially increasing a worker’s pay by hundreds of thousands of dollars.
Walsh said municipalities that promise their employees sick leave payouts create a financial liability of many millions of dollars for taxpayers.
The investigative report shows nearly all of the 60 towns reviewed violated some part of statewide reforms approved in 2007 and 2010 that capped how much a town could pay out to its employees upon retirement.
“Many of the towns we surveyed showed no awareness that these reforms even existed,” Walsh said. “Legislators from throughout New Jersey thought they had reformed the state’s sick leave policies, but the reforms have largely failed with these 60 municipalities and likely many more. Municipalities are willingly and unlawfully assuming substantial financial obligations that must be paid by today’s, tomorrow’s and future generations’ taxpayers.”
OSC’s report found that, in the 60 towns reviewed:
- 80% are letting employees cash out their sick time when they resign or change jobs;
- 60% allow payments over the $15,000 cap;
- 48% give employees annual payouts for their unused sick days.
Moreover, OSC’s report also found that there are no enforcement mechanisms in place to make sure towns are following the law. The report makes a number of recommendations to the Legislature, including:
- Designating a specific person within local government to ensure sick and vacation leave abuse laws are followed;
- Requiring that all payouts to employees beyond their standard pay are posted publicly and approved by the council, so taxpayers are aware of any additional compensation;
- Tasking a specific state agency to interpret and enforce the laws;
- Evaluating whether exemptions for some senior employees in local governments remain appropriate.
“Funds that belong to taxpayers should be spent with the highest integrity and transparency,” Walsh said. “It is disappointing to see so many municipalities disregarding state law and wasting taxpayer funds.”
OSC recommends that individual towns retain an attorney to review existing policies and procedures that appear to be against the law. Towns should assess how much financial liability the town currently has or will have in the future. They must also prepare a corrective action plan and send it to OSC for review.