Putting an End to Sick-Pay Accrual by Longtime Public Workers

Colleen O'Dea | March 14, 2018 | More Issues
In effort to prevent county, municipal, and school workers from banking sick pay and cashing in at retirement, two Democratic senators propose an across-the-board cap of $15,000

Credit: Jim Connolly
Sen. Paul Sarlo
“Banking” unused sick pay perpetually and then taking it as a fat retirement bonus may not be an option for longtime county, municipal, and school employees much longer. The current practice has racked up $1.9 billion in debt, and cutting that liability would provide some relief to property taxpayers.

Now, two Democratic senators have introduced a bill that would limit each longtime public worker to a total of $15,000 upon retirement, the same amount that currently applies to all state workers and other public employees hired after 2010.

Similar efforts failed in the last legislative session, but those bills were sponsored by Republicans. This bill, S-2300, is sponsored by Sens. Paul Sarlo (D-Bergen) and Vin Gopal (D-Monmouth).

Democratic bills will have a better chance in the State House, where the party controls both the Legislature and governorship. As chair of the Senate Budget and Appropriations Committee, Sarlo holds a powerful post and may be in a position to move the measure along.

Opposition ahead

Still, it is likely to face opposition from police and teachers unions, which usually fight hard against any measure that might limit compensation to members. Union officials did not return requests for comment yesterday. In the past, the New Jersey Education Association has said that all forms of compensation should be subject to contract negotiations and opposed any legislative attempt to limit payouts.

The practice of allowing public employees to accrue unused sick days and receive payment for those days at retirement is a longstanding but expensive one. Last spring, NJ Spotlight calculated the total liability owed by counties, towns and school districts statewide to be more than $1.9 billion. It would cost every New Jerseyan about $207 to cover that bill.

There is no requirement for local governments to set aside at least a portion of their sick-pay liabilities, so when a large payout comes due, it can force them to use emergency appropriations or borrow money to cover the cost.

Municipalities, in particular, that agreed to contracts with generous sick-time accumulation provisions have been forced to give retiring police officers and department heads six-figure golden parachutes. Last year, Jersey City set a record when its retiring police chief Phil Zacche amassed 450 unused days of leave worth $512,620. Just months after retiring, Zacche was charged in federal court with fraud for submitting time sheets to receive about $32,000 in pay from the Jersey City Housing Authority for security work he never performed. He has since agreed to a plea bargain and is awaiting sentencing.

‘Horror stories’

“Property taxpayers are seeing horror stories month after month as they foot the bill for six-figure bonuses stemming from unused sick days,” said Gopal, noting the liability for unused leave time in Monmouth and Ocean counties totals $102 million. “It’s just another reason why New Jersey’s property-tax burden continues to suffocate homeowners and it needs to end. Worst of all, it misses the point of paid sick days. Sick days are intended to recover from illness or aid ailing family members. They should not be treated as investments. Private-sector businesses don’t pay out six-figure bonuses for sick days and property taxpayers shouldn’t have to either.”

The total due for unused sick time in Jersey City alone dwarfs that of Monmouth and Ocean. According to the city’s 2017 budget, workers had accrued more than 300,000 days of leave time worth some $116 million. The liability in Newark totaled $52.5 million. Sarlo’s home county of Bergen had a $50 million debt owed for almost 146,000 days unused by county employees alone.

“New Jersey’s taxpayers have shouldered the burden of massive, unused sick-day payouts for far too long,” said Sarlo, who has long been an advocate of limiting such payments. “It’s time we give the taxpayers some much needed relief and end this trend of enormous — sometimes six-figure — payouts. Sick days are designed to be utilized, not stockpiled and used as a bonus.”

Payments for accrued sick days have long been capped for state employees. In 2010, former Gov. Chris Christie requested — and got — a cap of $15,000 for payouts going to any new school, county, or municipal employee. But that only capped new hires at $15,000. Anyone who was already employed was grandfathered in and could continue to accrue pay for unused absences.

The Legislature then passed a bill co-sponsored by Sarlo that was similar to Christie’s measure. That bill would have capped all employees’ payouts for sick time at $15,000, although leaving whatever was accrued to date in place. But Christie conditionally vetoed the bill, saying the practice needed to be stopped altogether. A revised bill was never passed.

Under the new bill, S-2300, any public employee who has already accumulated more than $15,000 in sick leave may still be eligible for what’s accrued but would not be allowed to bank anything further. All other employees would be capped at a payment of $15,000 on retirement. Workers could continue to amass days beyond their cap to use for an extended illness, but they would not be allowed to cash them in at retirement.

Gopal and Sarlo note that payouts for unused sick days are funded by property taxes and contribute to the state’s highest-in-the-nation property taxes — the average home owner paid $8,549 last year.

While some local officials would like to see all payments for unused leave time eliminated, others would be happy with any limit on the amounts that would have to be paid.

Michael Cerra, assistant executive director of the New Jersey State League of Municipalities, said he had not reviewed the bill fully yet, but that “Any step, any reform, and any relief is welcomed.”