North Jersey owes $273 million in retirement payouts
An explanation of accrued retirement liability and how banked time can become hundreds of thousands of dollars in payouts upon retirement for municipal and school employees. Jessica Presinzano/NorthJersey.com
Without comprehensive statewide retirement payout reform towns are left to find individual solutions
When Michael McMorrow, the former Englewood Cliffs deputy police chief, retired last winter, he took with him an extra $441,000 in taxpayer money to compensate him for unused sick time, vacation days and holiday pay over his four-decade-long career.
When Robert Carney, the former Teaneck police chief, retired on New Year’s Day, the township paid him nearly $250,000, courtesy of the same benefit.
And when Michael Postorino, the Paterson fire chief, decides to retire, he’ll get at least a $232,000 payout from the perennially cash-strapped city. He’s just one of 24 city police officers and firefighters whose pending severance payments — each totaling more than $100,000 — will further bleed the Paterson budget by forcing the City Council to borrow $5 million to cover the tab.
These payouts are common and legal in the Garden State. However, they make public officials cringe and taxpayers seethe because they divert resources and millions of dollars from other priorities: paving roads, hiring cops and lowering property taxes. But the lack of a statewide policy capping or ending these end-of-career rewards for veteran employees means municipalities are left to deal with the liability on their own — with sometimes wildly different results, an investigation by The Record and NorthJersey.com reveals.
The benefit is often built into contracts negotiated by labor unions or individual professionals with the public agencies. Some municipalities have negotiated contracts so that the benefit is eliminated or is mitigated. But the challenge is so great in some cities that they have been forced to add to their debts by borrowing to pay for large individual payouts or the payouts of several employees who retire in quick succession.
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HOW WE DID IT: Reporting behind NorthJersey.com’s payouts project
Marc Pfeiffer, assistant director of the Bloustein Local Government Research Center at Rutgers University, said payouts were once a benefit for public employees whose salaries were typically lower than those of their private-sector counterparts. And being able to bank those days discouraged employees from taking their sick and vacation time, he said.
“No one ever had a real reason to put it aside, because the numbers weren’t that great,” Pfeiffer said. “But clearly as time has gone on, salaries have increased … and it’s become a very expensive benefit.”
If all the municipal employees in Bergen, Morris, Passaic and most of Essex counties retired today, they would be owed more than $273 million, according to an analysis by The Record and NorthJersey.com of state Department of Community Affairs data. That figure excludes school districts and county governments.
Statewide, the retirement liability has grown in recent years.
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