New Jersey Local Governments Owe Billions In Sick Leave Pay

Decades of generous union contract policies for government workers is leaving future local government spending with flu like symptoms. Financial audit numbers are showing that New Jersey local governments owe $2 Billion in sick leave pay that must be dispersed when a government worker retires.

A government-watchdog agency that scrutinizes local-government employment practices is once again calling for widespread reform after finding new examples of high-cost benefits that can exacerbate New Jersey’s property-tax burden.

A report issued on Wednesday by the State Commission of Investigation said many local governments still pay workers significant lump sums when they retire to compensate for accrued sick time — even though that practice was flagged in an agency report 10 years ago.

In some cases, local governments have been forced to issue bonds to cover payments due to retirees, compounding the expense by making taxpayers foot the long-term interest costs.

A major data-analysis project conducted by NJ Spotlight in 2017 determined that local governments, including school districts, municipalities and counties, were on the hook for nearly $2 billion in payments for unused absences.

One of those towns is Lodi, where the current police contract allows officers to take up to 15 days of sick leave annually, and according to the report, receive annual cash compensation for unused time. The cost of funding such compensation that was passed along to local taxpayers was more than $800,000 between 2013 and 2018, according to the report.

Source: NJ Spotlight

Published by Hoosier Econ

Located out of Central Indiana. Blogger of economics, politics and societal trends.

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