$8.4M in Unused Sick Time in Toms River

Toms River employees have an estimated $8.4 million in unused sick time.

Toms River Business Administrator Paul Shives said that — similar to what's happened in other communities — more employees are retiring before proposed reform takes place, potentially accerelating the impact on the budget.

In many cases, employees who retire can have a payout of their unused sick time, which has come under strong criticism from , who is urging reform of the practice.

Shives said Christie's push to eliminate the ability to collect on unused sick time and leave has meant that since 2009, “some employees decided to retire a little sooner than maybe they would have.”

And if the governor’s proposed reforms are ultimately enacted, a further rush to retirement is not unlikely. “I would expect to see individuals who were considering retirement would retire sooner,” Shives said.

Shives said the governor’s reforms would be a positive in the long run, but in the short term they could cause headaches.

An employee retiring with a large number of unused days impacts the town’s ability to immediately fill the position, Shives said, because the money to pay for those days must be accounted for in the next township budget. That means less money to replace the departing salary.

The town will face just such a situation in the coming year. As of Feb. 1, 2012, there are 14 police officers retiring. Because of budget factors, including payouts for unused leave, Toms River will only be able to immediately fill about half those positions.

Toms River is among the communities that have endeavored to cut back on big payouts for unused sick time. As per township ordinance, no one hired by Toms River Township after July 2010 is entitled to collect payment for unused leave.

But that is just for new employees. For the moment, longtime employees are still entitled to payouts upon retirement for leave they do not use.

Shives said the town’s total accumulated unused sick time — in other words, what Toms River would have to pay out if every employee retired at the same time — must be reported to the state with each municipal budget. The current total stands at $8.4 million.

Is a scenario in which the township has to pay up to $8.4 million in unused sick time possible?

Unlike many aspects of a township budget, which can be predicted from year to year with reasonable accuracy, Shives said it’s not possible to predict how much the town may have to pay out in unused sick time in any given year. It all depends on who retires and how much time they have accrued.

“There is no single year where you can say, ‘This is average,'" he said.

Shives said in order to budget effectively, the town attempts to guard against being caught unaware by retirements.

“On an annual basis we request that employees who are going to retire give us six months notice,” he said.

Payouts for unused leave are handled on a department-by-department basis and are reflected in each department’s annual budget. Shives said recent negations with local labor unions allow the township, if necessary, to pay out money for unused leave over the course of two budgets rather than all at once.

However, “It would never span more than 24 months,” he said.