Ocean City Audit Presentation Includes Discussion of Lifeguard Pensions

Ocean City, NJ -- Ocean City’s seasonal lifeguard pension became a topic of discussion during a presentation of the 2015 audit to city council during its meeting Thursday night.

The city once again received a "clean audit" for 2015, meaning the auditor didn’t file a single finding or recommendation pertaining to the city’s finances. Ocean City has received a "clean audit" every year since 2008, Mayor Jay Gillian said.

Councilman Bob Barr asked auditor Michael Garcia, of Ford, Scott and Associates, if there was anything the city should be doing that it isn’t.

“The city’s always dealt with items before they become an issue,” Garcia said, but he noted that the city had just $7,600 in its lifeguard pension at the end of 2015.

The minimum requirement is for the fund to be able to cover what it pays out, which is expected to be almost $212,000 to 35 retired lifeguards in 2016, according to Chief Financial Officer Frank Donato.. The average pension is about $6,000.

Lifeguards are eligible for pensions at age 45 after 20 years of service, including 10 consecutive years before retirement. At that point, they annually collect half of their final summer's pay (or half the average of their final three summers' pay).

Ocean City receives $4 million in beach tag sales annually, and a portion of those sales are used to support the lifeguard pension, according to Donato. That is combined with about $55,000 in lifeguard contributions, which equals about four percent of their payroll. Donato said appropriations have grown as more lifeguards are hired.

The pension is state-mandated, but must be paid through local contributions. Ocean City's pension has been in place since 1988.

Garcia suggested hiring an actuary to analyze the account. The city received a similar suggestion in 2013, before council passed a resolution asking the state to put an end to the seasonal lifeguard pension fund.

There is also pending legislation to eliminate lifeguard pensions, focused specifically on Atlantic City, where lifeguard pensions cost the city about $1 million a year, according to nj.com.

Gillian commented on the overall findings of the audit in his weekly address.

“Detailed audits are required by the state for all municipalities and conducted by outside accounting firms to ensure that sound financial practices are maintained,” Gillian said. “Because city budgets are so complex, it’s very common for auditors to make recommendations. But Ocean City has not received a single finding or recommendation since 2008.

“The clean audits are testament to the hard work, experience and professionalism of Financial Director Frank Donato, his staff and the entire city team. They’re also an important factor in the exceptional AA bond ratings that help Ocean City borrow money at low interest rates. That allows us to continue our aggressive capital plans."

The attached image is an Ocean City Patch file photo