The Big I.O.U.
What city obligation is equal to one-tenth of the entire municipal budget?
Why, it’s the Compensated Absence Liability, of course. Never heard of it?
It’s the amount owed to employees for all the accumulated time they have not yet taken, such as vacations, personal days and sick days. In 2002, the state Division of Local Government Services began requiring municipalities and counties to declare the total days and dollar amount of the liability. This year’s Sheet 3c of the budget statement that must be sent to the state is an Analysis of Compensated Absence Liability. In Plainfield’s case, the city owes employees 17,661 days for a total of $4,880,872.90. (The proposed municipal tax levy for FY 2009 is $48,198,183.) Municipalities can set aside funds to offset the liability, but Plainfield’s reserve is zero.
It’s not likely that all the employees owed compensation would decide to cash in at the same time, but with a relatively mature work force, a bunch of retirements could cause a crunch.
Plaintalker reached out to Robert Casey, executive director of the New Jersey Municipal Managers Association, for his perspective. Casey, who counts Plainfield as one of nine jurisdictions where he has served as interim city administrator, explained that the liability comes about as a result of negotiated agreements. Most rural and suburban municipalities simply don’t allow such obligations to accrue, he said, but it is in urban cities with strong unions that the liability builds up. Casey said the situation is not unusual for cities and is not normally a problem unless a large number of employees retire simultaneously.
Most private sector employers have limited the number of sick and vacation days that can be rolled over to the next year, the so-called “use it or lose it” policy. But Casey said the liability for cities may go back many years.
There have been instances in Plainfield where a police or fire chief went out on a year of “terminal leave,” meaning the retiring chief was using up accrued compensation while someone else was acting chief. The situation also meant a new permanent chief could not be named until the retirement took effect.
As indicated on the analysis, the FY2009 liability is 8,080 days and $2,135,051.24 for the Police Division, 3,783 days and $1,023,618.13 for the Fire Division, 1,722 days and $408,371.74 for Public Works and 4,076 days and $1,313,831.79 for other employees.
The only strategy Casey could recommend for the future was “purely negotiations at the table.”
Plainfield has six or seven bargaining units that normally negotiate multi-year contracts. Whittling down the Compensated Absence Liability could take a really long time. It would take a combination of retirements by those owed the most and a firm hand at the bargaining table to rein in future liability. As it stands, the liability amounts to nearly 70 years’ worth of workdays.
--Bernice Paglia
Why, it’s the Compensated Absence Liability, of course. Never heard of it?
It’s the amount owed to employees for all the accumulated time they have not yet taken, such as vacations, personal days and sick days. In 2002, the state Division of Local Government Services began requiring municipalities and counties to declare the total days and dollar amount of the liability. This year’s Sheet 3c of the budget statement that must be sent to the state is an Analysis of Compensated Absence Liability. In Plainfield’s case, the city owes employees 17,661 days for a total of $4,880,872.90. (The proposed municipal tax levy for FY 2009 is $48,198,183.) Municipalities can set aside funds to offset the liability, but Plainfield’s reserve is zero.
It’s not likely that all the employees owed compensation would decide to cash in at the same time, but with a relatively mature work force, a bunch of retirements could cause a crunch.
Plaintalker reached out to Robert Casey, executive director of the New Jersey Municipal Managers Association, for his perspective. Casey, who counts Plainfield as one of nine jurisdictions where he has served as interim city administrator, explained that the liability comes about as a result of negotiated agreements. Most rural and suburban municipalities simply don’t allow such obligations to accrue, he said, but it is in urban cities with strong unions that the liability builds up. Casey said the situation is not unusual for cities and is not normally a problem unless a large number of employees retire simultaneously.
Most private sector employers have limited the number of sick and vacation days that can be rolled over to the next year, the so-called “use it or lose it” policy. But Casey said the liability for cities may go back many years.
There have been instances in Plainfield where a police or fire chief went out on a year of “terminal leave,” meaning the retiring chief was using up accrued compensation while someone else was acting chief. The situation also meant a new permanent chief could not be named until the retirement took effect.
As indicated on the analysis, the FY2009 liability is 8,080 days and $2,135,051.24 for the Police Division, 3,783 days and $1,023,618.13 for the Fire Division, 1,722 days and $408,371.74 for Public Works and 4,076 days and $1,313,831.79 for other employees.
The only strategy Casey could recommend for the future was “purely negotiations at the table.”
Plainfield has six or seven bargaining units that normally negotiate multi-year contracts. Whittling down the Compensated Absence Liability could take a really long time. It would take a combination of retirements by those owed the most and a firm hand at the bargaining table to rein in future liability. As it stands, the liability amounts to nearly 70 years’ worth of workdays.
--Bernice Paglia
posted by Bernice at 6:48 PM
1 Comments:
I once believed all the whining about how underpaid public employees are....I'm beginning to see how coddled they are compared to those who work in private industry..who work hard and are held accountable...these public 'servants' have it made....
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