A561

An Act concerning limits on compensation and benefits of officers, employees, and members of independent State authorities and of local authorities, amending and supplementing P.L.1983, c.313 and supplementing Title 52 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 10 of P.L.1983, c.313 (C.40A:5A-10) is amended to read as follows:

10. a. Each authority shall submit a budget for each fiscal year to the director prior to its adoption thereof. The budget shall comply with the terms and provisions of any bond resolutions, and shall be in such form and detail as to items of revenue, expenditure and other content as shall be required by law or by rules and regulations of the Local Finance Board. Submission of each authority budget shall include a certification by the chairman of the authority that the compensation and benefits of the officers and employees of the local authority do not exceed the limits permitted pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).

b. The Local Finance Board shall prescribe by rule or regulation the procedure for the adoption of budgets by authorities. The rules and regulations may include or be similar to any provisions of the "Local Budget Law" (N.J.S.40A:4-1 et seq.) which the Local Finance Board shall deem to be practicable or necessary, and may further include any other provisions and requirements which the Local Finance Board shall deem appropriate or necessary. The rules and regulations shall provide for approval or disapproval of a budget within 45 days of the director's receipt thereof.

c. The Local Finance Board shall also prescribe by rule or regulation the procedures and requirements for execution of any budget after adoption, and for the administration of financial affairs of authorities. The rules and regulations may include, without limitation, any provisions of the "Local Budget Law" (N.J.S. 40A:4-1 et seq.), and the "Local Fiscal Affairs Law" (N.J.S.40A:5-1 et seq.), which the Local Finance Board shall deem to be practicable and necessary.

(cf: P.L.1987, c.319, s.5)

2. Section 11 of P.L.1983, c.313 (C.40A:5A-11) is amended to read as follows:

11. No authority budget shall be finally adopted until the director shall have approved same. In granting the approval, the director shall consider whether or not:

a. All estimates of revenue are reasonable, accurate and correctly stated;

b. Items of appropriation are properly set forth;

c. In itemization, form and content, the budget will permit the exercise of the comptroller function within the authority;

d. The schedule of rates, fees and charges then in effect will produce sufficient revenues, together with all other anticipated revenues, to satisfy all obligations to the holders of bonds of the authority, to meet operating expenses, capital outlays, debt service requirements, and to provide for such reserves, all as may be required by law, regulation or terms of contracts and agreements;

e. The compensation and benefits of the officers and employees of the authority do not exceed the limits permitted pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).

The director may require such documentation, records and other information, and undertake any audit or investigation, as he may deem necessary in connection with his review.

If the director finds that all requirements of law and the rules and regulations of the Local Finance Board have been met, he shall, within 45 days of his receipt of the budget, approve it; otherwise he shall within that time refuse to approve it. The director, in refusing to approve the budget, shall not substitute his discretion with respect to the amount of an appropriation when that amount is not made mandatory by law or regulation.

Any decision of the director in the course of budget review under this section may be appealed to the Local Finance Board in the manner generally provided by law.

(cf: P.L.1983, c.313, s.11)

3. (New section) a. As used in this section:

"Compensation" means wages, salaries, commissions, or any other form of remuneration paid to officers or employees for personal services but shall not include supplemental compensation for accumulated unused sick leave.

"Local authority" means an "authority" as defined under the "Local Authorities Fiscal Control Law," P.L.1983, c.313 (C.40A:5A-1 et seq.).

b. No executive director or chief executive officer of a local authority commencing service on and after the effective date of this act shall be paid compensation higher than the salary of the Governor of New Jersey without approval of the Local Finance Board, for good cause shown.

c. No officer or employee of a local authority, except as provided in subsection b. of this section, commencing service on and after the effective date of this act shall be paid compensation higher than the salary of an officer listed in section 1 of P.L.1974, c.55 (C.52:14-15.107) or of the Governor, if the salary of such officer shall be higher than that of the Governor, without approval of the Local Finance Board, for good cause shown.

d. Nothing in this section shall be construed as extending or increasing any maximum salary limit or requiring an increase in salary heretofore established by a local authority for an officer or employee of the local authority.

e. An officer or employee of a local authority who on the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), or upon the expiration of a collective negotiations agreement or contract of employment applicable to that officer or employee in effect on that date, has accrued supplemental compensation based upon accumulated unused sick leave shall, upon retirement, be eligible to receive for any unused leave not more than the amount so accumulated or not more than $15,000, whichever is greater.

f. A local authority shall not grant to its officers or employees any paid holidays in excess of those granted to State employees, as set forth in section 25 of P.L.2008, c.89 (C.11A:6-24.1). This subsection shall take effect for a local authority in the calendar year following the expiration of the collective bargaining agreements or contracts covering a majority of the officers and employees of the local authority in effect on the effective date of this act.

g. The local authority shall prohibit the use of six or more consecutive days of accumulated sick leave by an officer or employee commencing service on and after the effective date of this act in the 12 months prior to retirement and in anticipation of that retirement, without a medical necessity verified in writing by a physician. The local authority may require the officer or employee to submit to an examination by a physician selected by the employer to verify the medical necessity. The local authority shall (1) impose a fine and issue a reprimand against the employee found to be in violation of this prohibition, with the fine to be an amount equivalent to three times the daily rate of compensation for each day of violation, or (2) for a second violation of the prohibition, deduct all sick leave found to have been used in violation of this prohibition from the number of days of unused accumulated sick leave credited on the effective date of retirement upon which supplemental compensation, if any, for the employee at the time of retirement is calculated, or (3) both.

4. (New section) As used in this section and sections 5 and 6 of this act:

“Board” means the board of directors or governing board.

"Compensation" means wages, salaries, commissions, or any other form of remuneration paid to officers, employees, or members for personal services but shall not include supplemental compensation for accumulated unused sick leave.

"Executive director" means the executive or administrative head.

“Independent State authority" means a public authority, board, commission, corporation, or other agency or instrumentality of the State allocated, in but not of, a principal department of State government pursuant to Article V, Section IV, paragraph 1 of the New Jersey Constitution, or which is not subject to supervision or control by the department in which it is allocated, and a regional authority, but shall not include a college or university.

"Member" means a member of an independent State authority or board thereof.

"Regional authority" means and includes the Passaic Valley sewerage commissioners and the North Jersey district water supply commission.

5. (New section) The chairman of each independent State authority or the chairman of the board of each independent State authority shall annually certify to the State Treasurer that the compensation and benefits of the officers, employees, and members do not exceed the limits permitted pursuant to section 6 of this act.

6. (New section) a. No executive director of an independent State authority commencing service on and after the effective date of this act shall be paid compensation higher than the salary of the Governor of New Jersey without approval of the State Treasurer, for good cause shown.

b. No officer, employee, or member of an independent State authority, except as provided in subsection a. of this section, commencing service on and after the effective date of this act shall be paid compensation higher than the salary of an officer listed in section 1 of P.L.1974, c.55 (C.52:14-15.107) or of the Governor, if the salary of such officer shall be higher than that of the Governor, without approval of the State Treasurer, for good cause shown.

c. Nothing in this section shall be construed as extending or increasing any maximum salary limit or requiring an increase in salary heretofore established by an independent State authority for an officer or employee of the authority.

d. An officer or employee of an independent State authority who on the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), or upon the expiration of a collective negotiations agreement or contract of employment applicable to that officer or employee in effect on that date, has accrued supplemental compensation based upon accumulated unused sick leave shall, upon retirement, be eligible to receive for any unused leave not more than the amount so accumulated or not more than $15,000, whichever is greater.

e. An independent State authority shall not grant to its officers or employees any paid holidays in excess of those granted to State employees, as set forth in section 25 of P.L.2008, c.89 (C.11A:6-24.1). This subsection shall take effect for an independent State authority in the calendar year following the expiration of the collective bargaining agreements or contracts covering a majority of the officers and employees of the independent State authority in effect on the effective date of this act.

f. (1) The cost of health care benefits coverage provided by an independent State authority that is not participating in the State Health Benefits Program, and therefore not subject to section 7 of P.L.1964, c.125 (C.52:14-17.38) and P.L.2010, c.2, pursuant to another health care benefits plan or program shall be shared by the officers and employees of the authority through the withholding of a contribution in an amount in accordance with this paragraph. Upon the expiration of any applicable binding collective negotiations agreement in force on the effective date of this act, the amount of the contribution required by the officers and employees of an independent State authority for whom there is a majority representative for collective negotiations purposes shall be 1.5 percent of base salary, notwithstanding any other amount that may be required additionally for a share of the cost or a percentage of the premium for such coverage by means of a binding collective negotiations agreement, and the amount of the contribution required by the officers and employees of an independent State authority for whom there is no majority representative for collective negotiations purposes shall be 1.5 percent of base salary, notwithstanding any other amount that may be required additionally for a share of the cost or a percentage of the premium for such coverage by means of the application by the authority to such officers and employees of the terms of a binding collective negotiations agreement or by other means.

(2) The cost of health care benefits coverage provided by an independent State authority that is not participating in the State Health Benefits Program, and therefore not subject to section 7 of P.L.1964, c.125 (C.52:14-17.38) and P.L.2010, c.2, pursuant to another health care benefits plan or program shall be shared by the officers and employees of the authority in retirement through the withholding of a contribution in an amount in accordance with this paragraph. The amount of contribution required in retirement as to an officer or employee of an independent State authority who becomes a member of a State-administered or locally-administered retirement system on and after the effective date of this act, for whom there is a majority representative for collective negotiations purposes or for whom there is no such representative, shall be 1.5 percent of the retiree’s monthly retirement allowance, including any future cost-of-living adjustments, notwithstanding any other amount that may be required additionally for a share of the cost or a percentage of the premium for such coverage by means of a binding collective negotiations agreement or by means of the application by the authority to the officers or employees of the terms of such an agreement or by other means. When an officer or employee is not required to become a member of a State or locally-administered retirement system, this paragraph shall apply to an officer or employee who commences service with the independent State authority on or after the effective date of this act.

g. An independent State authority shall prohibit the use of six or more consecutive days of accumulated sick leave by an officer or employee commencing service on and after the effective date of this act in the 12 months prior to retirement and in anticipation of that retirement, without a medical necessity verified in writing by a physician. The independent State authority may require the officer or employee to submit to an examination by a physician selected by the employer to verify the medical necessity. The independent State authority shall: (1) impose a fine and issue a reprimand against the employee found to be in violation of this prohibition, with the fine to be an amount equivalent to three times the daily rate of compensation for each day of violation, or (2) for a second violation of the prohibition, deduct all sick leave found to have been used in violation of this prohibition from the number of days of unused accumulated sick leave credited on the effective date of retirement upon which supplemental compensation, if any, for the employee at the time of retirement is calculated, or (3) both.

7. This act shall take effect on the 60th day following enactment and shall be applicable to all agreements and contracts entered into or renewed, and all salary resolutions adopted, after the effective date.

STATEMENT

This bill would more closely align the salaries and benefits of officers, employees, and members of independent State authorities and local authorities (collectively, “authorities”) with the salaries and benefits of full-time State employees.

The bill requires the chairman of an authority to annually certify, to the Local Finance Board in the case of a local authority or to the State Treasurer in the case of an independent State authority, that the salaries and benefits of its officers, employees, and members do not exceed the limits set forth in the bill, which are as follows:

1) No new executive director of an authority may have compensation higher than the salary of the Governor without the approval of the Local Finance Board or the State Treasurer, as the case may be;

2) No new officer, employee or member of an authority may have compensation higher than the salary of a State Cabinet Officer without the approval of the Local Finance Board or the State Treasurer, as the case may be;

3) Payments by an authority for accumulated unused sick leave, for all current and future officers and employees, may not exceed the greater of $15,000 or whatever they have already accrued on the effective date of the bill, and shall be paid only at the time of retirement. (P.L.2010, c.3 already imposes this limit on officers and employees commencing service with local authorities on or after May 21, 2010)

4) Officers and employees of an authority would have the same paid holidays, 12 in number, as full-time State employees, when current collective bargaining agreements expire;

5) Officers and employees of an authority, not already subject to such statutory requirement, must contribute a minimum of 1.5 percent of base salary for the cost of health care benefits coverage provided by the authority, and new officers and employees must contribute in retirement a minimum of 1.5 percent of the monthly retirement allowance for health care benefits coverage; and

6) An authority must prohibit the use of six or more consecutive days of accumulated sick leave by any new officer or employee in the year prior to that officer or employee’s retirement without a medical necessity verified in writing by a physician. The bill provides for penalties to be imposed on those who violate this prohibition.

The bill defines "compensation" as wages, salaries, commissions, or any other form of remuneration paid to officers or employees for personal services but shall not include supplemental compensation for accumulated unused sick leave.

Also, in granting the approval of the budget of a local authority, the bill requires the Director of the Division of Local Government Services to consider whether the salaries and benefits of the officers and employees of the local authority exceed the limits described above.

This bill would become effective on the 60th day after enactment and be applicable to agreements or contracts entered into or renewed, and salary resolutions adopted, after the effective date.