Hidden
pay for school superintendents
N.J. report finds a system of
out-of-control deals designed to deceive taxpayers
Tuesday, March 14, 2006 • BY JOHN MOONEY •
Star-Ledger Staff
A Bergen County school chief was awarded
more than a half-million dollars in extra pay for unused
sick time and other benefits, including $300,000 that was
paid to his estate after his sudden death in
2004.
The superintendent in Long Branch saw his
income top $300,000 last year due to more than $110,000 in
one-time buybacks and other payments.
And a former superintendent from Teaneck
may have added as much as $20,000 to his annual pension when
his salary was boosted with end-of-career stipends and pay
for unused leave. That doesn't include the $60,000
consultant contract and retirement golf trip to Myrtle
Beach.
These and dozens more examples are part
of a scathing report on school administrator pay released by
the State Commission of Investigation yesterday. The report
detailed what it called widespread padding and
"manipulation" of compensation, costing taxpayers millions
of dollars in added, and often hidden, school
costs.
The extra perks have become common
bargaining chips in a fiercely competitive market for
administrators, the 165-page report acknowledged, creating
what it called a "sky's-the-limit" contest that has gone
haywire.
"All too often, the result is an unseemly
spectacle reminiscent of sports teams and their competition
for free-agent athletes -- with the cost, of course,
underwritten ... by taxpayers," reads the report's executive
summary.
Titled "Taxpayers Beware: What You Don't
Know Can Cost You," the report examined the contracts of
more than 334 administrators in 71 districts, about a tenth
of the state's school districts.
It recorded one superintendent with a
$2,500 clothing allowance, more than 30 with district cars,
and many more receiving healthy sums in annuities, insurance
and unused sick and vacation time.
The report noted that the general public
is unaware of much of the extra pay, because it is typically
listed in the minutiae of contracts and subsequently
negotiated amendments rather than in disclosed
salaries.
The report puts the onus on school boards
-- and in some cases the state itself --for signing off on
the deals. It made a series of recommendations to close the
loopholes and prevent other abuses.
"This is really about a system that
allows this exorbitance," said Lee Seglem, spokesman for the
SCI and author of the report. "In most of these cases, they
were signed, sealed, and delivered."
Two years in the works, the report drew a
mix of caution and criticism from some of the targeted
officials and their representatives, all of whom had
anticipated its release.
Some of the officials claimed in letters
that the report contained errors, and others contested its
inference that the officials were out to cheat the
system.
"I have nothing to hide," said Long
Branch Superintendent Joseph Ferraina, whose compensation
last year included $78,000 in unused sick time built up over
his 33 years in the district.
"I work very hard and put in a lot of
hours," he added. "To be singled out like this, well,
nothing was hidden. It's all in my contract."
SUDDEN DEATH
The case of John Grieco reflects the
lengths to which districts will go to compensate their
administrators. With a tragic ending.
A well-regarded educator, Grieco was
superintendent of Bergen County Technical Schools when he
also assumed the job as head of Bergen County Special
Services Schools and then superintendent of City of
Englewood schools.
The three jobs made Grieco, a well-known
workaholic, one of New Jersey's highest-salaried
superintendents, with a compensation package to match,
totaling $370,000 in 2003-04, according to the
SCI.
Grieco died of a heart attack in 2004, a
year in which he accrued more than $580,000 that included
payment for accumulated sick, vacation and compensation time
built up over five years. Nearly $300,000 of the total went
to his estate after his death that October.
School officials and others argued that
the various forms of compensation can actually save
taxpayers money as one-time payments that would not be
reflected in the long-term pension.
But the SCI study found cases where these
extra payments were included in determining pensions, in
apparent violation of pension rules. SCI officials said all
its findings were referred to the appropriate agencies,
including the Internal Revenue Service and state tax
offices.
'THEIR MONEY'S WORTH'
State pension regulations dictate that
annual pensions be determined off an employee's base salary.
But the report said, for example, Harold Morris' pensionable
salary in 2002-03, his last year as Teaneck superintendent
in the Teaneck district, was boosted from $170,000 to nearly
$230,000 through a series of payments. That, in turn, bumped
his pension to $81,000 from $61,000.
In addition, Morris received a $113,000
lump sum upon his retirement for unused sick time and a
$60,000 consultant contract to help with unfinished capital
projects, according to the report.
Topping it off was a three-day golf
vacation to Myrtle Beach, S.C., upon his retirement,
"courtesy of district taxpayers at a cost of $1,713,
including round-trip airfare on Hooters Air," the report
said.
In the course of the SCI investigation,
the golf trip costs were reimbursed to the district by three
unnamed Teaneck officials. And in a letter to the SCI last
month, Morris said there was "nothing deceptive or
misleading about the contracts I signed."
"The taxpayers got their money's worth,"
he wrote. "I believe the Boards of Education with which I
worked thought so, too."
Teaneck board president Judith McKay said
her board "relied upon the advice of counsel" in negotiating
the contracts and repeated that the report "does not allege
any unlawful acts on the part of Teaneck school
officials."
Board attorney Sid Sayovitz said it may
be more of an issue of disagreement between how the state
and local communities compensate their employees.
Sick-leave buybacks, for instance, have
been a longtime tool to discourage educators from using up
their sick days, he said. On the other hand, state employees
have seen them capped to contain costs.
"It's not so much they found the
contracts unlawful, but SCI didn't like the contracts,"
Sayovitz said. "I understand their perspective that they
want to change things. It's a legitimate discussion to
have."
Several legislators and state officials
immediately called for statewide reforms in school and
pension regulations to prevent such abuses.
"This report exposed a number of
practices that are not just deceptive but downright
irresponsible, particularly in light of the enormous burden
that school budgets place on local taxpayers," said state
Senate President Richard Codey (D-Essex).
A spokesman for Gov. Jon Corzine said the
report raised "significant and troubling issues of systemic
abuse," and state Department of Education officials said
they would work with school boards and administrators groups
to help close any loopholes and to open the process to the
public.
The full report can be found online at:
http://www.state.nj.us/sci/
John Mooney covers education. He may be reached at
jmooney@starledger.com or (973) 392-1548.
© 2006 The Star-Ledger. Used by NJ.com with
permission.
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