As reported by, last year, cities and towns across New Jersey were forced to lay off thousands of employees to cope with budget woes, while momentum for benefit reform in Trenton pushed a record number of public workers into retirement. In theory, the exodus of employees was supposed to make municipalities leaner and provide some financial relief. Instead, some of New Jersey’s most cash-strapped cities had to pay millions to departing employees for their unused sick and vacation time, even as they struggled to provide basic services. The largest checks to departing workers exceeded $200,000.

For some cities and towns, the total payouts were so big that they had to take out loans to make them. The examination of records, as well as interviews with union and local officials, show cities are encountering a perfect storm: The Christie administration’s push for public workers to pay more for pensions and health care prompted many to retire early just as the bad economy and state aid cuts forced layoffs. Cities and towns with no money to spare were then hit with having to make big payouts for accumulated time that was promised years ago.    

The Star-Ledger reviewed eight municipalities that either borrowed to make their payments under a new law that allows this, or experienced high-profile layoffs last year: Newark, Atlantic City, Camden, Jersey City, Trenton, South Brunswick, East Orange and Hackensack. In total, these municipalities paid more than $39 million last year to more than 700 employees who cashed in their unused sick and vacation time, about $54,000 per employee. At the same time, they laid off about 460 employees, mostly police and firefighters, records show. The State does not have records for every town, but officials say they believe this pattern was repeated across New Jersey.

Jim Ryan, spokesman for the State Police Benevolent Association, said cities that previously benefited when employees skipped vacations to work contributed to the problem because they failed to first calculate the cost of the payouts in the rush to lay off police and push veterans to retire. The result, he says, is that departments are dangerously depleted. “The majority of our members are on the front lines and don’t benefit,” said Ryan. “It’s the administrators getting the big paychecks and leaving our members behind in depleted departments and without proper backup.”

Across New Jersey, 20,237 public employees retired last year, an almost 65 percent increase from the 12,270 who retired in 2009 and the highest number in a decade. Union leaders say fear of public-employee benefit reforms was a major reason workers headed for the exits.