A Bergen County town has been paying tens of thousands of dollars a year to employees who had unused sick leave in violation of state law preventing such payouts, according to an investigation by the state comptroller that also flagged other financial mismanagement.

Palisades Park has been giving sick-leave payouts to its borough administrator each year and allowing him to accumulate unused vacation time and other severance for another lump payout over $360,000 when he retires, in violation of state laws from 2007 and 2010 that allow a one-time payout capped at $15,000 upon retirement, according to the Office of the State Comptroller.

But the questionable sick-leave payouts weren’t limited to the administrator. In 2018, the borough paid over $109,000 to 27 employees who shouldn’t have received them under a 2010 state law, according to the report. In 2019, it similarly paid over $95,000 to 22 employees.

“Palisades Park wasted hundreds of thousands of taxpayer dollars by ignoring legislation designed expressly to prohibit this kind of waste,” acting State Comptroller Kevin Walsh said. “The law is very clear on this: Sick time is an essential benefit that allows employees to recover when they’re sick, not a way for employees to quietly boost their salaries.”

The audit, which began after a complaint was received, also found:

  • The 1.25-square mile borough spent $120,000 on gas in 2019, through gas cards issued to multiple employees in part to fuel their personal cars. It includes legitimate spending on police and fire vehicles, but the town doesn’t know how many cards are issued or who has used them. All of the cards have the same account number and PIN.
  • The $207,000 yearly contract for the borough administrator, David Lorenzo, grants him 57 weekdays off a year – 12 sick days, 15 holidays, 25 vacation days, four personal days and his birthday. He also gets a $350 monthly car allowance, despite having a fuel card and auto maintenance covered. (The deputy administrator gets a municipal car and $250 allowance.)
  • Borough officials in 2017 approved a nearly $68,000 request from Lorenzo for reimbursement of personal costs related to an investigation of his privately owned construction business such as accounting services, legal fees for his wife and a cancelled pre-paid vacation. It was rescinded after the comptroller’s investigation began.
  • The business administrator can only be terminated through a unanimous vote of the mayor and council, according to his contract. State law requires a two-thirds vote.
  • The chief financial officer approves financial transactions by text message, and his signature stamp is often used to approve documents he hasn’t reviewed.

Employees in Palisades Park get 12 to 15 sick days a year and can roll unused days into the following year. They can accrue a maximum of 60 days of sick leave, and many of them can be paid annually for the time that exceeds 60 days.

“Palisades Park’s leadership failed to follow the law, failed to protect public funds, and failed to act in the best interests of Borough residents,” Walsh said. “When local leaders abuse and waste taxpayer funds, public confidence in government is harmed.”

The comptroller recommends that Palisades Park should recoup annual sick leave payouts paid out improperly since 2008 and eliminate all sick-leave payouts, except for $15,000 payouts at retirement. It also recommends eliminating fuel cards for personal cars and instead reimburse employees for mileage.

The borough did not dispute the findings in the report. In its formal response, it said the “governing Body has been in ongoing discussions with the administrative staff and its professionals to address the issues set forth in [the] draft report.”

In response to the audit, the borough now prohibits using personal cars for borough business and limits the use of municipal vehicles. It has updated sick and vacation leave tracking and requires preapproval for expense reimbursement. It is reviewing employee contracts, including Lorenzo’s.

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Property taxes in Palisades Park, which has a population of around 20,700, average just over $10,000 for the average home. The nearly $18 million municipal tax levy amounts to $3,560 for the average home.

The information in the report was referred to the Local Finance Board and Division of Local Government Services, in part due to possible violations of the state’s ethics law.

Suspected government mismanagement or fraud can be reported to the Office of the State Comptroller anonymously by calling 1-855-OSC-TIPS (1-855-672-8477) or by email at comptrollertips@osc.nj.gov.

Michael Symons is State House bureau chief for New Jersey 101.5. Contact him at michael.symons@townsquaremedia.com.

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