Fifteen retirements this month, primarily within Atlantic City’s police and fire departments, will cost the city $2.2 million as those employees cash in unused sick and vacation time.
The payments range from $12,437 to more than a quarter-million dollars. Two deputy fire chiefs, Robert Palamaro and Daniel Tamburilla, who retired in February, received the highest payouts totaling more than $283,000 each. Nine others will receive between $125,000 and $209,000.
It’s an issue the city has struggled to control as officials have worked to reduce payments through contract negotiations and state laws limiting the amount of the payouts. But in most cases, officials say, those limits won’t have a significant effect on the budget until years later, when new hires look to retire.
The city has budgeted about $3 million in retirement payouts this year. Payouts approved by City Council this month will account for nearly 75 percent of the budgeted amount.
City Revenue and Finance Director Michael Stinson said the rush of payouts in February can be attributed in large part to the city’s contract with the police union that expired Dec. 31. A fire contract that expired last year also had a similar effect.
In recent years, the city has moved $3 million annually into the trust account from which the retirement payouts are made. That account is used to make payouts for all city employees, but the largest payouts typically go to members of the police and fire departments, whose schedules allow for the accumulated leave, officials said.
As of the end of 2012, the trust account had about $5.2 million, a cushion the city has worked to build in recent years.
“If the city were to close today and we had to pay everybody out — let’s not kid ourselves — it’s not enough,” Stinson said. “From a conservative point of view, you should have more.”
At a recent City Council meeting, officials including 6th Ward Councilman Tim Mancuso and Council President William “Speedy” Marsh questioned what could be done to control the payouts.
Previously, the city attempted to control the expense by spreading the payments over time for employees who didn’t notify supervisors of their intent to retire that year. The change came after the city faced a deficit in the trust account in 2010 when the city paid out nearly $5.2 million. The following year, payouts were cut to $1.7 million as the city attempted to spread out the payments over four years.
A grievance was filed, however, and an arbitrator ruled against the city’s practice, Stinson said.
The city is phasing in limits on unused leave. Payouts are limited to $15,000 for members of the city’s white-collar union hired after 2002. The payments are similarly limited for new firefighters under a contract finalized last year.
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