Published Online: March 24, 2006
Published in Print: March 29, 2006, as Administrators’ Pay Packages Under Scrutiny in N.J.

Administrators’ Pay Packages Under Scrutiny in N.J.

Lawmakers in New Jersey are calling for major reforms in compensation practices for public school administrators in the wake of a scathing report that concludes that millions in taxpayer dollars were spent on lucrative contracts, hidden perks, and pension padding for dozens of superintendents and their top deputies.

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The State Commission of Investigation, New Jersey’s public-watchdog agency, found that a handful of top school administrators were paid as much as 65 percent more than what was publicly reported. In addition, some cashed in tens of thousands of dollars in unused sick and vacation leave, and others were able to negotiate excessive boosts to their pension benefits before retiring, it found.

And, in some cases, administrators may not have reported their full compensation to state and federal tax authorities, the commission also concluded in its 71-page report released this month.

Investigators examined the contracts and compensation packages of 334 top administrators in 71 school districts in New Jersey and concluded that neither state education officials nor local school board members—who are charged with negotiating and approving contracts with top administrators—are doing enough to guard the public purse.

“We are saying that there is something wrong with a system that has created a runaway free-for-all at the expense of taxpaying citizens who are in many cases in the dark about what they are paying for,” said Lee Seglem, the assistant director of the commission.

The superintendents, however, are defending themselves, arguing that elected school board officials approved their contracts in public meetings. They worry that their credibility has been unfairly damaged by the report, said Barry J. Galasso, the executive director of the New Jersey Association of School Administrators.

“What’s most concerning for our members is that they are being portrayed as though they misled the public,” Mr. Galasso said. “In truth, these contracts are public documents, analyzed in newspapers, approved by elected public officials who are skilled at negotiations, and who have the services of phenomenal school board attorneys.”

Understatement?

But Mr. Seglem said there’s a troubling problem of understatement of expenses, even though school districts follow the state’s annual requirement to report salaries for their employees.

For example, Toms River school district officials reported to the state department of education that Superintendent Michael J. Ritacco earned a base salary of $210,750 in 2004-05. But the commission found that Mr. Ritacco’s actual compensation, with cashed-in leave time and other perks, that year was $347,462, or 65 percent more.

Proposed Changes in Compensation Policies

New Jersey’s State Commission of Investigation is calling for sweeping reforms to compensation practices for the state’s top public school administrators. Recommendations include:

• A state law to require that school boards annually publish, for the public, a detailed account of all contract terms and forms of compensation to superintendents, assistant superintendents, and other top administrators.

• A policy that limits accrual of sick leave and vacation days and imposes a cap on cash payouts for unused sick and vacation days.

• A ban on practices that inflate pensions, such as granting large pay raises in the final years of a contract.

• A new unit in the state department of education to create statewide standards for salaries and benefits.

• A training program for school board members that teaches acceptable compensation practices.

“These people comply with what the requirements are, but we are saying that’s not enough when the public doesn’t begin to see what the true value of these contracts are,” Mr. Seglem said.

Another troubling finding, he said, was the common practice of annual cash payouts to administrators who had accumulated sick leave and vacation time.

In the Bergen County Vocational School District, for example, eight administrators, including the late superintendent John Grieco, cashed in a combined $1.21 million for unused leave from 1999 to 2004, according to the report. The commission also zeroed in on districts that added cash bonuses to administrators’ compensation in their final years before retirement to boost their pensions.

Mr. Seglem said the commission opened its inquiry after receiving multiple complaints from residents about the lack of public disclosure surrounding school administrators’ salaries.

The investigation was also part of the commission’s ongoing reviews of public-employee salaries and benefits across New Jersey, where high property taxes are among residents’ chief complaints, he said.

Superintendents Respond

Many of the administrators named in the commission’s report wrote responses, most of which contained defenses of their compensation packages. They argued that they work round the clock, and that they have improved student achievement in their respective districts.

Mr. Galasso of the administrators’ group said the report unfairly compares school chiefs’ compensation with that of other state employees and doesn’t acknowledge that New Jersey’s banning of tenure for superintendents 15 years ago helped create the competitive, free market in which school boards must now negotiate to attract and retain the best candidates.

The report has prompted an outcry from lawmakers, who have vowed to introduce legislation that would adopt the recommendations made by the commission.

Mr. Galasso said administrators believe credibility is their most valuable currency and want to be involved in improving compensation practices that are fair and transparent to the public.

Vol. 25, Issue 29, Pages 30-31

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