When Charlie Schumacher took a job in Town Hall 16 years ago, he was 41-and-a-half years old. He figured he would work for 20 years, retire, and collect lifetime medical benefits under the town’s 20-year package. This week – slightly under four years from when he plans to retire – he found out that the town’s Retired Employees Hospital program violates state law, and that if he wants to collect medical benefits after retiring, he will have to wait nine more years.
The discovery came as a result of a conflict between the town and two former public officials who have threatened to sue the town to obtain benefits. Former Mayor Anthony Just and former Councilman Robert Campanella both claimed they qualify under a 1978 town resolution allowing retired employees benefits after 20 years of service. The town contends neither man qualifies because neither Just nor Campanella had 20 consecutive years.
In investigating state statutes in anticipation of the lawsuit, Marty Pachman, the town’s labor attorney, discovered that the 1978 Secaucus resolution violated state law. State law requires that before collecting benefits, public employees must put at least 25 years into public service positions, including work for the city, for the schools, or in the military. The towns themselves can set a requirement that 20 of those years come from work for the city, but there must be a total of 25 years worked for public entities.
“According to state statute, an employee must work at least 25 years in order to get medical benefits,” said Town Administrator Anthony Iacono.
“Our labor attorney, Marty Pachman went back and looked more closely at our Post-Employee Hospitalization program and reported to us that the policy we have is indeed illegal,” said Mayor Dennis Elwell last week, noting that the council met Tuesday to review its options and to develop a plan that will meet the basic language of the law. They will meet again this week.
According to state law, a person must be in the state retirement plan or its equivalent for 25 years and have earned a minimum of $1,500 per year to qualify for state benefits after retirement.
“Anyone who has a contract that says he or she can get medical benefits after 20 years can throw that policy out the window,” said one town official who asked to remain unnamed. This could impact contracts with the police and various town employee unions.
Although Iacono admitted last week that the Secaucus program established in 1978 is “100 percent illegal,” he said the change would impact less than five percent of the 200 employees. Police contracts, he said, would be affected least since the police require 25 years for a person to receive other retirement benefits.
Expected the benefits
Schumacher, who is the chairman of three of the town’s bargaining units, the Departments Heads Union, the Department of Public Works Foreman’s Union and the Secaucus Housing Authority Union, said the 20 year-provision was a condition of employment.
“They are changing the rules in the middle of the game,” he said. “We have provisions in the contracts guaranteeing us the 20 years retirement. We expect the town to live up to that commitment. We have talked to our attorney and there are remedies the town can put into place to make things right. I am hoping the town will initiate them.”
However, it seems that the town’s options are much more limited than the unions believe. While the state does provide some alternatives, none would allow the town to offer the benefits promised by the 1978 resolution. The state, according to Mayor Elwell, provides several alternatives. A town can put in a provision that will set a specific age for retirement. Under this proposal the town could establish benefits for a former employee provided that employee retires a specific age, such as 62 or 65. Under that provision, the employee might not have to work the full 25 years. This is a policy currently used in Union City. Secaucus has no age requirement currently. An employee would also be eligible for the benefit package if he or she retire due to a disability.
In establishing its new policy, Secaucus is likely to set up a minimum number of years an employee must work in town.
“We wouldn’t want someone coming here after 23 years [of working in another public entity], work here two years, only to have local taxpayers footing the bill for his or her benefits,” a local official said.
Elwell said the town is looking to require an employee to work in Secaucus for at least 20 years in order to qualify.
“If someone worked for Secaucus 20 years and five years in the Army or another town, then that person would get medical benefits,” Elwell said. “What we’re trying to do is mold something close to what we already have, but something that will meet the state statute.”
Iacono said the town will likely also require the 20 years to be consecutive.
“This is not something that has anything to do with the former mayor or the former councilman,” Iacono said. “We believe that was intent of the 1978 law all along. We just want to make it clearer.”
But even without this provision, Just and Campanella would not qualify for the medical benefits under state law. While Just has accumulated 26 years as a mayor, councilman, board member and employee, some of his service didn’t meet the minimum pay standard. Campanella, meanwhile, could only muster 23 years, some of which was as a non-paid Board of Education member. Just, however, said he also believes he is entitled to the benefits under the 1978 resolution.