Audit says Turnpike Authority wasted $43 million

More than $43 million, two-thirds of which was paid for bonuses that state auditors say can’t be justified, was squandered by the New Jersey Turnpike Authority since 2007, says an audit issued today by the Office of the State Comptroller.

That’s enough for more than 4.75 million drivers to pay cash and drive the entire length of the New Jersey Turnpike.

State Comptroller Matthew Boxer noted that the Turnpike Authority increased tolls on the New Jersey Turnpike and Garden State Parkway in 2008 and has already voted to raise them in 2012. “While tolls are going up, the Turnpike Authority is overpaying its employees, overpaying its management, overpaying for its health plan and overpaying for legal services,” Boxer said.

Roughly $30 million in bonuses and payouts in 2008 and 2009 that the comptroller’s office questions “are in the best interest of the public.” Out of the authority’s $381 million in payroll expenses in that time, that’s roughly $1 of every $13 spent, on things such as:

While longevity bonuses have been slowly phased out for new employees since 1996, roughly 1,400 workers still receive them annually. These amount to an annual 4 percent bonus for folks with more than 10 years of service, 6 percent at 15 years and 7 percent at 30 years. During 2008 and 2009, this cost $11.6 million.

Employees can get annual payouts for unused sick time, costing the authority $3.8 million in 2008 and 2009 and enabling employees to circumvent the $15,000 cap on cashing in unused sick time upon retirement (which itself cost the authority $2.1 million in 2008 and 2009). Workers get 15 sick days a year and can cash in five a year during their first five years on the job and 10 a year after that.

Workers can similarly receive annual payouts for unused vacation days, costing the authority $3.7 million in 2008 and 2009.

Separation bonuses of $500 to $600 for each year of service upon departing from authority employment for employees in seven of the 10 bargaining units. This cost $1.4 million in 2008 and 2009.

An additional voluntary separation plan offered to employees in the last two months of 2007 cost the authority nearly $2.7 million. The authority said that program (and earlier ones in 2005 and 2006) cut 243 full-time positions and yielded $39 million in salary savings through 2009.

Parkway toll collectors can be paid “bank-out” bonuses of $1,650 a year for spending time counting money from tolls collected after their normal shift ends. This cost over $653,000 in 2008 and 2009.

A “snow bonus” of $1,000 to $1,700 is paid to employees who work plowing snow, on top of their overtime pay. This cost the authority nearly $268,000 in 2008 and 2009.

Part-time toll collectors get $400 anniversary bonuses each year following their fourth year of service. This cost $274,000 in 2008 and 2009.

One union contract provides bonuses to employees who work on their birthday, costing the authority $227,000 in 2008 and 2009.

Holiday bonuses of $25 to $100 to employees who work on a holiday that falls on a day they otherwise weren’t scheduled to work, on top of their time and a half or double time they’re often also afforded. Cost to the authority in 2008 and 2009 was $226,000.

The Turnpike Authority, in its formal response to the audit, noted the payments were made in accordance with union contracts. It said it would consider eliminating the bonuses and payouts during contract negotiations with unions in 2011.

Similar payments were made to authority managers and other “at-will” staffers not subject to a collective bargaining agreement, the audit said, costing the authority $3 million in 2008 and 2009.

“Rather than set an example, management at the Turnpike Authority chose to piggyback off of the generous bonuses and payouts it agreed to provide its employees,” Boxer said. “In doing so, it compromises its ability to objectively represent the interests of the public when negotiating these union contracts.”

“The conclusion that the authority’s executive management ‘piggybacked’ off of various collective bargaining agreements and thus impaired executive management’s collective bargaining objectivity is unfounded,” the authority said. “Indeed, there is no evidence to support a finding that the authority’s executive management negotiators did not always negotiate in a manner that was in the best interests of the authority.”

One property inspector who retired in 2008 at a $73,469 salary was able to parlay the various payouts and bonuses into a $321,985 final year earnings, the audit said.

Employees are also provided E-ZPass transponders to commute to work toll-free, causing the state to miss out on $430,000. This will be phased out by year’s end, the authority said.

The audit also found the authority has a contract with one union providing retirees’ health benefits after five years of service.

The audit estimates the authority — which operates the Turnpike, Garden State Parkway and PNC Bank Arts Center — could have saved $4 million this year, on top of $8.8 million combined over the three previous years, if it used the State Health Benefits Program instead of a self-funded plan. It has never done a cost-comparison, the comptroller’s office says.

The Turnpike Authority challenged that conclusion, saying the audit’s cost-analysis didn’t compare each plan’s scope of services. It also hired a consultant in July to compare the programs and recommend ways to trim costs. “The authority maintains that it effectively administered both its overall health benefits program and the related contracts,” the authority said.

Comments