Audit of Berlin Township identifies improper use of public funds

Policies for hiring new employees, reimbursements, and sick leave payments that protect taxpayers were disregarded

TRENTON - An audit released today by the Office of the State Comptroller (OSC) finds that Berlin Township failed to comply with internal controls and the Township’s own policies, resulting in improper payments of more than $265,000.

The audit found that disregard for key controls exposed taxpayer resources to potential waste and abuse.

In one example, Berlin’s police chief hired a new officer without council approval. The chief also approved payroll for that officer for 123 hours of work when records supported only 81 hours’ worth of work.

“It is important that municipalities follow the law and their own rules in order to guard against fraud, waste and abuse and in order to preserve trust in government,” said Acting State Comptroller Kevin D. Walsh.

OSC also found that Berlin Township paid approximately $60,000 to two police officers for unused sick leave contrary to collective bargaining agreement terms.

OSC auditors sampled Berlin’s payroll transactions and found that one police officer received $26,250 and another received $33,432 in 2017 and 2019, respectively. The mayor, CFO and clerk approved the unused sick leave payments in violation of the Police Agreement that forbade sick leave payments except at retirement or resignation if officers served continuously for 15 years.

Berlin’s current agreement with police officers provides for sick leave payments in violation of state law. In 2010, in an effort to control rising property taxes, the Legislature capped payments for unused sick leave for all local government employees hired after May 21, 2010. Payments may be made only at retirement and are capped at $15,000.  Berlin’s current agreement provides that the cap applies to employees hired after January 1, 2016, which creates a period of more than five years during which employees who were hired were provided employment terms inconsistent with state law.

“Agreements with public employees exist in part to protect taxpayers.  Berlin paid employees using public funds in violation of binding contracts,” said Walsh. “Complying with the clear rules for sick leave payments under both binding contracts and under state law is a way to protect taxpayers and safeguard public funds.”

OSC also found that Berlin provided health insurance benefits to the mayor and two council members, but did not keep time and attendance records to determine whether they worked the minimum hours to qualify for insurance coverage. The two Berlin council members informed OSC that their hours worked ranged from 5 to 20 hodurs per week. According to Berlin’s policy, only employees who work at least 35 hours per week are eligible for health benefits. As a result, OSC determined that Berlin improperly paid $219,000 for health insurance coverage for these ineligible employees. In addition, our audit found that Berlin made incorrect payments of $46,463 to employees who opted out of employer-provided health benefit coverage.

Berlin did not have effective oversight over other operations, OSC found, including:

  • Awarding a $757,000 contract for prescription insurance coverage without securing competitive quotations;
  • Allowing adjacent landowners to illegally use 8 of 18 municipally-owned properties without Berlin’s consent or knowledge;
  • Authorizing reimbursement requests only after the mayor had purchased goods and services without prior approval; and
  • Not requiring employees who used municipal vehicles to track their usage, resulting in one part-time employee that possibly utilized the vehicle for personal use.

To report government fraud, waste, mismanagement or corruption, file a complaint with OSC or call 1-855-OSC-TIPS.

The Office of the State Comptroller (OSC) is an independent State agency that works to make government in New Jersey more efficient, transparent and accountable. OSC is tasked with examining all aspects of government expenditures, conducts audits and investigations of government agencies throughout New Jersey, reviews government contracts, and works to detect and prevent fraud, waste and abuse in Medicaid.

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Government Waste and Mismanagement Hotline: 1-855-OSC-TIPS (672-8477)