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Court Upholds N.J. Curbs on Administrator Benefits

New Jersey's highest court has upheld a law and regulations that curb unused sick leave and certain other benefits for school administrators in the state.

The unanimous ruling by the New Jersey Supreme Court overturns an appellate court decision that had struck down the provisions on the basis that they would deprive some school district superintendents, assistant superintendents, and business administrators of their vested tenure rights.

"We conclude that the legislature had the authority to modify terms and conditions for future contracts for public employment in a manner that did not raise constitutional concerns," the state high court said in its May 3 decision in New Jersey Association of School Administrators v. Schundler. "The laws that protect tenure rights did not prevent the legislature's later actions. In this case, the legislature properly exercised its power when it directed the commissioner [of education] to issue regulations for new contracts for superintendents and assistant superintendents."

The curbs grew out of concerns about excessive increases in compensation and benefits for local school administrators in the Garden State, including from a 2006 report by the State Commission on Investigation titled "Taxpayers Beware: What You Don't Know Can Cost You: An Inquiry Into Questionable and Hidden Compensation for Public School Administrators."

The legislature adopted a new layer of oversight, the executive county superintendent of schools, who must approve the hiring, compensation, and benefit plans for top administrators of the state's 603 local school districts.

The legislature also found that many administrators were cashing in substantial accumulated sick-leave amounts. It capped the amount of sick-leave payouts that certain education employees could receive upon retirement at $15,000.

In 2008, New Jersey's education commissioner issued regulations interpreting the curbs and setting out more specific limits on compensation and benefits for school administrators. The state administrators sued to challenge the new rules.

A state appellate court found that the rules infringed the vested tenure rights of administrators and reduced the compensation of some assistant superintendents.

The New Jersey Supreme Court found that the law and its regulations apply only prospectively.

"The statute does not deprive officials of any property already earned, and it protects existing contract rights," the court said. "The legislature enacted the statute in the wake of reports by two of its own committees, which highlighted excessive benefits for school administrators in general, and excessive payments for unused sick leave in particular."

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