Mayor defends finance director's contract

Mayor defends finance director's contract
Citizens group criticizes payout for unused vacation, sick days
BY KENNY WALTER Staff Writer

LONG BRANCH — Mayor Adam Schneider last week came to the defense of city Finance Director Ronald Mehlhorn Sr., who is under fire for contract provisions that allow him to cash out unused sick and vacation days.

"Ron is well paid; he is also one of the best at what he does in the state of New Jersey," Schneider said. "He is in a position where you have tens of millions of dollars coming in every year and going out every year.

"The decisions that he makes, that we rely on him to make, are critical to the taxpayers."

Mehlhorn's contract came under heat at the Oct. 13 City Council meeting. The contract allows the finance director to cash out an unlimited number of accrued sick and vacation days.

Schneider was absent for the meeting but responded in an interview last week and credited Mehlhorn for rarely taking any time off in his more than 25 years of service.

"He rarely takes a day off; it's only in the last couple of years that he did," the mayor said. "If I wanted to call him on Sunday, I'd call him at the office and the likelihood is he'd be there."

Schneider said much of Mehlhorn's contract was carried over from a previous administration in the '80s.

Tensions spilled over last week at the council meeting when a citizens group questioned contracts that allow some highlevel city officials to cash out accrued sick and vacation days.

This comes as the Long Branch Citizens for Good Government discovered through Open Public Records Act [OPRA} requests that Mehlhorn was able to cash out an additional $242,832 in 2006 and 2007 by banking sick and vacation days he has accrued during his more than 25 years of employment.

During the public discussion portion of the Oct. 13 meeting, members of the public repeatedly criticized the mayor and city administration for this practice.

"We in Long Branch need to adopt a use-or-lose policy on vacations," LBCGG spokesman Tom Sheedy said.

"These people supposedly represent the public and the public interest," LBCGG organizer Diana Multare said. "These figures were not easily accessible. They need to come up with an agreement that represents the public interest," she added.

Schneider, however, does not see real savings in the use-them-or-lose them way of doing business.

"The idea that you have to use them or lose, there is a slight savings in there, but it's not a huge number," he said. "So people either have to use their vacation days, which they will, or they'll cash them in every year."

Schneider admitted that the number of days cashed in sounds like a lot, but it also has another meaning.

"There are advantages for both sides when we say we'll pay you for your sick and vacation days," he said. "It sounds like a huge number, it is a big number, but it means he's worked those days."

Schneider was also critical of the timing of revelations about Mehlhorn's contract.

"How much he makes is public record," he said. "When people come up and say, 'Look what we've discovered,' that's false, that's a misrepresentation."

Multare went on to criticize Schneider and question the way contracts are negotiated.

"I don't blame any city employee for trying to get the best deal that they possibly can," she said. "The big question is why wasn't the public represented at the table.

"As we all know, Mayor Schneider controls every dollar spent and every contract negotiated," she said. "And the City Council has to pass on these contracts and budgets."

After Multare spoke, local CPA Lynn Petrovich, who is financial adviser to the LBCGG, spoke about her analysis of the contracts.

She said that the contracts for city employees with 25 years of service or more provide that unused sick and vacation days are compensated at 50 percent of the employee's daily pay rate, not to exceed $25,000. Mehlhorn's contract was different.

"The contract for Mr. Mehlhorn states that all unused sick days should be paid at 100 percent value," she said. "He can accrue an unlimited number of vacation days at 100 percent."

Resident Bill McLaughlin also criticized the city for what he said is the waste of taxpayers' money.

"This is no way to spend taxpayers' money that you are elected to serve," McLaughlin said. McLaughlin refused to blame Mehlhorn for the contract, focusing the blame on Schneider, who was absent from the meeting.

"If he asked for it and you [council members] gave it to him, more power to him," McLaughlin said. "Why did you give it to him?

"I've known Mr. Mehlhorn 20 years. Since you [Mehlhorn] got up there, you got yourself in bad company," he added.

Addressing the council, McLaughlin said, "You gave him that contract to run as your point man."

Both McLaughlin and Multare said that a change in administration is needed.

"If you continue on this track, I think the people of this town should throw you out of office, or run you out of office, or just vote you out of office," McLaughlin said.

"Is it indifference?" Multare asked. "Is it arrogance? As far as I'm concerned, it's time to go. There are other people out there, new blood to take the reins."

At the end of the meeting Mehlhorn responded to the criticism, defending the provisions of his contract.

"I didn't say I never took vacation," he said. "It's long hours and long days. It's a lot of money and I'm not hiding behind that."

Another point the city was criticized for was having more than $10.4 million in liability for sick and vacation time due employees, which is not audited, according to Petrovich.

"What is very interesting is the $10.4 million does not show up for the city's audited financial statements for accrued sick and vacation benefits," Multare said.

Mehlhorn defended the liability, saying that while it is a large number, it won't ever be paid out in full.

"It's a contingency liability fund," he said. "It doesn't appear in any of the city's books.

"It's contingent upon the city having to close its doors and having to pay every penny that it owed its employees," he added. "That'll never happen. If it did, that would be the least of your problems."

Councilman Brian Unger said the problem is on the part of the administration, not the employees.

"I've always enjoyed working with Ron," Unger said at the meeting. "However, I take exception to some of the practices we have here at City Hall.

"We should limit the compensated accrual of vacation and sick days," he said. "It's ridiculous; $200,000 and $300,000 payouts are absolutely outrageous and we can't afford them."

Unger said in an interview last week that he is not opposed giving special contracts to top officials, but he would like to limit the vacation payouts.

"It's deficient as a matter of fiscal policy," he said. "Most management employees are covered by the union contract we have."

Unger said that Mehlhorn, Business Administrator Howard H. Woolley Jr. and Director of Public Safety William Richards are the three city employees with special contracts.

"I'm not opposed to giving them a special contract, but it shouldn't be a violation of the public trust," he said. "I don't get a lot of [complaints] on the base pay from people. I think where people really take issue is these huge bonus payments from sick days."

Unger said the problem goes all the way up to the state level.

"The standards that the State of New Jersey uses are not as stringent as GAAP [Generally Accepted Accounting Principles]," he said. "GAAP is considered the gold standard.

"Schools and other government agencies use GAAP," he added. "Municipalities can't use GAAP."

Contact Kenny Walter at

kwalter@gmnews.com.