In 2010, New Jersey lawmakers wanted to put a stop to the six-figure payouts police officers and other public employees could get by cashing in their unused sick days at retirement. They capped the sellbacks at $15,000 for anyone hired after the law took effect.

Six years later, Vernon Township, a small town in northern New Jersey, changed its police contract to allow officers to cash in their sick days annually, in addition to at retirement. Over the years 2017 and 2018, officers hired after the 2010 law took effect were paid more than $13,000, according to town payroll records.

Vernon is one of 25 towns identified by the Asbury Park Press and ProPublica as having made payments for unused sick time to officers covered by the 2010 law, totaling more than $460,000 between 2017 and 2019. Now, New Jersey’s acting state comptroller has deemed those types of payments illegal. In some cases, the officers might need to pay that money back.

In a report issued this month, Comptroller Kevin Walsh highlighted improper sick time sellbacks by public employees in Palisades Park, a Bergen County town across the Hudson River from Manhattan. Any sick time sellback payments other than a retirement check capped at $15,000 are unlawful, the report said. The town’s attorney, John Schettino, said police officers are not among those who received payouts for sick days. He said the town is working to get money back from employees who shouldn’t have received it and is changing its contracts to comply with the law.

In Vernon, a reporter’s review of payroll records shows five officers received seven payouts that appear unlawful by the comptroller’s definition. The town’s business administrator, Charles Voelker, said in an email that four officers received payments, but did not respond to a question about the discrepancy.

“The ball was dropped by all parties on this,” Voelker said.

Vernon’s labor attorney, the town police union and auditors never pointed out problems when the contract was approved, he said.

The problem has since been corrected, Voelker said. He did not say whether the money had been repaid. The town’s latest police contract allows officers covered by the 2010 law to convert unused sick time to comp time, which is paid time off.

“Please know that Vernon Township is not alone in this,” Voelker wrote. “There are other contracts throughout the state, where municipalities did and may still be paying sick time” for officers hired within the New Jersey police pension system “without knowing about the law change. Some know, some don’t, some of it is caught by the auditors, some is not.”

State Sen. Declan O’Scanlon, R-Monmouth, who was involved in passing the 2010 law, noted it was discussed publicly at the time, and underscored its importance.

“When we do reforms ... and those reforms are ignored, it’s a serious problem,” O’Scanlon said.

New Jersey residents pay some of the highest average property taxes in the nation. In February, the Press and ProPublica revealed how New Jersey police officers pad their contracts with financial perks. Over the years, money owed for unused sick days has left taxpayers on the hook for hundreds of millions of dollars in eventual payouts to law enforcement officers alone.

Walsh declined to comment on towns other than Palisades Park, the subject of a report by his office. But he said his office is prioritizing review of sick time payouts to public employees covered by the 2010 law.

“Any employee who was hired after the effective date of this law, and who is covered by this law, who receives an annual sick leave payout does so in violation of this law,” Walsh said.

Walsh would not talk about possible investigations in towns other than Palisades Park. But he encouraged tipsters to step forward if they know about such payments.

The president of the New Jersey State Policemen’s Benevolent Association, the state’s largest police union, didn’t respond to questions about the payments the comptroller is calling unlawful.

Experts on New Jersey government said it’s possible that a knowing misuse of public funds could lead to criminal penalties for those involved. But it’s more likely, they said, that town officials would suffer political blowback for paying unused sick time to employees covered by the 2010 law. For example, soon after the release of the Palisades Park report, which flagged a host of financial problems in the town, the town’s mayor, Christopher Chung, withdrew from a bid for state Assembly to focus on making reforms. Chung didn’t respond to a request for an interview.

There could also be other consequences. The New Jersey Division of Local Government Services, a branch of the state’s Department of Community Affairs, has the power to fine towns for ethical violations. The agency would not say whether it has done so.

Individuals who pay property taxes could also request an accounting of a town’s finances from a judge and raise legal claims of malfeasance, but experts said that’s probably a long shot.

“The Legislature could also go back and amend the law to provide some type of penalty for it,” said Marc Pfeiffer, assistant director of the Bloustein Local Government Research Center at Rutgers University.

To identify the towns where police officers received payouts for unused sick time before retirement, a reporter requested records from hundreds of towns. The review did not include a look at records for public employees other than police, or for every township in the state.

A reporter reached out to officials in all 25 towns where pre-retirement sick time payouts were identified. Some agreed the payments were improper and said that the reporter’s inquiry brought the issue to their attention. Three said they’d change their contracts, and two said they’d ask for the money back.

West Caldwell administrator Nikole H. Baltycki noted payments in that town were for people who had left employment with the department. The comptroller’s office can’t comment on specific towns but draws a bright line on the sick pay issue: The 2010 law means covered employees can only get paid for sick leave at retirement, according to a statement from Megan Malloy, spokesperson for the Office of the State Comptroller.

From 2017 through 2019, Mantua Township, near Philadelphia, gave three officers more than $9,000 that would conservatively fall into the category flagged by the comptroller, the town’s records show. The payments were called for under a provision in the town’s police union contract.

“These have been in contracts for years and they should be out of the contracts, so I’m working immediately to get these removed from the contracts,” said Jennica Bileci, the Mantua business administrator.

Highlands, a seaside borough just south of New York City, gave more than $18,000 in similar payments to five cops over the same three-year period, records show.

Highlands Borough Administrator Michael Muscillo, who was hired in January, said the town would stop making the payments. Borough officials will remove the provision the next time a union contract expires, he said, and are exploring asking for the money back.

“You brought it to our attention, we looked at it, our attorneys agreed that it was in violation of the statute, and we’re going to fix it moving forward,” Muscillo said.

Some town officials argued the practice of allowing police officers to sell back their sick days saves money by encouraging officers not to use them, thereby reducing overtime costs: When a cop calls in sick, their department has to find a last-minute replacement to cover the officer’s shift. But the officials said they’d comply with state law.

The township of North Brunswick in the central part of the state provided records showing payments labeled “Sick Pay Buy Back Adjustment” totaling $25,000, to eight officers who wouldn’t be legally eligible for them under the state comptroller’s interpretation.

North Brunswick “has complied with all statutory, regulatory, and contractual obligations as they relate to sick time, vacation time, and other compensation,” a spokesperson for the town said in a statement. “The township is aware of the comptroller’s position. The township follows the law.”

Albert Marmero, an attorney responding on behalf of the township of Deptford, said the town’s sick time buyback program was “in line with the statute.”

“Essentially, it takes the $15k cap and spreads it out over a period of time so that the Township can better absorb the costs over a period of time,” Marmero wrote in an email.

But the state comptroller’s report on Palisades Park says the law “prohibits” sick leave payouts “other than a one-time payment of up to $15,000 at retirement.”