PATERSON, NJ - City Council members may lose their municipal health benefits as one of the requirements for the state to give Paterson $21 million in transitional aid.

The health benefits provision is a new condition that's been added to the 2012 Memorandum of Understanding (MOU) that the New Jersey Department of Community Affairs (DCA) requires all municipalities receiving transitional aid to sign.

It reads, "The Municipality acknowledges that the State does not provide Transitional Aid for the purpose of providing health benefits to part-time elected or appointed officials and shall eliminate such benefits for all officials and employees not contractually entitled to them.''

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Paterson council members are not happy about the provision. They had been scheduled to approve a resolution on Tuesday saying they accepted the terms of the MOU, but decided to put off that vote until a special meeting on Wed., Feb. 1.

"I think the state is getting a little bit ridiculous,'' said Councilman Aslon Goow.

"If someone gets elected and they get sick, they need to be taken care of,'' said Council President Anthony Davis.

Some council members have other health insurance. Others rely on the municipal coverage.

The health benefits requirement was included in MOUs sent to all transitional aid cities, not just Paterson, according to DCA spokeswoman Lisa Ryan. The only part of the MOU that's unique to Paterson is a provision requiring the city to increase its sewer fees, she said.


Paterson council members acknowledge they are paying closer attention to the details of the MOU after they felt blindsided by the state's recent pronouncement that it would penalize transitional aid municipalities for travel expenses that did not get prior approval from the DCA. City officials said they were not aware of the need to get approval to stay overnight at the League of Municipalities convention in Atlantic City.

During next week's special meeting, council members said they would examine the proposed MOU in detail. "The DCA will hold us to the letter of the law and we want to make sure we have a clear understanding of it,'' said Councilman William McKoy.

Council Finance Chairman Kenneth Morris said the city has very little say in establishing the terms of the MOU. "It shouldn't be presented as a negotiated agreement,'' Morris said. "It's not a negotiated agreement. It's an edict.''

"Rejecting the MOU is like rejecting the transitional aid,'' Morris said. Without the $21 million from the state, Paterson would be facing a fiscal crisis as bad as the one the city endured last year. Even with the state aid, Paterson's best case scenario this years seems to be a five-percent tax increase.

Goow said he believes city officials ought to put increased pressure on the state instead of simply accepting the DCA's proposed terms.

The MOU requires the city to get state approval before hiring anyone, giving non-contractual pay raises, entering new union contracts, and retaining consultants. Among the other conditions of the MOU are:

  • The preparation of a plan by June 30 showing how Paterson intends "to eliminate its reliance" on transitional aid within three years.
  • The elimination of longevity pay for elected officials and other city employees not covered by labor contracts.
  • No overtime for management employees unless it's required by state or federal law.
  • No expansion of city services unless approved by the DCA.

Goow criticized the state's desire to discontinue Paterson's transitional aid within three years. "It's impossible,'' he said. "It's absolutely impossible. It's not going to happen.'''

Morris also questioned the fiscal impact of eliminating health benefits for council member because Paterson uses a self-insurance fund under which the city pays for employees' medical care on an as-needed basis. "It's not like we're going to get a lower premium,'' Morris said. The savings, he said, would be minimal and staggered.

Morris also argued that there was "some ambiguity" in the provision on eliminating health benefits because council members sign a certification that outlines their "terms of service,'' including benefits. "What constitutes a contractual agreement?"