Superintendent salary cap fails taxpayers

A 2011 austerity measure meant to stop runaway salaries for school superintendents has had an unintended consequence — while it has held the school chiefs' pay largely in check, it has allowed some subordinates, including principals, to earn significantly more than their bosses.

After five years, the feel-good measure has led to almost no savings for taxpayers because it failed to control all top salaries, an Asbury Park Press investigation found.

In 2010-11, salaries among the state's 5,300 school administrators totaled more than $661 million. In 2014-15, it skyrocketed to $710 million, with 5,700 administrators employed in the schools, the Press' review of payroll data found.

DATABASE: Look up your school district's superintendent

School enrollment, meanwhile, grew by 5,000 students, a 0.4 percent increase.

Against this backdrop, some school districts are finding it difficult to find qualified superintendents; fewer candidates are applying for openings, experts say. In other cases, top bosses have moved across the border to Westchester and other New York counties, where districts pay $100,000 above New Jersey's average superintendent salary of $152,000.

A month after Roy Montesano was named New Jersey's Superintendent of the Year in 2011, he left the state to lead a district 30 miles across the Hudson River – in New York. His $226,000 salary in the Ramsey school district would have dropped to $167,500. He's now making $244,000. His brother, James Montesano, the former Paramus superintendent who made $223,000, followed. He's now the superintendent in Nyack, New York, making $248,000.

EDITORIAL: Lift superintendent salary caps

Paul Fried, a former Montville superintendent who made $237,000, took a job in White Plains, New York, after the salary limits were put in place. He faced a $60,000 pay cut. Now, he earns $275,000. Fried said three former New Jersey superintendents are heading districts within 15 minutes of his.

"Do I think there should be a limit and some salaries are exorbitant and that common sense should prevail? Yes," said Michael Osnato, founder of Leadership Advantage, a firm that conducts superintendent searches in the Northeast. "If there should be a limit and the state is going to get involved in limiting public salaries, the only one they've limited is the superintendents. It seems punitive."

State Education Commissioner David C. Hespe will decide by November whether to revise, renew or lift the salary cap, which was implemented through regulations – without Legislative or state Board of Education approval.

"For well over a decade, these compensation packages were rapidly escalating out of control and local taxpayer costs were spiraling higher," Christie spokesman Brian Murray said in an email. "Communities needed relief, and school boards needed to be armed with some checks and balances. That’s what the salary caps provided."

Unintended consequences

Near the end of his career, the former head of Long Branch City schools hauled in $250,000 a year overseeing 5,300 students. He cashed in on another $600,000 for unused sick and vacation days over his decade in office.

Schools Superintendent Joseph M. Ferraina was among the last of his class. He retired in 2011 (amid a sex harassment scandal), the same year the cap on superintendent pay was implemented.

Ferraina's successor, Michael Salvatore, makes $177,500 a year to oversee both Long Branch and Deal schools. There's one caveat: he makes $20,000 less than the district’s business administrator, who is not subject to a cap.

Some superintendents took pay cuts – upward of $60,000 – to keep their posts. But superintendents have become anything but paupers under the forced restraint of the caps, their contracts show.

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Many superintendents still receive vehicle allowances, stipends and other perks that add many more thousands to their bottom line; a handful – far fewer than before, thanks to reforms – will receive six-figure payouts for unused sick days.

Retirement payouts for unused sick days are maxed out at $15,000 unless a superintendent accumulated the days prior to 2007, when the state limited payouts.

Rumson-Fair Haven Superintendent Peter Righi will be paid for 128.5 accumulated sick days, or about $32,125 when he retires. Southern Regional superintendent Craig Henry will be compensated for 369 sick days and about 50 vacation days equal to $247,000.

In his zeal to clamp down on government excess, first-term Gov. Christie focused on superintendent salaries. He wanted to limit what he saw as an out-of-control education bureaucracy that paid no deference to taxpayers.

Because the cap only targeted superintendents, it created some pay oddities:

• In 11 districts in Monmouth and Ocean counties, business administrators, assistant superintendents or principals earn more than their boss, the superintendent.
• Heads of charter schools, vocational districts and other non-traditional public schools face no limits on pay. The salary for the Monmouth County Vocational school superintendent, paid by all county taxpayers, is $202,000.
• Districts can exceed the caps with merit bonuses, allowances, stipends and other fringe benefits.
• Pay for superintendents of private schools for students with disabilities — which receive public tuition dollars — are capped by the state at $253,926. The highest cap for public school superintendents is much less: $175,000, equal to Christie's pay.

Critics of the superintendent salary limit say those anomalies underscore the crux of the problem: the measure was not fully thought out by its proponents.

"I think the biggest issue is determining what you are trying to accomplish," said John Adamus, associate professor of professional practice at the Rutgers Graduate School of Education in New Brunswick. "If the goal of the cap is to keep salaries down, you're looking at one minuscule part of (a school's) budget."

Nonetheless, defenders of the cap portray the pay restrictions as a godsend to taxpayers, who would be on the hook for much more without the salary cap.

Though the cap slowed the state's rate of growth in superintendent pay, salaries for New Jersey administrators remain top in the nation, according to 2014-15 Bureau of Labor Statistics data.

The caps adopted in 2011 were set based on student enrollment, with a range of $125,000 for small districts and $175,000 for the largest, based on student populations. Districts can request waivers from the state if they have more than 10,000 students.

A workaround

Despite the salary cap, stipends, bonuses, tuition reimbursement, paid trips to conferences and additional tax-sheltered retirement plans still exist in superintendent contracts.

The pay limits don't address the total cost of a superintendent's contract, which typically includes the cost of health benefits, retirement contributions, life insurance, disability insurance, mentoring expenses, computer and cell phone use, membership dues and sick/vacation compensation.

READ: Long Branch super takes on Deal school

The most handsomely compensated school chiefs under the cap have contracts that cost boards more than $250,000.

A Press review of Monmouth and Ocean county superintendent contracts found:

• Nineteen superintendents are eligible for more than $20,000 each in merit bonuses. In Middletown, the superintendent can earn up to $28,000 in bonuses and in Manchester up to $26,000.
• Several are given monthly car allowances ranging from $200 to $500.
• The Middletown and Central Regional superintendents receive annual stipends for having doctoral degrees: $6,570 and $1,000, respectively.
• At least 31 superintendent contracts include a provision to reopen them if the caps are changed or eliminated.

"The effectiveness of the cap is limited because there's so many other alternatives," said Adamus, a former superintendent who researches administrators and school finances. "If it's just (salary) dollars you're worried about, you can be creative and get around it."

Salaries for district superintendents in 2010 totaled $92.5 million. In 2014, they were $80.2 million.

"When you're talking about dollars in communities and hundred million (dollar) budgets, what is the actual significance of tax dollars being saved? It's pennies," said Salvatore, superintendent of Long Branch and Deal schools. "I believe it was noble to invoke this process but the long term unintended consequences were really not considered."

'A cap within a cap'

While some experts agree that some superintendent salaries pre-cap were excessive, there is less agreement about what the cap has accomplished.

The policy doesn't guarantee taxpayers will feel the savings, or that saved dollars will be redirected into the classroom — or anywhere else in a district's budget, Adamus noted.

There are two other stiff mechanisms the state implemented to rein in school spending, which include a regional limit on administrative costs in a district and a 2 percent annual cap on the tax levy increase a district can seek each year.

Executive county superintendents, who are state appointed, also review and approve contracts for all administrators in a district.

"As far as we're concerned, there's a cap on year-over-year growth on school spending for local taxpayers," said Donald Webster, president of the New Jersey School Boards Association and the Manchester school board. He said capping school chief pay amounts to "a cap within a cap."

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Fried, the former Montville superintendent who left for New York, said the 2 percent tax cap made other measures unnecessary.

"That's the part that's really difficult, there's no regulation on what you do with your savings," Fried said. "If Montville saved $60,000, what did they do with it? Could they hire one more teacher? Probably not."

No other state in the Northeast has such a cap. New York’s governor has advocated for one, but his suggestion has never gotten very far, though the state does have a tax cap that is comparable to New Jersey’s.

"There are good intentions here, and there was a need to crack down on some abuses that came to light in some districts, but doing these blanket, wholesale, arbitrary restrictions doesn't make sense," Webster said.

Other administrators cashing in

In Neptune Township, the business administrator and two assistant superintendents make at least $15,000 more than the superintendent.

A Press review of all Monmouth and Ocean county assistant superintendent and business administrator contracts found that nearly all received annual raises around 2 percent to 3 percent.

Righi, the superintendent in Rumson-Fair Haven, is the third-highest paid administrator in his district. He earns $147,500. One of his school principals makes $162,575. The business administrator makes $158,361.

"I just bit the bullet," said Righi, 62, who has been the district's chief for 11 years, adding that if he were in the middle of his career, he wouldn't have stuck around. "I love the district; it's been kind to me and my family."

Righi opted to stay in his district when the caps were implemented, taking a $60,000 pay cut.

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The cap overlooks other types of public schools, including charter schools, vocational schools, education service commissions and jointure commissions. Commissions provide special programs for students from various districts.

The director of Academy Charter High in Lake Como earns $151,822 overseeing about 200 students. The superintendent of Belmar schools, which serves Lake Como, is capped at $135,000. More than 500 students are enrolled in the district.

The Monmouth Vocational School District superintendent's base salary of $202,000 is more than $25,000 over the cap for a district with 10,000 students. The vocational school district has 2,700 students.

Interim double dipping

Many districts are operating with interim superintendents, who can be hired for up to 2 years and are typically retired administrators collecting a pension.

The state's school directory shows 54 interim or acting superintendents in the state. Of those, 43 are retired educators raking in about $4.3 million in pensions annually, state data show.

"It’s become a cottage industry," said Richard Bozza, executive director of New Jersey's Association of School Administrators. "You don’t have stable permanent leadership and what you have is a significant amount of turnover."

New Jersey boasts one of the best education systems in the country and is considered by experts among the top performers. School board officials, education experts and superintendents say that's at risk — the cap is hurting the state's ability to retain and compete for the best candidates.

LETTER: Don’t lift superintendent caps

Murray, Christie's spokesman, said superintendent turnover is not new, adding there is no hard data to support the correlation.

But Osnato, who helps districts find leaders, said fewer superintendent candidates are applying for jobs in the Garden State.

"The candidate pool for the smaller districts … is really dwindled down," he said. "We would have 30 candidates now we get 15."

"A person who is 40 (years old) and becomes a superintendent can never ever get a salary increase," added Bozza. "The rules are nonsensical in terms of what they are trying to achieve."

Karen Yi: 732-643-4277; kyi@gannetnj.com; Kala Kachmar: 732-643-4061; kkachmar@gannettnj.com