Lawyers Demand Payout of Ritacco's Unused Sick Time and Deferred Compensation Plan Funds

Two lawyers representing former Superintendent Michael J. Ritacco used the public comment portion of Tuesday's school board meeting to seek answers on Ritacco’s deferred compensation plan and a payout of unused sick time.

The plans are called 457 plans, and allowed Ritacco to voluntarily defer some of his $234,000 annual salary into a fund to be used after retirement goes into effect. This allows the district to use that money to invest and earn interest, while it affords the plan-holder the advantages of a reduced taxable income.

However, lawyers and district officials said the money has not been paid out.

Ritacco, who resigned the same day FBI arrested him on involving the Toms River Regional Schools insurance broker Francis X. Gartland, is entitled to the money in his 457 fund, said his lawyers, Jerome A. Ballarotto and William J. Hughes.

The two attorneys said Ritacco is due the “large amount of money” in the deferred compensation fund, but the district has yet to turn it over. They argued before the school board that Ritacco’s contract was very clear: deferred compensation would be paid out within 60 days of his retirement.

“We are just so perplexed why you have not paid these funds,” said Ballarotto.

When asked how much the amounts where, Ballarotto said, “A lot of money. A lot. A lot,” and did not elaborate further on how much Ritacco voluntarily deferred into the fund.

Hughes called into question the district’s use of an outside counsel from Pennsylvania in seeking an opinion on the benefits.

However, school board Attorney Thomas Monahan said it was necessary, and questioned why the two lawyers would come before the school board and the general counsel for the district to publicly weigh in on a specialized area of the law.

“They (the board) don’t have the expertise to respond, I don’t have the expertise to respond,” said Monahan, “I said we have to have someone examine it.”

Ballarotto and Hughes spoke for more than 10 minutes before the board, as audience members interjected with shouts of “that’s taxpayer money” or audible gasps and laughter in response to the lawyers' comments.

“Is there a solid foundation in the law to deny these benefits or is there some other motivation as to why you are doing it?” Ballarotto said. “No other reason other than the reason of law is sufficient.”

Hughes said that this was income already earned by Ritacco, and said they were “at the precipice of unnecessary litigation” in their attempts to get the district to pay out Ritacco’s unused sick days and deferred compensation.

Monahan said the issue came about in the last week and at 3 p.m. Tuesday provided Ritacco’s lawyers with the contact information of the outside counsel who advised the district it should not pay out the benefits, saying the contract allowed the funds to be held for five years.

Hughes responded that the contract defines that retirees cannot be re-employed by the district for five years, not that the benefits be held for five years.

Ballarotto argued that by not adhering to the contract, one could infer other benefits contracts could also be held into question. “To deny his contractual rights means you in effect could deny everyone their contractual rights,” he said.

In addition, he told the board to not condemn a man .

“Innocent until proven guilty,” Ballarotto said. “An indictment is issued on mere suspicion. There’s been no evidence.”

Gartland and Ritacco pleaded not guilty in December.

Ritacco surrendered to authorities in Newark on Oct. 21; he resigned from his superintendent post that same day.

The 27-count indictment contains two counts charging separate conspiracies to defraud the IRS and seven counts of making and subscribing to false federal personal income tax returns. The charges include the tax years of 2004 through 2006 for Ritacco and 2004 through 2007 for Gartland. 

The initial indictment, returned Oct. 19, contained 18 total counts of mail and wire fraud, travel and use of facilities in interstate commerce to promote bribery, and bribery in connection with a local government agency receiving federal funds. The U.S. District Attorney charges more than $1 million in bribes allegedly passed hands.

At last month’s board of education meeting, a resident questioned Ritacco’s contract and the payout of unused sick and vacation time, asking how the superintendent "managed to stay so healthy."

“In the eight and a half years I worked with him, I never saw him take a sick day,” said , who was previously a district assistant superintendent and is now serving as the superintendent. He assured the resident the district does use a computerized system to track the use of sick, vacation and personal days.

The current contract, which would have lasted through 2012, is clear, said Ritacco’s lawyers. At issue are two things Ritacco is due, they said: all moneys put in deferred compensation and any unused sick and vacation time.

According to board minutes, Ritacco’s contract provides for 25 days paid vacation, which can be carried forth up to 25 days for any subsequent year for vacation purposes.

According to the contract, upon retirement any unused vacation days, not to exceed 50, will be paid at a per diem rate (annual salary divided by 240) of the last year of the contract.

There are 15 paid sick days annually and five personal days. “Remuneration shall be paid to the superintendent for unused sick days at the per diem rate at the time of retirement or termination from the position of Superintendent,” according to the contract.

The contract goes on to say that in the event of the death of the superintendent, the amounts due shall be payable to his estate. This dollar amount is not to exceed a total of $15,000.

When asked when the deferred compensation and payout of unused benefits became an issue, Ballaratto said “immediately.”

“We have been asking and asking,” he said.

Hughes said they brought the issue before the board in this way, before its public meeting instead of in executive session, after exhausting other avenues.
“We tried that,” Hughes said.

“We have nothing to hide,” Ballarotta said after the meeting. “We will bring it up here, in the public, in the school meeting, in the Ritacco Center, it doesn’t matter.”

Monahan told Hughes and Ballarotta that if they disagreed with the special counsel’s understanding of deferred compensation law, to write up their interpretation of it.

“We’d welcome that. We are listening,” Monahan said.