Brian M.

Nelson
bnelson@archerlaw.com
Riverview Plaza
10 Highway 35
Red Bank, NJ 07701
732-268-8000 Law Office
www.archerlaw.com

April 29, 2015

VIA ELECTRONIC MAIL ONLY

Adam Hughes, Esq.
Assistant Director
Office of the State Comptroller
Post Office Box 024
Trenton, New Jersey 08625

Re:

Comments To Draft Report On LOSAP Program

Township of Middletown, Monmouth County

Dear Mr. Hughes:

As you know, this office represents the Township of Middletown (the
Township) in relation to the above-referenced matter. Managing the Townships
Emergency Services Volunteer Length of Service Awards Program (LOSAP) program
is a significant task given that it is served by 16 separate volunteer organizations
constituting the largest all volunteer fire service known in the world. The Township
appreciates your offices review of the Townships LOSAP program, which has aided the
Township significantly in addressing issues it became aware of during the course of your
offices examination. The Township has yet to make its 2014 LOSAP contributions as it
was awaiting the completion of your offices examination while actively addressing
issues that have been discovered since that time as highlighted herein.
I.
The continued vitality and integrity of the LOSAP program is essential to the
Township as our volunteers save local taxpayers an estimated $30 million per year, which
is approximately what similarly sized municipalities pay for paid fire companies and
rescue services.1 The Township takes great pride in having these essential services

For example, Cherry Hill Fire District No. 13s budget for 2015 is $27.4 million, costing the average
Cherry Hill homeowner approximately $661 per year for its paid fire service. The entire 2015 municipal
Haddonfield, NJ Philadelphia, PA Hackensack, NJ Princeton, NJ
Flemington, NJ Wilmington, DE Red Bank, NJ Georgetown, DE New York, NY

Adam Hughes, Esq.

Office of the State Comptroller
April 29, 2015
Page 2

provided on an all volunteer basis by a total of 16 independent non-profit fire companies,

rescue and first aid squads. This, however, is becoming increasingly difficult in a more
burdensome regulatory environment and as individuals find it hard to donate their time to
volunteer services while caring for their households where more than one person
typically works now, and in many cases, in more than one job to make ends meet. This is
no small undertaking in a municipality consisting of nearly 70,000 full-time residents
spanning 42 square miles of territory including three major State highways with tens of
thousands of guests in the summer months. We are extraordinarily fortunate to have
hundreds of actively committed volunteers who are indispensable, especially during
events such as Superstorm Sandy that greatly impacted the Township just a few years
ago. Any small incentives, such as the LOSAP program, that we can continue to provide
to encourage volunteerism in the community is of the utmost importance to the Township
to maintaining the largest all volunteer fire and rescue services in the world.
II.
With respect to the Townships LOSAP program there were principally three
issues raised: (1) the scoring and certification of LOSAP points by volunteer
organizations; (2) duplicate contributions caused by membership in multiple volunteer
organizations that collectively exceeded the statutorily permitted maximum; and (3) the
recovery of dormant funds in unvested LOSAP accounts all of which are already being
addressed as follows.
Scoring and Certification of LOSAP Points
Your offices examination identified a number of issues associated with the
methods applied, in particular, by the Leonardo First Aid Squad (Leonardo) for the
scoring and certification of LOSAP points used to determine whether an individual
volunteer receives an annual LOSAP contribution.
As a preliminary matter, it is important to note that Leonardo is an independent
non-profit organization operated by its volunteer members, not the Township. The
Township recognizes Leonardo, by ordinance, as a squad permitted to provide emergency
services in the Township. The Township funds LOSAP contributions based on
information annually certified to it by Leonardo, which awards all LOSAP points and
retains all records regarding the aggregation of LOSAP points. The Township always
questions the submission of certifications upon receipt of them while addressing blatantly
obvious issues and mistakes, but does not have the ability or resources to individually
tax levy in the Township for all municipal services is only $1,806 for the average homeowner. In sum, a
paid fire service would add nearly 40% to the municipal tax levy.

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Adam Hughes, Esq.

Office of the State Comptroller
April 29, 2015
Page 3

audit the scoring of individual LOSAP points for every volunteer organization in the
Township. Notably, it took your office months to examine the records of just one
organization, which is smaller relative to many others in the Township.
During your offices examination of Leonardos awarding of LOSAP points, it
became clear to the Township that there were a number of issues that needed to be
addressed not just in Leonardo, but also by other recognized volunteer organizations in
the Township. First, there was a seemingly cavalier attitude towards the application of
the provisions of the Townships LOSAP ordinance as a guideline rather than a firm rule.
Second, where it was followed, there were clearly errors made due to apparent confusion
over the ordinance language, which had been amended once after the program began over
a decade ago with some following a combination of both the original ordinance and the
amended version in certain respects. Finally, there was a lack of understanding or
knowledge of the individual organizations bylaws definitions of active membership
and enumeration of leadership positions, which qualified members for points under the
Townships LOSAP ordinance. Collectively, confusion reigned regarding the interaction
between the Townships ordinance, individual organization bylaws and the statutory
requirements of the LOSAP program.
All of this, however, must be considered in the context that these tasks are being
handled by volunteers who regularly rotate responsibilities just as they learn the program
rules. This is not to excuse these errors as taxpayer money is involved, but the expense
of paying professionals to handle these tasks would be far more costly than the errors
made by volunteers. With this in mind, the Township set out to determine how best to
guide its volunteer organizations to fully comply with the program rules while
institutionalizing best practices to avoid future errors.
The first thing the Township did to address this was to demand changes to the
volunteer personnel who assist the Townships volunteer organizations with the tracking
and certification of LOSAP points. The Township then collectively worked with the
volunteer organizations to develop a new LOSAP ordinance to help eliminate confusion
and institutionalize best practices, which in relevant part:
(1) establishes a uniform minimum definition of active membership required to
be adopted by all volunteer organizations as a condition of participation in the
program;
(2) establishes a specific list of offices qualifying as elected or appointed positions
eligible for LOSAP points, with allowance for unenumerated positions subject
to Township review and approval;

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Adam Hughes, Esq.

Office of the State Comptroller
April 29, 2015
Page 4

(3) formally establishes the position of certifying officer for each organization
who must be specifically designated; and
(4) establishes specific authorization for random and/or annual audits of records
maintained by individual certifying officers for each organization.
This ordinance was not easy to create, however, because the statutory scheme for
LOSAP explicitly delegates so much authority to the individual volunteer organizations
as to how to define active membership and the leadership positions qualifying for the
aggregation of LOSAP points. See N.J.S.A. 40A:14-184. Accordingly, the Township, as
the sponsoring agency, had to condition participation in its program upon acceptance of
the Townships ordinance provisions by each volunteer organization to circumvent this
problematic statutory language. There is simply no other way for the Township to
establish uniformity while administering greater oversight over the program absent the
State Legislature addressing these issues. This may not be an issue in smaller
municipalities that have only one or two volunteer organizations, but it makes these tasks
incredibly difficult when the sponsoring agency has to oversee 16 separate volunteer
organizations each making individual certifications based on varying definitions of active
membership and qualifying leadership positions in their bylaws.
Duplicate Contributions Exceeding Statutory Maximum
This specific issue has been a concern of the Township as the sponsoring agency.
Prior to your offices examination, the Township actually addressed this question with
Lincoln Financial, which is the States authorized LOSAP administrator utilized by the
Township. The Township was improperly informed that it was permissible for volunteer
members who qualify for LOSAP eligibility from more than one volunteer organization
falling under the same sponsoring agency to receive contributions to be deposited for
their respective service to each.
Perhaps there was confusion when the question was presented in that multiple
contributions may be made for service to each organization, but the aggregate amount
cannot exceed the statutory maximum. Clearly, the State should require that its approved
LOSAP administrator have mechanisms in place to flag duplicate deposits in excess of
the statutory maximum associated with the same social security number. The Township
has also included a provision in its new LOSAP ordinance to eliminate any ambiguity
that in cases of dual enrollment in no circumstance may such enrollment result in an
aggregate Township contribution in excess of the maximum. . . .
Upon receipt of information from your office as to the individual participants that
purportedly received duplicate contributions to their accounts in excess of the statutory

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Adam Hughes, Esq.

Office of the State Comptroller
April 29, 2015
Page 5

amount, the Township will seek to recapture these funds to the best of its abilities. We
are hopeful that Lincoln Financial, which holds the funds unless they have been
withdrawn, will assist the Township in this process along with your office as we
anticipate this may be a contentious issue. Some of the actual dollar figures contained in
your draft report, however, may not be accurate given that the Township did not increase
its maximum contribution by ordinance to the allowable statutory thresholds adjusted for
CPI. The Township has not yet been provided the underlying data establishing your
offices draft findings so it cannot examine the basis for the same at this time.
Recovery of Dormant Funds
The Township appreciates your offices recognition of its efforts to recoup
dormant funds in accounts that were established for members who have resigned from
volunteer service prior to vesting. The $4,015 dormant funds cited in your draft report
from the close of 2013 have already been addressed shortly after the requisite data
became available in 2014. The Township has not even made LOSAP deposits for 2014
while addressing the above issues, so there are currently zero dormant dollars remaining
in unvested LOSAP accounts.
III.
In conclusion, the Township appreciates your offices efforts to examine its
management of its LOSAP program. The Township doesnt necessarily disagree with
any of your preliminary findings, but hopes your office recognizes the challenges faced
when dealing with busy but committed volunteers who are largely delegated authority by
the statute as it relates to the day to day management of the LOSAP program.
As outlined above, long prior to your offices submission of its draft report, the
Township has already sought to institutionalize best practices to limit confusion and
errors while ensuring compliance with the program rules. The Township would like to
see the States approved fund administrators to take on a greater fiduciary responsibility
to assist program sponsors with compliance as they have far greater expertise in the
administration of these programs than municipal employees and volunteers.
We look forward to receipt of the underlying data cited in your offices draft
report so that we can seek to recapture any funds that may have been deposited in
LOSAP accounts in excess of the statutorily permitted maximums.

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Adam Hughes, Esq.

Office of the State Comptroller
April 29, 2015
Page 6

My client greatly appreciates your attention to this matter. Please do not hesitate
to contact me directly regarding these comments. We look forward to reviewing your
offices final report in the near future and hope that it aids other program sponsors to
continue to incentivize volunteer service in their communities through LOSAP.

Respectfully submitted,
ARCHER & GREINER
A Professional Corporation

By:_____________________
Brian M. Nelson

cc.

Anthony Mercantante, Township Administrator

Colleen Lapp, Chief Financial Officer

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