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Home My WebLink About87-567 NardelliJames L. Nardelli, Esquire Upper Allegheny Joint Sanitary Authority 320 Fourth Avenue Tarentum, PA 15084 Re: Member Municipal Authority, Pension Benefits Dear Mr. Nardelli: STATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 783 -1610 May 19, 1987 ADVICE OF COUNSEL 87 -567 This responds to your letter of April 28, 1987, wherein you requested the advice of the State Ethics Commission. Issue: Whether the State Ethics Act presents any prohibitions upon the receipt of pension benefits by a member of a municipal authority. Facts: You currently serve as the solicitor for the Upper Allegheny County Joint Sanitary Authority in Tarentum, Pennsylvania. You advise that a member of the board of the authority, Charles F. Hanna, has made an inquiry of the authority's office manager as to whether he may be included as a contributing member of the Pennsylvania Municipal Retirement System. This inclusion would be based upon his service as an official board member. You have requested the advice of the State Ethics Commission regarding whether there would be any prohibitions under the State Ethics Act regarding Mr. Hanna's inclusion in the pension program. Discussion: Generally, as a member of a municipal authority, the individual involved herein, is a public official as that term is defined in the State Ethics Act. 65 P.S. §402. 51 Pa. Code §1.1 as amended November 29, 1986, 16 Pa. Bulletin, Page 4653. As such, his conduct must conform to the requirements of that law. Dice, 85 -021. The State Ethics Commission has on a number of occasions addressed propriety of a public official's receipt of various types of benefits including pension, insurance, hospitalization and medical within the provisions of the State Ethics Act. Krane, 84 -001; Cowie, 84 -010; Domalakes, 85 -010; McCutcheon v. State Ethics Commission, 77 Pa. Commw. Ct. 529, 466 A.2d 283, (1983). Our analysis of this issue generally has been based upon section 3(a) of the State Ethics Act and our interpretation thereof. Generally, that provision of the law provides as follows: James L. Nardelli, Esquire May 19, 1987 Page 2 Section 3. Restricted activities. (a) No public official or public employee shall use his p'!blic office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 403(a). We have particularly reviewed the above section of law in relation to municipal authority members and their receipt of various types of benefits in our opinion, Dice, 85 -021. Generally, we concluded that a public offical may not, under the above provision of law, use or otherwise obtain through or in his public position any financial gain other than the compensation that is provided by law. As part of such an analysis, it must be determined whether the receipt of such insurance benefits by a public official constitutes financial gain and whether it is part of the compensation provided by law. This Commission, as well as a number of court decisions, have now, without question, determined that pension benefits and life insurance, hospitalization and medical insurance benefits in fact are financial gain. See Synoski v. Hazletownship, Pa. Commw. Ct. , 500 A.2d 1282, (1985). See also, in Re: Auditors Report of Muncy Creek Township, Pa. Commw. Ct. , 520 A.2d 1241, (1987). As such benefits are indeed a financial gain, it must be determined, under the Ethics Act, whether this financial gain is part of the compensation provided for by law. An analysis of this type has been deemed appropriate and in the event that an official through or in his position obtains a financial gain that is not part of the compensation provided for by law, then such would transgress the provisions of the State Ethics Act. See McCutcheon v. State Ethics Commission, supra. In order to determine if a particular financial gain is part of the compensation provided for by law, the enabling legislation creating the public office must be reviewed. The Pennsylvania Municipal Authority's Act of 1945 sets forth that members holding office on such an authority may receive such compensation or salaries as determined by the governing body or bodies of the municipality creating said authority. 53 P.S. §309. In addition to the foregoing, the Pennsylvania Municipal Authority's Act also specifically provides for the provision of certain insurance benefits. In this respect, the Act provides as follows: James L. Nardelli, Esquire May 19, 1987 Page 3 Make contracts of insurance with any insurance company, association or exchange authorized to transact business in the Commonwealth of Pennsylvania, insuring its employees and appointed officers and officials under an individual policy or policies of insurance covering life, accidental death and dismemberment, and disability income or under a policy or policies of group insurance covering life, accidental death and dismemberment, and disability income provided that statutory requirements for such group insurance, including but not limited to requisite number of eligible employees and /or appointed officers and officials, are met as provided for in... "The Insurance Company Law of 1921. 53 P.S. 306 q. The Act also provides that the authority may: Make contracts with any insurance company, association or exchange or any hospital plan corporation or professional health service corporation authorized to transact business in the Commonwealth of Pennsylvania, insuring or covering its employees and /or their dependents (but not its appointed officers and officials nor their dependents) for hospital and /or medical benefits; and to contract for its employees (but not its appointed officers and officials) with any insurance company, association or exchange authorized to transact business in the Commonwealth of Pennsylvania granting annuities or to establish, maintain, operate and administer its own pension plan covering its employees (but not its appointed officers and officials). 53 P.S. 306 q. From the foregoing, it appears quite clear that the provisions of the Municipal Authority's Act of 1945 specifically permits the authority to provide as the benefits for authority members life, accident, disability insurance but would prohibit the receipt by such authority members benefits such as hospitalization, medical or pension. While the law does not specifically indicate or make reference to the Pennsylvania Municipal Retirement System, it appears clear from the foregoing provisions of the Municipal Authority's Act that municipal authority officers were not intended to receive pension type benefits. As such, these benefits could not be considered part of the compensation for service as a municipal authority member. James L. Nardelli, Esquire May 19, 1987 Page 4 Based upon this Commission's previous analysis of similar situations and based upon a number of judicial decisions reviewing those determinations, it would appear as though a member of a municipal authority, may not through or in his position on said authority receive the benefits set forth in your letter. Conclusion: As a member of a municipal authority, the individual involved herein is a public official as that term is defined in the State Ethics Act. Pursuant to a review of applicable law, said member may not in or through his public office receive or participate in a pension program at the expense of the municipal authority. Such benefits are not specifically provided for as part of the compensation to be received in the position of municipal authority member. As such, an official who would so receive said benefits would be obtaining a financial gain through the use of his public office other than the compensation provided for by law. Pursuant to Section 7(9)(ii), this Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, providing the requestor has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may request that the full Commission review this Advice. A personal appearance before the Commission will be scheduled and a formal Opinion from the Commission will be issued. Any such appeal must be made, in writing, to the Commission within 15 days of service of this Advice pursuant to 51 Pa. Code 2.12. hn J. Actin tino eneral Counsel ry