HomeMy WebLinkAbout87-636 TemperoMr. James Tempero
9947 Tyler Avenue
North Huntingdon, PA 15642
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PA 17120
TELEPHONE: (717) 783 -1610
December 7, 1987
ADVICE OF COUNSEL
87 -636
Re: Conflict of Interest, First Class Township Commissioner, Pension Benefits
Dear Mr. Tempero:
This responds to your letter of November 9, 1987, wherein you requested
advice from the State Ethics Commission.
Issue: Whether a commissioner in a first class township is permitted under
the Ethics Act to receive pension benefits which have, in part, been
contributed by the township.
Facts: In your letter you state that you are a First Class Township
Commissioner in North Huntingdon Township, Westmoreland County, Pennsylvania
and are desirous of drawing from a pension plan in which you participated and
which was established when the township joined the Pennsylvania Municipal
Retirement System (PMRS). You state that the ordinance, which allowed your
municipality to join PMRS, included a provision wherein elected officials
could, at their own option, participate in the plan. You further state that
at that time you were advised that your participation in the pension program
was legal and, as a result, you participated in the plan. It is further
stated by you that since you joined in 1981, you have made contributions of 5%
of your annual salary as a Commissioner. You state that you would like to
begin drawing from the pension fund at this time if it is legal; otherwise,
you would probably withdraw the money that you contributed to the
fund. You conclude by requesting advice from the State Ethics Commission as
to whether you would be allowed to receive a pension through the PMRS.
Discussion: As a First Class Township Commissioner, you are a "public
official" as that term is defined in the State Ethics Act. 65 P.S. §402;
Dodds, 84 -011. As such, you are subject to the provisions of the Ethics Act
and the restrictions therein apply to you.
Mr. James Tempero
December 7, 1987
Page 2
Section 3(a) of the Ethics Act provides:
Section 3. Restricted activities.
(a) No public official or public employee shall use his
public 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).
Under this provision, the Ethics Commission has determined that the use
of office by a public official to obtain a gain or benefit for himself which
is not provided for in law constitutes a "financial gain other than
compensation provided for by law." See McCutcheon v. State Ethics Commission,
77 Pa. Commw. 529 (1983). See also Yocabet v. State Ethics Commission,
Pa. Commw. (1987) filed on September 18, 1987 at 83TTD. 1986.
The State Ethics Commission may only address questions regarding the
duties and responsibilities of public officials within the purview of the
State Ethics Act. However, this Commission does not specifically have the
statutory jurisdiction to interpret provisions of the First Class Township
Code. If, another provision of law somehow impacts upon the provisions of the
State Ethics Act or the Ethics Act accords jurisdiction in relation to other
provisions of law, then this Commission may be required to interpret such
provisions of law. See Bigler, 85 -020. Further, the Ethics Act allows the
Commission to address other areas of possible of conflict. 65 P.S. §403(d).
This Commission has determined that within the above provision of law, a
public official may not accept any compensation to which he knows or otherwise
should know he or she is not entitled. Huff, 84 -015; Domalakes, 85 -010. The
Commission's basis for the above determinations was founded on the intent of
the Act which is primarily concerned with insuring that the financial
interests of public officials are not in conflict with the public trust. 65
P.S. §401. Within these provisions of law, the Commission has determined that
when a public official accepts compensation to which he or she by law is not
entitled, the financial interests of said offical are in conflict with the
public trust.
Applying the above principles to the instant situation, it is necessary
to review the relevant provision of the First Class Township Code for guidance
in this matter.
The First Class Township Code provides, in part:
..contract with any such company, granting annuities or
pensions, for the pensioning of such employes, or any
class or classes thereof, and for such purposes, may
Mr. James Tempero
December 7, 1987
Page 3
agree to pay part or all of the premiums or charges for
carrying such contracts, premiums or charges, or portions
thereof. The commissioners are hereby authorized,
enabled and permitted to deduct from the employe's pay,
salary or compensation such part of the premium or charge,
as is payable by the employe, and as may be so authorized
by the employe in writing. As used in this clause, the
terms "employe" and "employes" shall include township
commissioners, if the Commissioner works on a full -time
basis in his capacity as superintendent, road master,
laborer or secretary for the township, such commissioners
eligible for inclusion in such plans must meet the same
requirements including hours of employment, as other
full -time employes of the township... Any pension or
annuity contract entered into by a township between
January 1, 1959, and December 31, 1984, that includes or
provides for benefits for commissioners at township
expense shall not be void or unlawful solely because of
such inclusion of such commissioners; nor shall any
penalty, assessment, surcharge or disciplinary action of
any kind occur as a result of such participation by
commissioners: Provided, however, That anyone entitled to
benefit coverage under a pension paid for, in whole or in
part, by any township without lawful authority shall
deliver, surrender and assign to the township all benefits
paid thereunder after December 31, 1984.
Where any official personally contributed toward such a
pension plan or a purchase of such an annuity, he shall be
refunded his total contributions thereto, plus any
interest accumulated thereon, less any amount already paid
to him under the annuity or pension plan, when the annuity
or pension benefits are delivered, surrendered or assigned
to the township, or when the annuity becomes the property
of the township by operation of this section. In lieu of
a refund of total contributions plus accumulated interest,
an official who personally contributed toward the pension
plan or toward the purchase of the annuity may elect to
purchase from the township its interest in that pension
plan or annuity program. The election option shall be
exercised within sixty (60) days of the effective date of
this act. The value of the interest of the township in
the pension plan or annuity program with respect to the
official shall be determined by the actuary who prepared
the 1983 municipal pension report for the township pension
Mr. James Tempero
December 7, 1987
Page 4
plan or annuity program pursuant to the act of December 6,
1972 (P.L. 1383, NO. 293), entitled "An act requiring
municipal pension systems to have an actuarial
investigation of the fund made by an actuary who shall
report his findings to the Department of Community
Affairs, " using the same applicable actuarial assumptions
as used in that report or, if no actuary was retained for
the 1983 report or no 1983 report was filed, by an actuary
retained for the purpose of valuing the township interest.
The cost of the actuarial valuation of the township
interest and any future administrative costs of the
pension plan or the annuity program attributable to the
official shall be payable by the official in a manner to
be established by agreement with the township auditors.
No elected or appointed township official included in a
township -paid pension or annuity plan entered into prior
to December 31, 1984, shall be subject to any penalty,
assessment, surcharge or disciplinary action of any kind
as a result of said participation. Any residual interest,
value, refund of premium or benefits payable on or after
December 31, 1984, arising out of the township -paid
interest of the elected or appointed township officials
shall become the exclusive property of the township....
53 P.S. 56563.
The First Class Township Code does not appear to contain any exceptions
to the above provision that are applicable in the instant situation.
This Commission has determined in prior rulings that a First Class
Township Commissioner could not receive or secure for himself through his
office compensation in the form of benefits or gains which were in excess of
the compensation allowed for or limited by law.' See Tempero, No. 565.
The First Class Township Code provides that township commissioners may
receive certain pension benefits if they are employed by the township in
certain capacities. Additionally, the amended First Class Township Code
provides that any pension benefits which a commissioner received between
Janaury 1, 1959 and December 31, 1984, shall not be void and said
commissioners shall not be charged or assessed any other penalty as a result
of his participation in the pension plan. Act No. 82 of 1985, P.L. 318
provides that any benefits which are paid after the above period of time could
be subject to assessment; thus, the amnesty provision only covers the above
time period.
Mr. James Tempero
December 7, 1987
Page 5
Therefore, since you have been a member of the pension system from 1981
to the present, you may not be penalized and hence may participate under the
Ethics Act to the extent of the period from 1981 through December 31, 1984.
However, any benefits that have accrued from January 1, 1985 to the present
are not allowed under the First Class Township Code and are not permitted
under Section 3(a) and 3(d) of the Ethics Act.
Conclusion: As a First Class Township Commissioner, you are a public official
subject to the provisions of the State Ethics Act. Although the Ethics Act
does not prohibit you from receiving pension benefits from the PMRS for the
period between January, 1981 and December 31, 1984, the Ethics Act would
prohibit you from receiving those benefits which accrued from the period
January 1, 1985 to the present. Therefore, to the extent that it can be
actuarially determined, you may, consistent with the State Ethics Act, receive
that portion of the pension benefits that accrued between the period of 1981
through December 31, 1984; however, you are not entitled to receive those
pension benefits from January 1, 1985 forward.
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.
Sincerely,
Vincent J. Dopko
General Counsel