Loading...
HomeMy WebLinkAbout84-008 KiniryPatrick T. Kiniry, Esquire 200 Central Park Law Building Park Place Johnstown, PA 15901 STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 OPINION OF THE COMMISSION RE: Township Supervisor, Pension Plan, Participation Dear Mr. Kiniry: 84-008 I. Issue: You have requested a ruling as to whether a particular Township Supervisor may participate in and collect benefits from a pension /annuity program. II. Factual Basis for Determination: We note that your request for Opinion was originally addressed to this Commission by your letter of December 14, 1982. Subsequent to that date, you provided us with information in response to written questions we had asked by letter of February 17, 1983. Further, you made an oral presentation and answered questions in addition to having your client, Supervisor Melvyn D. Wingard, hereinafter Wingard or the Supervisor, provide information and testimony at that time at our meeting of February 24, 1983. You followed -up with further information after this meeting with your letter of March 18, 1983, providing further documents, minutes, and information as requested at the meeting of February 24, 1983. You presented a statement, appeared with your client, and provided a document signed by Richland Township Auditors at our meeting of February 23, 1984. All of the above information is in our files and is considered part of our determination in this case and will be incorporated herein by reference without further elaboration except as set forth below. Also, procedurally, we should note that your original request, although presented on December 14, 1982, was, with your consent and that of your client, held originally in abeyance and not processed by this Commission until the disposition of the appeal and Opinion of the Court in the matters entitled Elroy J. Hoak and Edward G. McCutcheon, Petitioners v. State Ethics Commission, Pa. Cmwlth. , 466 A.2d 283 (1983). We note that the proceedings in these cases were completed by the filing of the Opinion of the Commonwealth Court in these matters as of October 14, 1983. This Opinion was Patrick T. Kiniry, Esquire Page 2 not appealed and the Respondents therein, have returned and refunded the money associated with our original Order issued to them on rune 18, 1982. Accordingly, these matters are now final any' we may now proceed to disposition of your request for Opinion. We had scheduled this request as part of our next meeting following the Hoak .puling (December 19„ 1983), but with your approval this matter was again delayee in disposition. Additionally, we note that in response to the Court ruling in Hoak, this Commission on December 19, 1983, adopted a Statement of Poolicy by which to guide our review of cases similar to the situation raised in Hoak. This Statement. of Policy was published in the Pennsylvarnie Bulletin Volume 14, No. 3, on Saturday, January 21, 1984, and was immediately effective. When reviewing your request, we have utilized this Statement of Policy as a guideline. The facts of your particular situation are set forth in the documents, letters, and presentations described above, however, we should emphasize certain facts. Specifically, you are solicitor for Richland Township, located in Cambria County. Richland. Township is a Second- Class,Township governed by a five - member Board of Supervisors. One Supervisor in particular, Mr. Wingard, was elected in the municipal election of 1967 and assumed the position of Supervisor in January, 1968. In January 1970, he was appointed by the Board to serve as a roadmaster pursuant to the provisions of a Second -Class Township Code, 53 Pa. C.S. 65514. As a Supervisor serving as a roadmaster, his compensation for services as a roadmaster were set by the Township auditors pnrusant to the Second -Class Township Code, 53 Pa. C.S. 65515. It should be noted that the Township auditors approved an hourly rate for such services and took action to establish other benefits for this Supervisor serving as a roadmaster or roadwo rker such as health insurance, and holiday and vacation allowances. See minutes of auditors 1970 -1981 incorporated by reference. Additionally, Mr. Wingard was paid the statutorily provided amount set forth in the Second -Class Township Code for his attendance at meetings and other official responsibilities as a Supervisor. Mr. Wingard, as a full -time employee, received a salary which was the amount set by the Township auditors pursuant to. the Second -Class Township Code, but the minutes of the Township auditors did not include a specific reference to an approval of any "deferred compensation" benefit plan for Mr. Wingard as a Supervisor- employee. In 1970, the Board of Supervisors with Mr. Wingard participating unanimously decided to establish a penson plan for a',1 full- time'employees of the Township. At this time, Mr. Wingard, as a full -time employee and roadmaster of the Township, was considered to be part of and eligible for participation in this pension plan. From 1970 until 1981 Mr. Wingard served as a roadmaster and the Supervisors (including Wingard), according to the plan of pension adopted in 1970, purchased and paid for him and each of the other Patrick T. Kiniry, Esquire Page 3 full -time employees of the Township whole life insurance policies. These policies were administered pursuant to a trust plan or fund set up by the Supervisors. Incidental to the establishment of this trust fund, Mr. Wingard was named as Trustee of the Fund and assumed all the legal responsibilities and duties set forth in the provisions of the Trust Fund. In 1981, Mr. Wingard was relieved of his duties as roadmaster because the Township had decided to establish the position of Township Manager who would be responsible for assuming some of the duties formerly assigned to the roadmaster. Thus, even though Mr. Wingard continues to serve as a Supervisor, he has, since 1981, discontinued his role as roadmaster. Pursuant to the provisions of the Trust agreement, because Mr. Wingard ceased to be an employee within 10 years of his normal retirement date he had the option of "electing ", pursuant to Section 10.02 of the Trust Agreement to withdraw the sums in his "account" and to reinvest those sums, as restricted by the Trust Agreement. Essentially, this would mean that the Township would relinquish the policies on which it is the applicant and owner. Then, on behalf of Mr. Wingard, pursuant to the Trust Agreement, the Township, at Mr. Wingard's request, would cash these policies. These amounts -- representing a fully funded pension or policy -- would be given to Mr. Wingard for his use and disposition. It should be noted that the policies purchased under the terms of this Trust Agreement for Mr. Wingard provided substantially the same coverage as provided for other non - police Township employees covered by the Trust Agreement. It should also be noted that the minutes of the auditors do not record their affirmative approval as to the inclusion of Mr. Wingard as a member of this trust plan nor did they, throughout the years in question, take exception to the amounts paid for premiums by the Township to purchase or fund this plan and the policies for Mr. Wingard thereunder. However, the document you provided to us on February 23, 1984, signed by seven of the nine persons who served as auditors within the Township from 1971- 1983 indicates that when the auditors acted to set the salary for Mr. Wingard, they intended to and believed that they were approving benefits for him that corresponded to those provided to all other non - police Township employees. Because of the questions that have been raised concerning the participation of Mr. Wingard in such a plan and the return of any cash value (via the Township under the terms of the trust, as outlined above) to Mr. Wingard under the provisions of the Ethics Act, the money that has been obtained by the exercise of the option under Section 10.02 of the'Trust and associated with Mr. Wingard's policies has been issued to the Township. However, these proceeds were upon receipt and are currently deposited in an interest- bearing account owned by the Township. If the ruling of the Ethics Commission is that Mr. Wingard may receive this cash payment, a check would be drawn payable to Mr. Wingard for the amount associated with the policy values less an amount payable to the Township because the policies purchased created a larger cash value than was needed to provide or fund an annuity pursuant to the provisions of the Trust Agreement to further fund the Township pension plan. Patrick T. Kiniry, Esquire Page 4 III. Applicable Law: The law to be applied to this question is as follows: Section 1. Purpose IV. Discussion: The Legislature hereby declares that public office a public trust and that any effort to realize personal financial gain through public office other than compensation provided by law is a violation, of that trust. In order to strengthen the faith and confidence of the people of the State in their government, the Legislature further declares that the people have a right to be assured that the financial interests of holders of or candidates for public office present neither a conflict nor the appearance of a conflict with the public gust. Because public confidence in government can best be sustained by assuring the people of the impartiality and honesty of public officials, this act shall be liberally construed to promote complete disclosure. 65 P.S. 401. 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). As noted above, we have previously concluded that the purchase of pension /annuity policies on the authorization of the Township Supervisors which would be applicable to and benefit the Township Supervisors themselves is questionable. See Hoak, No. 128. Basically, the compensation for a Supervisor acting as a roadworker or roadmaster, including deferred compensation in the form of a pension or annuity must he approved by the auditors of the Township. These concepts were recently affirmed by the Commonwealth Court ruling noted above. Sec Hoak and McCutcheori, supra. As in Hoak, an action is particularly questionable where the Township Supervisor to whose benefit the pension or annuity plan would enure, appears to have elected without oversight or affirmative approval of the Township auditors, to establish and to participate in such a plan. Patrick T. Kiniry, Esquire Page 5 With these concepts in mind we must review the particular provisions of this plan, the facts surrounding its adoption, and the actions taken by the auditors in this particular case. We undertake this review with the policy statement we recently issued on this general topic in mind. See Pennsylvania Bulletin, Volume 14, No. 3, Saturday, January 21, 1984, p,dges 217 - 221. Specifically, when reviewing the questions of whether a violation of the Ethics Act has occurred in such circumstances as are present here, we indicated that we would consider the fact of auditor action to approve the pension as a type or part of the compensation as determinative. See Chapter 7, 7.13(1) - (5) and 7.14(1). Basically, we indicated that whether the auditors of the Township have affirmatively approved the inclusion of the Supervisor in such a plan and recorded or evidenced their actions in their minutes would be of a prime concern in answering the question of compliance with the Ethics Act. We indicated that a plan which has not been "approved by the auditors" would be contrary to the Ethics Act and a conflict thereunder. In your presentation on February 23, 1984, you requested we review the minutes of the Township auditors meetings from 1970- 1981. While you realize that the minutes of the auditors of Richland Township do not contain any clear reference to their approval of Mr. Wingard as a participant in this Township pension /annuity, you argue that a review of those minutes of those auditors meetings from 1970 - 1981, show that the auditors intended to treat Mr. Wingard similarly to those other non - police workers within the Township. Reviewing these minutes we find that. Mr. Wingard was authorized by the auditors to receive health insurance coverage similar to that provided for other employees and to enjoy holidays awarded to other employees, for example. There is no evidence that the auditors intended to exclude Mr. Wingard from participation in the pension or annuity program which was available to other non - police Township employees. Additionally, in your most recent presentation to the Commission you have provided us with an affirmative statement from seven of the nine auditors who served within the Township indicating that the auditors had intended to and believed that they had approved Mr. Wingard's participation in the Township pension plan that covers all non - police Township employees. Basically, this statement, signed by these individuals under penalties relating to unsworn falsifications to authorities (see 18 Pa. C.S. 4904) is sufficient to persuade us that the auditors did intend, during the period 1970 -1981, to approve and . assumed that they had approved the same benefits for Mr. Wingard (including Township paid for annuities) that were received by the other non - police Township employees. During this period, 1970 - 1981, as has been recorded in the factual portion of this opinion, those other employees were eligible for and did participate in the pension /annuity program provided and paid for by the Township. We believe that this statement of the auditors represents a recordation of the events that these auditors believe occurred during 1970 - 1981, hut which, unfortunately, were not properly or fully recorded at that same time. This statement of the seven auditors who served during this period, along with our review of the minutes of the auditors provides sufficient basis for us to conclude that the auditors, in this case, did or should be deemed to have approved of Mr. Wingard's participation in this pension/annuity program. Patrick T. Kiniry, Esquire Page 6 We recognize in making this ruling and in reviewing these questions that, in some instances, full and clear recordation of events did not occur. Records or minutes, which were contemporaneously made with the auditors' decision - making process, which reflect their affirmative approval of this action, of course, would be preferable to the type of recordation which you have presented. When a contemporaneous record of auditor approval is unavailable, the Commission will require presentation of other clear and substantial evidence to convince us that no violation of the Ethics Act has occurred. Our ruling in this case is limited to these facts and should not be viewed as establishing a general precedent. V. Conclusion: Given the statement that the auditors apparently approved the participation of Mr. Wingard in the trust /pension (annuity) program discussed above, his acceptance of benefits thereunder is not violative of Section 3(a) of the Ethics Act. The money currently deposited in an interest - bearing account owned by the Township can be converted and remitted to Mr. Wingard without violation of the Ethics Act. Pursuant to Section 7(9)(i), this opinion is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any civil or criminal proceeding, providing the requestor has disclosed truthfully all the material facts and committed the acts complained of in reliance of the advice given. Finally, any person may request within 15 days of service of the opinion that the Commission reconsider its opinion. The person requesting reconside- ration should present a detailed explanation setting forth the reasons why the opinion requires reconsideration. SSC /rdp This letter is a public record and will be made available as such. cc: Tom Wenger, Esquire By the Commission, PAUL S'ITH Chat