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HomeMy WebLinkAbout85-006 SaundersII. Factual Basis for Determination: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 March 20, 1985 OPINION OF THE COMMISSION Robert L. Saunders, Esquire Mutzabaugh, Mutzabaugh, Saunders & Mattie P.O. Box 342 236 -237 South Penn Building 52 Boyleston Street Bradford, PA 16701 -0342 85 -006 Re: Pension Plan, Township Supervisors; Retroactive Approval by Township Auditors Dear Mr. Saunders: I. Issue: You ask whether the township you serve as solicitor, has complied with the Ethics Act with respect to the pension program that it has adopted. You serve as solicitor for Lafayette Township, hereinafter, the Township. The Township is a second -class township and as such is governed by the provisions of the Second Class Township Code, 53 P.S. et. seq., hereinafter, the Code. The Township is governed by a Board of three supervisors. Only two of the supervisors serve as employees of the Township, having been appointed as such under the provisions of the Code, 53 P.S. 65514. Of these two supervisors, only one, Mr. Black, has been employed by the Township on a full -time basis for more than eight (8) years. The Township, by action of the Board of Supervisors, including Mr. Black, adopted a Resolution, No. 8 -80 at their regular meeting on August 12, 1980. This Resolution authorized the establishment of a pension plan for non- uniformed employees of the Township to cover all such employees having eight years of continuous full -time service with the Township. A pension plan was implemented on September 1, 1980, in accordance with this Resolution. Robert Saunders, Esq. March 20, 1985 Page 2 At the time of adoption of the Resolution and implementation thereof by the supervisors, there is no evidence that the auditors of the Township approved participation of any supervisor - employee in this pension plan, as part of the compensation fixed for such persons. See 53 P.S. 65515. You have, however, supplied us with the minutes of the Township auditors' meeting of January 3, 1983. In these minutes the following appears: You have provided no evidence that the auditors in office during the period from 1980, through 1983, approved the participation of the working supervisors in the program or fixed such as compensation for them. You also do not indicate if any payments have been made by the Township into the program on behalf of the one eligible supervisor. III. Discussion: "The auditors approve the Pension Annuity policy from September, 1980, at a premium of $700. per year, for Tom Black as a compensation, since he is a supervisor and full -time employee of the Township for over a period of eight years, as stated in a Resolution adopted by the Lafayette Township Supervisors, in August, 1980." There is no doubt that pension program or benefits constitutes deferred compensation which must be fixed by the auditors for supervisors who serve the Township as roadworkers, laborers, etc. See Hoak and McCutcheon v. State Ethics Commission, 77 Pa. Cmwlth. 529, 466 A.2d 283 (1983). As in Hoak, the actions of a supervisor to secure and benefit from a pension program paid for by the Township are questionable under the Ethics Act where the plan is established without the oversight and approval of the Township auditors. Additionally, we note that in response to the Court ruling in Hoak, this Commission on December 19, 1983, adopted a Statement of Policy by which to guide our review of cases similar to the situation raised in Hoak. See 51 Pa. Code §7.1. When reviewing your request, we have utilized this Statement of Policy as a guideline. Of particular importance in this review is the affirmative action of the Township auditors. In Hoak, the Commonwealth Court specifically ruled that Township supervisors have no authority, in the absence of affirmative action by the Township auditors, to purchase pension policies for themselves. Such was beyond the statutory authority of the supervisors, See Hoak, 466 A.2d 283 at 288. Robert Saunders, Esq. March 20, 1985 Page 3 In the instant matter the "affirmative action" of the auditors fixing the supervisors compensation by approving the inclusion of the Township supervisors in the pension program was set forth in the minutes of the January, 1983, Board of Auditors meeting. This approval indicates that it is to operate retroactively to August, 1980, when the supervisors first established this program for themselves. This retroactive approval and the effect, thereof, is the focal issue involved herein. It should be noted that from the period of 1983, the pension program may include the supervisors, as it was fixed by the auditors, it includes or may include other eligible employees, and the supervisors so included are working supervisors. With regard to the authority of the Board of Auditors to retroactively approve the pension plan, the Second Class Township Code provides in part that: The auditors of townships shall meet annually, at the place of meeting of supervisors, on the day following the day which is fixed by this act for organization of the township supervisors; and shall organize by the election of a chairman and secretary, and shall audit, settle, and adjust the accounts of the supervisors, superintendents, roadmaster, treasurer, and tax collector of the township and fix the compensations for the current year authorized in Section 515 hereof. 53 P.S. §65542, (emphasis added) A literal reading of this provision indicates that only the Board of Auditors may fix the compensation for a working supervisor and that they have no authority to fix such compensation (such as pension plans) for other than the current year. Support for this concept can he found in a number of cases holding that it is the authority of the auditors to settle the accounts for the preceding year and attempts to resettle accounts in a subsequent year is of no validity whether it be by the same or by another Board of Auditors. Short v. Gilson, 107 Pa. 315, A , (1884); Commonwealth v. Scanlon, 202 Pa. 250, 51 A.986, (1902). Similarly, when a municipal corporation, or municipal officials undertake actions that are utterly beyond the statutory jurisdiction set forth by legislative grant, such actions are "ultra vires" and may not be subsequently ratified or approved. See Albright v. City of Shamokin, 277 Pa. super 344, 419 A.2d 1176, (1980). Robert Saunders, Esq. March 20, 1985 Page 4 Thus, while the Township supervisors may purchase insurance pursuant to the Second -Class Township Code, 53 P.S. §65713, they may not do so for themselves without auditor approval fixing such compensation. Such is completely beyond their statutory power as set forth in Hoak. See also Hendricks v. E. Rockhill Township, 1 D &C 3d 763 (1977). The Court in Hoak found this independent determination and review to be an essential component of the statutory framework and the absence thereof results in the occurrence of an action that is "ultra vires." In light of this, the Board of Auditors appear unable to ratify or otherwise retroactively fix or approve the actions of the supervisors in purchasing said plan. In this matter no affirmative auditor action fixing the supervisors compensation in the form of pension or retirement coverage has been evidenced for the period 1980, through 1982. The supervisors here in question had fixed their own compensation. The approval of January, 1983, cannot, according to our reading of the available law, validate the program during that unauthorized period. Thus, the plan during that time would have existed in violation of the Ethics Act. 65 P.S. §403 (a). In closing, it must be noted that while you have indicated that the supervisors approved this pension plan for themselves as of 1980, you have not indicated the extent of any premiums paid in relation thereto. If, in fact, such premiums have been paid by the township on behalf of eligible supervisors, such premiums must be returned to the Township insofar as they related to the time when the plan was not authorized. In the alternative, the Township may wish to modify the plan so as to reflect the status of the plan had it been originally implemented in 1980. In this way, the covered supervisors need not make personal cash expenditures. The premium refund realized by such modification must be paid to the Township treasurer. See Marcello, 85 -003. IV. Conclusion: The pension plan, herein, involved was properly established and approved as of January, 1983. The plan as established prior to that date was unauthorized and, therefore, violative of the Ethics Act. Any financial gain realized as a result thereof, must be returned to the Township either directly or by way of a modification of the plan. 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. Robert Saunders, Esq. March 20, 1985 Page 5 This letter is a public record and will be made available as such. 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. JJC /sfd By th- Co , ission, [s° HERB'' B. CONNER Chairman