HomeMy WebLinkAbout480 FordMr. Jerry ford
ibUb Colleye Avenue
Beaver Falls, NA 1bUIu
Re: 254 -149 -C
Uear Mr. Ford:
A. Findinys:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
ORDER OF THE COMMISSION
May 2, 1986
Order No. 480
The State Ethics Commission has received a complaint regarding you and a
possible violation of Act 17U of 19/8. The Commission has now completed its
investigation. The individual allegations, conclusions, and findinys on which
those conclusions are based are as follows:
1. Alleyation: That you, a Controller for the City of Beaver Falls, violated
Section i(a) of the Ethics Act, bb N.S. 4U3(a), by having the city pay for a
hospitalization /medical plan and a life insurance policy in which you
participate.
1. You have served as a city controller in Beaver Falls since 19 /8 and, as
such, are subject to tne Ethics Act (Act 17U- 19 /6).
L. You state that the solicitor told you that your participation in this
program is authorized by a city ordinance and the Third Class City Code.
J. the city continues to pay tne premiums tor your plans.
4. According to the city clerK, otticials are automatically added to the
hospitalization ana lite insurance plans when they assume uftice.
The city auditor acKnowledyes that he was aware the city paid tor city
otticials participation in lite and hospitalization plans but never yuestioned
it.
Mr. Jerry Ford
Page 2
May 2, 19R6
6. City council took the following actions relating to insurance;
a. Ordinance #975 passed by council April 13, 1951 and signed by Mayor
Edward C. Corcoran, authorized contracts with insurance companies
insuring the employees of the City of Beaver Falls under policies for
group insurance covering life, health and accident insurance and
agreed that the city could pay part of the premimums. This ordinance
was based on Section 2403 of the Third Class City Law as amended May
22, 1933, which authorized council to contract with insurance
companies insuring its employees under group insurance policies for
life, health, or accident insurance.
b. This ordinance authorized the city to contract for group life
insurance for its employees with Sun life Assurance Company of Canada
and Zurich General Accident and Liability Insurance Company, LTD,
insuring its employees under a group, health and accident policy.
c. The city was authorized to pay approximately 2/3 of the premiums or
charges for such contracts but this payment was not to exceed $7 per
month for each employee.
d. The city clerk and mayor who were in office in 1951 and who were
involved in the passage of Ordinance #975 have affirmed that it was
the intent of the city council, at that time, to include city
officials and officers within the provisions of the ordinance.
7. The council also approved an ordinance in 1976. This ordinance involved
changes in compensation, expenses, bonds and organization of the police
department but did not affect Ordinance #975. The 1976 ordinance did not deal
with life insurance or hospitalization benefits.
8. The city has paid premiums for your life insurance as follows:
a. From January, 1981 through September, 1985 $466.00
9. The total cost to the city for your life insurance from February, 1984
through September, 1985 was $466.00.
10. The city has paid the following premiums for your participation in the
hospitalization program:
October, 1984 through September, 1985 209.90 x 12 $2,518.80
February, 1984 through September, 1984 203.40 x 8 $1,627.20
February, 1983 through January, 1984 175.63 x 12 $2,107.56
January, 1982 through January, 1983 154.62 x 13 $2,010.06
March, 1981 through December, 1981 109.27 x 10 $1,090.27
January, 1980 through March, 1981: Total b i l l
$7,411.60 divided by 93 persons covered =
79.70 x 15
$1,195.50
Mr. Jerry Ford
Page 3
January, 1979 through December, 1979: Total bill
$6,964.89 divided by 99 persons covered =
70.35 x 12
Total
Less deductions from your pay
hospitalization payments by city
11. The total premiums paid by the city for your hospitalization and life
insurance programs was $11,169.44 (hospitalization - $10,703.44 plus life -
$466.00.)
12. Other city officials have received similar hospitalization and life
insurance benefits at city expense.
13. You served the city of Beaver Falls as a controller and are not employed
by the city in any other capacity.
14. The Beaver Falls city council routinely has passed ordinances adopting
city budgets. These budgets included payments for hospitalization and life
insurance.
B. Discussion: As an elected city controller, you are a public official as
that term is defined in the State Ethics Act. 65 P.S. §401 et. seq. As such,
your conduct must conform to the requirements thereof. Boyle, 80 -020. See
also 53 P.S. §35701 (controller elected officer).
The Ethics Act provides, in part, that:
$ 844.20
$11,393.59
690.15
$10,703.44
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).
May 2, 1986
Within this provision of law, this Commission has determined that a public
official may not use his office to approve, obtain, accept or otherwise
receive financial gain other than his compensation provided by law. Allegheny
County v. Grier, 79 Pa. 639 (1897). This Commission has also held, on a
number of occasions, that insurance coverage of the type herein involved is,
in fact, financial gain. See Krane, 84 -001; Cowie, 84 -010; Domalakes, 85 -010.
See also Conrad v. Township of Exeter et. al., 76 Berks 7, 27 BC 3d 253,
(1983).
The question to be resolved, therefore, is whether this insurance
coverage is compensation provided by law. For this answer, we must look to
the Third Class City Code.
Mr. Jerry Ford
Page 4
The Code provides that the controller:
shall receive a fixed annual salary, to be provided
by ordinance, which shall not be less than the
compensation paid to members of council.
53 P.S. §36703
May 2, 1986
The Code also provides:
§37403. Specific powers
In addition to other powers granted by this act, the
council of each city shal 1 have power, by ordinance:
To make contracts of insurance with any insurance
company, or nonprofit hospitalization corporation, or
nonprofit medical service corporation, authorized to
transact insurance business within the Commonwealth,
insuring its elected or appointed officers, officials and
employes, or any class or classes thereof, or their
dependents, under a policy or policies of group insurance
covering life, health, hospitalization, medical service,
or accident insurance. 53 P.S. §37403
The Code clearly provides a mechanism for the purchase of insurance of
the type here in question for elected or appointed officials of cities of the
third class. The Code also sets forth a method by which the salary of
councilmembers is to be fixed.
Our reading of the law, however, also clearly indicates that when a
public official has the power to fix compensation for himself, the mechanism
provided for such power must be complied with strictly.
While it cannot be questioned that the General Assembly has the inherent
power to declare the public policy of the Commonwealth and may confer upon
members of council of municipalities power to appoint themselves to membership
upon boards of authorities and to fix their own salaries as it has been done
here, such grant of power must be strictly construed and strictly applied.
Commonwealth ex. rel. McCreary v. Major, 343 Pa. 355, (1941); See also
Warminister Township appeal, 56 D &C 2d 99, (1971); Genkinger v. New Castle,
368 Pa. 547, (1951); McCutcheon v. State Ethics Commission, 77 Commw. 529,
(1981). Both the salary of councilmen as well as the purchase of insurance
benefits for officials must be authorized by a duly enacted city ordinance.
There is no other mechanism through which these benefits may be obtained by
such officials. In the instant situation, an ordinance was in fact passed in
1951 which authorized the city to contract for the purchase of various
Mr. Jerry Ford
Page 5
May 2, 19R6
insurance benefits for employees of the city. While the ordinance did not
reference to such coverage for officials or officers of the city, we have
received the sworn statements of several individuals who were in office at the
time of the passage of the ordinance. These individuals, in substance, have
i ndicated that it was the intent of that ordinance to extend the insurance
coverage to members of council and other city officials. The council believed
that the ordinance, in fact, had accomplished this goal.
In several matters we have, in the past, accepted the statements of
intent of authorized officials as sufficient evidence of appropriate approval.
Kiniry, 84 -008; Saunders, 85- 006 -R. Based upon our pri -or decisions, we
believe that the intent of Ordinance #975 was to extend the insurance coverage
to the city officials.
We must here note that the argument has been advanced; that the
offici al s and officers of the city are, i n fact, employees within the meaning
of that term. Our decision herein is not based upon that analysis and we
believe that the officers and officials are not employees of the city. See,
e.g., Conrad v. Exeter Township, 76 Berks L.J. No. 2p. 7, (1983); In Re:
Appeal of Auditors Report of Muncy Creek Township, 16 Lycoming Rep. 159,
(1985).
Our decision is based solely upon our finding that the Third Class City
Code allows for the purchase of such insurance benefits for city officials by
ordinance and our finding that the ordinance enacted was intended to implement
this provision of the code.
As such, we do not believe that you violated the State Ethics Act in the
instant situation.
We must note, that the problems encountered in this matter were
occasioned by the faulty language of the in question ordinance.
In this respect, we strongly suggest that said ordinance be amended so as
to include the proper language to clearly extend the benefits to officials
and officers of the city.
C. Conclusion: Based upon the foregoing, we do not believe that you violated
the State Ethics Act when you received certain insurance benefits. The Third
Class City Code allows for the purchase of such benefits for officials of a
city .when a duly enacted ordinance is promulgated. Here, while the ordinance
only references to such benefits for employees, we believe that it was also
the intent of the council to provide said benefits to officials and officers
as well. We do suggest that an appropriate ordinance be enacted so as to
avoid future problems of this type.
Mr. Jerry Ford
Page 6
May 2, 1986
Our files in this case will remain confidential in accordance with
Section 8(a) of the Ethics Act, 65 P.S. 408(a). However, this Order is final
and will be made available as a public document 15 days after service (defined
as mailing) unless you file documentation with the Commission which justifies
reconsideration and /or challenges pertinent factual findings. See 51 Pa. Code
2.38. During this 15 -day period, no one, including the Respondent unless he
waives his right to challenge this Order, may violate this confidentiality by
releasing, discussing or circulating this Order.
Any person who violates the confidentiality of a Commission proceeding
is guilty of a misdemeanor and shall be fined not more than $1,000 or
imprisoned for not more than one year or both, see 65 P.S. 409(e).
By the Commission,
G. Sieber Pancoast
Chairman