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HomeMy WebLinkAbout481 KrzemienskiMr. Ted Krzemienski 1126 5th Avenue Beaver Falls, NA 15U1U Re: 64 -15U -L Uear Mr. Krzemienski : 0 STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 URUEK OF Trit COMrr1Ss1U1a May 2, 1986 Order No. 4R1 The State Ethics Commission has received a complaint reyardiny you and a possible violation of Act 17U of 19 /6. The Commission has now completed its investigation. The individual allegations, conclusions, and findinys on which those conclusions are based are as tollows: 1. Al legation: That you, a Counci lwember for the City of Beaver Falls, violated Section i(a) of the Ethics Act, b5 P.s. 4U3(a), by naviny the city pay tor a hospitalization /medical plan and a lite insurance policy in which you participate. A. Findinys: 1. You have served as a city councilmernber in Beaver Falls since January, 1934 and, as such, are subject to the State Ethics Act (Act 1 /U- 19/8). 2. You believe your participation in the nospitalization and life insurance proyrarn is authorized by a city ordinance enacted before you came un counci 1 and the Third Class City Lode. 3. The city continues paying premiums for these plans. 4. According to the city clerk, otticials are automatically added to the hospitaltzat1urr duo life insurance glans When they assume oftice. 5. The city auditor acknowledges that tie was aware the city paid fur city otticials participation in lite and hospitalization plans but never questioned it. Mr. Ted Krzemienski 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, 1984 through September, 1984 $ 81.00 b. From October, 1984 through September, 1985 $108.00 9. The total cost to the city for your life insurance from February, 1984 th -ough September, 1985 was $189.00. 10. The city has paid the following premiums for your participation in the hospitalization program: a. From February, 1984 through October, 1984 $1,213.20 b. From November, 1984 through September, 1985 $2,340.36 c. You reimbursed the city $27.50 monthly from March, 1984 through September, 1985 ($522.50). Mr. Ted Krzemienski Page 3 The Ethics Act provides, in part, that: May 2, 1986 11. The total net premiums paid by the city for your hospitalization program from February, 1984 through September, 1985 was $3,031.06 ($3,553.56 - $522.50). 12. The total premiums paid by the city for your hospitalization and life insurance premiums was $3,220.06 (hospitalization - $3031.06, life - $189.00. 13. Other city officials have received similar hospitalization and life insurance benefits at city expense. 14. You served the city of Beaver Falls as a councilpe -rson and are not employed by the city in any other capacity. 15. The Beaver Falls city council routinely has passed ordinances adopting city budgets. These budgets included payments for hospitalization and life i nsurance. B. Discussion: As an elected member of city council, 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. 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). 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. 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 D &C 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. Ted Krzemienski Page 4 The Code provides that: §36016. Salaries Councilmen shall receive for their services during their term of service annual salaries, to be fixed by ordi nance, payable i n monthly or semimonthly instalments (sic). Councils may, by the ordi nance fixi ng said salaries, provide for the assessment and retention therefrom of reasonable fines for absence from regular or special meetings of council or councilmanic committees. The salary paid to any councilman shall not be less than two hundred and fifty dollars per year. The compensation to be received by councilmen shall not be increased or diminished after their election; but succeeding councils may change all compensation, said change to take effect as to councilmen taking office at least six months after the passage of the ordinance providing for such change. 53 P.S. §36016 The Code also provides: May 2, 19R6 §37403. Specific powers In addition to other powers granted by this act, the council of each city shall have power, by ordi nance: 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 empl oyes, or any class or classes thereof, or - thei r 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. Mr. Ted Krzemienski Page 5 We must note, that the problems encountered in this matter were occasioned by the faulty language of the in question ordinance. May 2, 1986 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 ordi nance. 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 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 indicated that it was the intent of that ordi nance 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. Ki ni ry, 84 -008; Saunders, 85- 006 -R. Based upon our prior 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 officials and officers of the city are, in fact, employees within the meaning of that tens. 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 ordi nance and our fi ndi ng that the ordi nance 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. In this respect, we strongly suggest that said ordi nance be amended so as to i nclude the proper language to clearly extend the benefits to officials and officers of the city. Mr. Ted Krzemienski Page 6 By the Commission, G. Sieber Pancoast Chairman May 2, 1986 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. 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).