HomeMy WebLinkAbout482 CampMs. Erma Lally
1101 Eiyhteentn Street
Beaver Falls, PA 15u1U
Re: 64 -151 -C
Uear Ms. Camp:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
ORDER OF h COMMISSION
May 2, 1986
Order No. 482
The State ethics Commission has received a complaint reyardiny you and a
possible violation of Act llu of 1916. The Commission has now completed its
investigation. inc individual allegations, conclusions, and tindinys on which
those conclusions are based are as follows:
I. Allegation: Tnat you, a Co +uncilmember for the City of Beaver Falls,
violated Section 3(a) of the Ethics Act, bb P.J. 4113(a), by naviny the city
pay for d hospitalization /medical plan and a life insurance policy in Which
you participate,
A. Findings: -
1. You have served as a city councilmerrrber in heaver Falls since Januery,
1964 and, as such, are subject to the Ethics Act (Act 1 /U- 1976).
Z. You state that you were aware that Beaver Falls provided nealth care
benetits.
J. You â–ºlad your hospitalization cuveraye discontinued effective October :!,
1964. (he city continues to pay premiums tor lice insurance.
4. Accurdiny to the city clerk, otticials are automatically added to the
hospitalization and life insurance plans when they assume ottice.
b. At the September 11, 1965 council meetlny, you made d notion to Have
council drop all hospitalization benefits. The motion tailed tor lack of
second.
Ms. Erma Camp
Page 2
May 2, 1986
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
b. From October, 1984 through September, 1985
$ 81.00
$108.00
9. The total cost to the city for your life insurance from February, 1984
through 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 September, 1984 $1,078.40
b. On your request, you were removed from the program effective October,
1984.
Ms. Erma Camp
Page 3
May 2, 1986
c. You had $6.45 per month, from April through September, 1984, deducted
from your pay to reimburse the city for vision care (total reimbursed
$38.70).
11. The total net premiums paid by the city for your hospitalization program
from February, 1984 through September, 1985 was $1,039.70.
12. The total premiums paid by the city for your hospitalization and life
insurance plans was $1,228.70 (hospitalization - $1,039.70, life insurance
$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 councilperson 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.
The Ethics Act provides, in part, that:
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 he resolved, therefore, is whether this insurance
coverage is cpmpensation provided by law. For this answer, we must look to
the Third Class City Code.
Ms. Erma Camp
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 fixing 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, 1986
§37403. Specific powers
In addition to other powers granted by this act, the
council of each city shall 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,
i nsuri ng 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.
Ms. Erma Camp
Page 5
ay 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. P4cCreary 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 offici al 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
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 ordinance to extend the insurance
coverage to members of council and other city officials. The council believed
that the ordinance, i n fact, had accompli shed 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 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
official 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
ordi nance and our findi 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.
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.
Ms. Erma Camp
Page 6
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).
By the Commission,
G. Sieber Pancoast
Chairman