HomeMy WebLinkAbout540 ShafferMr. A. Pay Shaffer
Paint Township Supervisor
1n2R Lnuella Drive
Windher, PA 15963
Re: 84 -07 -C
near Mr. Shaffer:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
nROER nF THE rnMMISSION
Order No. 540
DECIDED NOV 19 1986
MAI LEDNI=6
The Ethics Commission has received a complaint regarding you and a
possible violation of Act 170 of 1978. The Commission has now completed its
investigation. The individual allegations, conclusions, and findings on
which those conclusions are hased are as follows:
I. Allegation: That you, Supervisor in Paint Township, violated Section 3(a)
of the Ethics Act which restricts a puhlic official or puhlic employee from
using puhlic office or confidential information received through holding that
office to ohtain financial gain other than compensation provided for hy law
for himself, a member of his immediate family, or a husiness with which he is
associated, in that you participated in a pension- annuity, life insurance or
stock plan paid for out of township funds and received benefits thereunder,
which plan was not approved hy the township auditors hut was voted upon and
paid for with your participation.
A. Findings:
1. You have served as a township supervisor for Paint Township since at least
1470 through 1981.
2, you were also employed hy the township as a roadmaster, laborer or
secretary /treasurer during your years of service.
R. On ,Hine 29, 1970, the Paint Township Roard of Supervisors consisting of
tyrant Wirick, Charles Wirick, and A. Ray Shaffer estahlished a retirement
program for all full -time employees of the township.
Mr. A. Ray Shaffer
Page 2
4. The plan was set up thrcurh the Robert F. F..!,,ebner Agency and insurance was
provided throug l..iri7olr National Life Insurance Company.
5. The plan contained the Following features:
a, immediate commencement for all present full - -time employees of the
township.
b. Newly hi r ec_ employees must acquire a ore year waiting period before
they ar: r:? igibie tc participate.
c. All contributions on behalf of employees shall be vested •n t'. - ±
cwn:rs of the plan, the Paint Township Board of Sup rvisors, until
the employee acquires ten years of employment with the township on a
full -time basis.
d. Thereafter, the benefits accrued in the empThyee rec nt plan will
vest i n the i ndi vi dual employee.
e. Benefits will be based on 50% of the employee's s Lary and further
integrated with primary social security benefits.
f. Normal retirement age is fixed at 65 years.
g. Moneys for provision of the employee benefits wild • obtained from
the Paint Township general fund. (Dated May 22, 1970).
6. During the original implementation of the plan in June of 1970, Grant
Wirick and A. Ray Shaffer, were authorized to sign applications and endorse
checks for the employee retirement plan.
7. On May 1, 1972, the plan was amended by the township supervisors
consisting of Ross 0. Weaver, A. Ray Shaffer, and Grant L. Wirick. The
amended pension plan contained the following features:
a. The plan was approved for all full-time employees of the township
except the policemen.
b. The plan becomes effective immediately.
c. All newly hired employees in the program shall be eligible to
participate on the first anniversary date of employment.
d. The plan is to be administered through the Robert F. Huebner Agency
Mr. A. Ray Shaffer
Page 3
e. After five years of continuous full -time employment, the plan vests
in the individual employee.
f. Benefits of the retirement plan shall be based on 7% of total
compensation plus 24% of excess over $400 less 150 for each year of
service and 15 years at normal retirement.
Normal retirement is set at age 65.
g.
and the Lincoln National Life Insurance Company. The benefits of the
plan are to be vested in the Paint Township Board of Supervisors.
8. The original plan established in 1970 was developed as a defined benefit
prototype plan, Fund B, variable annuity participant and life insurance. The
1972 amendment to the plan was made in order to utilize the fund A V
product.
9. The township pension program was not enacted through the adoption of a
township ordi nance.
10. During the course of the pension plan program initiated by the
supervisors, several changes were made to the plan. The original plan was
through Huebner Agency with Lincoln National Life Insurance Company.
Subsequent payments were made to Volunteer State Life Insurance Program.
Additionally, the plan was changed to allow for investments in the Templeton
Growth Fund because Lincoln National Life Insurance Plan was paying the plan
5% on their investment while the Growth Fund was earning 11 %.
11. Township supervisors were eligible to participate in the plan and did, in
fact, participate.
12. On April 2, 1985, the township supervisors, consisting of Ross Weaver,
Bruce Statler and A. Ray Shaffer adopted Ordinance 76.
d. The ordinance established a pension plan for all non - uniform full -time
employees. The new plan vested on a percent after 2 years of credited
service.
b. All previous contract agreements or funds held for the purpose of
providing pension plans and annuities also transferred to the newly
created plan.
13. On April 2, 1985, the township board of supervisors adopted a resolution
implementing Ordinance 76.
Mr. A. Ray Shaffer
Page 4
As part of that • esolution, all assets of the previously existing
plan were traasfcrr "d to the new elan. These assets were considered
as initia; contributions by the t3','nshiv tG thy. credit of the
accounts of the respective employees of the new plan. Twenty point
eleven percent (20.11 %) of the assets of the existing plan were
transferred to the new plan on behalf of Bruce Statler; 51.10% of the
assets in the existing plan were transferred to the new plan on
behalf of Ross Weaver; 11.20% of the existing plan were transferred
to the account of Richard Shaffer; 13.13% of the assets of the
existing plan were transferred to the new account on behalf of Wendy
Shaffer; and 3.46% of the assets of the existing plan were
transferred into the new plan on behalf of Jeffrey Penrod.
b. The township supervisors also engaged the firm of Post Associates,
Incorporated as the township pension plan consultants.
14. ON April 2, 1985, the township board of supervisors adopted a resolution
liquidating the present pension plan assets. Pursuant to this resolution, the
chairman of the board of supervisors was authorized and empowered to surrender
and deliqer all contracts between Paint Township and Volunteer State Life to
receive payments, therefore, made payable to the township supervisors. The
township board of supervisors' chairman was also authorized•to similarly
surrender all contracts with Lincoln National Life Insurance Company. The
township supervisor chairman was then instructed to make payment over of these
funds into the newly created pension plan as per prior resolution.
15. On January 7, 1985, a memorandum of understanding was entered into
between the township supervisors and the Paint Township Auditors. Pursuant to
this memorandum of understanding, it was agreed that the township board of
supervisors would initiate, by ordinance, a new pension program. The township
auditors would approve the participation of the supervisors in this pension
program and further make said approval retroactive to 1970. Pursuant to the
memorandum of understanding the township supervisors would, in conjunction
with the township pension plan consultants, Post Incorporated, establish a new
pension plan and make initial contributions into that plan from the surrender
of the previously obtained plan. A memorandum of understanding was entered
into and signed by Ross Weaver, Bruce Statler and A. Ray Shaffer (township
supervisors), Janet Gindesperger, Pat Mulcahey and John Burkett, (township
auditors).
16. On April 2, 1985, the township board of auditors adopted a resolution
approving the township pension plan as applied to the township board of
supervisors in accordance with the previously mentioned memorandum of
understanding. The auditors further approved the transfer of the assets from
Mr. A. Ray Shaffer
Page 5
the previously existing plan to the new and revised plan to the credit of the
accounts of the respective employees on whose behalf contributions were
made. The memorandum of understanding indicates that auditors retroactively
adopt and approve, from its inception, the currently existing pension plan.
The auditors' action was taken on their belief that the supervisors had acted
in good faith.
17. The minutes of the Paint Township Board of Auditors reveal the
fol lowi ng official actions regarding the compensation of Paint Township
Supervisors prior to 1985:
a. November 15, 1971, auditor minutes show K. L. Faust elected as
chairman of township board of auditors. Township supervisors were
granted a two -week paid vacation in 1971. It was further agreed that
the township would pay for hospitalization for the above supervisors.
b. January 3, 1972, auditors authorized a wage increase for the township
supervisors not to exceed 5% to be effective March 1, 1972.
c. An additional township meeting was held June 1, 1973, although no
mention of the pension plan was made during that meeting.
d. January, 1973, no agreement on supervisors compensation, although a
subsequent meeting would be conducted.
On January 11, 1973, a meeting was conducted and the subject of
discussion was the wage increase, holidays and vacations. A specific
wage was set for supervisors ($4.00 per hour for a nine hour day).
No compensation was approved for time worked in excess of nine hours.
All working supervisors were granted eight paid holidays and all
working supervisors were given three weeks vacation.
e. January 7, 1974, Faust elected chairman, wage increase not granted to
township supervisors although they would be paid for a sixth day when
worked.
f. January 6, 1976, no agreement on pay increase for supervisors reached
at this time.
9. January 8, 1976, p
worki ng supervi sors.
"All three supervi so
them to roadmaster's
overtime charge on a
raise of $.35 per hour granted by auditors to
The minutes further indicate as follows:
rs are classified as roadmasters which entitles
pay. This will grant a nine -hour day with no
time and a half basis."
Mr. A. Ray Shaffer
Page 6
h. January 4, 1977, Faust still chairman, no mention of supervisor
compensation.
1. March 13, 1977, auditor agree to gErt Paint Township Supervisors
$.50 per hour raise effective March 14, 1977.
Janu °ry 5, 1978, auditors agree to $.5L i.er hour raise for township
supervi sors.
k. 0;2cember 5, 1978, discussion by auditors on use of personal vehi :les
township supervisors. Auditors met in an executive session to
d':-_uss this matter. Eight dollars a week compensation retroactive
to ecember 1, 1978 for supervisors' use of personal vehicle approved
fo1 c,h cki ng township road and township business.
1. Ja,' c.r ;' s, 1979, no discussion of wage at this time.
m. June 5, 1979. auditors grant $.40 per hour wage increase to the
super:''orF.
n. January 8, 1980, supervisors request 7% wage increase. Twenty -five
cents per hour wage increase granted retroactive to Jarurry 1, 1980.
Reason f9r this increase was based on the $8 a week car useage
reimbursAnent given in 1978 plus the $.40 an hour pay .ncrease in
June, 19`.'9.
January &, 1981, supervisors requested $1 per hour wage increase.
Auditors discussed the increase and decided to grant $.65 an hour
i.-.crease effective January 1, 1981.
January 5, 1982, Faust elected as chairman. No mention of wage
increase or wages.
January q, 1983, Faust elected chairman. Minutes indicated i.hat ".eel
Faust will also check with A. Ray Shaffer about his years of service
in the pension plan. Ross Weaver stated that the errors with Pearl
Shaffer and Wendy Shaffer in the pension plan had been corrected."
Roadmaster /supervisors granted $.50 per hour pay increase. Ken Faust
will al <;o see what effect the raise will have on the pension plan
costs.
,>. April 19, 1983, a discussion was held on the present pension plan
that the township has on the supervisors. Motion was made that
no moneys from township funds will be used for pension or life
J.
p•
q.
Mr. A. Ray Shaffer
Page 7
insurance for supervisors /roadmasters until such time as the auditors
approve the amount of money or the legality of such plan is
determined by the township solicitor.
s. January 3, 1984, questions raised about life and /or retirement plans.
Wages freeze at $7.65 per hour until explanation of plan is made to
auditors' satisfaction. Motion was made that A. Ray Shaffer be
compensated for roadmaster wages only for inspecting roads twice a
year. Motion that no money from township funds be used for pension
or life insurance for supervisors /roadmasters until such time as
the auditors approve the amount of money and /or the legality of the
plan.
18. Several of the auditors were not sure as to what, if any, action had been
taken by them in relation to the plan.
19. Paul F. Henger, a former Paint Township Auditor, first learned of the
pension plan in 1981 from Ross Weaver.
a. Henger advised that at the time the auditors found out
about the pension plan (1981), the auditors advised that the
supervisors could not have it. They advised this decision was made
because the plan was too expensive.
b. Hegner stated that he didn't hear much about the program prior to
this.
20. Kenneth Faust was an auditor in 1970. He stated that he did not know
the supervisors requested approval for a pension plan. Prior to the
termination of A. Ray Shaffer, township supervisor, he did not know about the
pension plan. Faust insisted that he did not know anything about the pension
plan
a. Faust also stated that they thought that it was too much to be
paying for someone who is going to be in office for only six years.
b. He advised that because the expenditures for the plan were only
listed on auditor reports as "insurance" no one questioned it.
21. Roy E. Dobson became an auditor in 1977. He was an auditor for
approximately 6 years.
a. He advised that during the time of his service, none of the
supervisors ever discussed a township pension plan with him.
Mr. A. Ray Shaffer
Page 8
b. He was never aware that the supervisors had a pension plan until Ross
Weaver, Supervisor, advised them of such.
c. He alsr does not recall discussing hospitalization plans for the
supervi sors.
d. He advisee that to the best of his knowledge, the township auditors
never gave the supervisors authority to have a pension plan.
e. He was unaware as to what, if any, action took place prior to his
term.
22. Janet Gindlesperger served as an auditor in 1984. During her term of
office, the ;township supervisors requested to roll over the old pension plan
into a new procram.
a. ;,s an auditor, she believed that the new pension plan would be fair
and egtitable.
b, Her tend as auditor expired in 1985.
23. Joh,e Burkett was elected in November of 1984 to serve as auditor for a
term of six years.
a. Prior to that, he had served to fill the vacancy of George Penrod.
b. He advised that he knew of the new pension plan. This plar? �soc�ld
cost the township less.
c. He turf her acknowledged that he knew that the money from the old plan
was rolled over into a new plan.
24. Patrick Mulchay served as a township auditor for 1 year.
a. In 1983 the township auditors instructed the board of supervisors to
discontinue pz.yments into the retirement plan until the matter was
revi ewed.
b. The township supervisors disobeyed this motion and continued to make
contributions.
c. The same procedure was followed in 1984 and contributions were still
made.
Mr. A. Ray Shaffer
Page 9
25. The annual financial reports of the Paint Township Board of Auditors for
the years 1973 -1982 indicate that in each of the aforementioned years, the
township board of auditors issued a financial report which included township
disbursements for employee benefits in the form of insurance /annuities and
retirement expenditures.
a. The auditors, approving these financial reports, included Faust,
Imler, Botl ock, Henger, and Dobson.
b. The following is a breakdown of the payments in this respect and the
auditors who performed the audit in the years identified above:
Insurance/
Year Annuities Retirement Auditors
1972 $1,636.07 $ 1,257.74
Faust, Fleck, Imler
1973 $5,096.35 Faust, Fleck, Botiock
1974 $ 475.93 $ 5,096.35 Faust, Fleck, Botiock
1975 $2,840.49 $ 4,859.08
Faust, Henger, Botiock
1976 $ 8,776.01
Faust, Henger, Botiock
1977 $1,359.36 $10,895.09 Faust, Henger, Dobson
1978 $7,576.09 $ 8,900.52
Faust, Henger, Dobson
1979 $ 339.21 $23,104.03
Faust, Henger, Dobson
1980 $7,371.40 $14,761.48
Faust, Henger, Dobson
1981 $3,634.65 $14,094.33
Faust, Henger, nobcon
1982 $ 520.52 $ 9,132.55
Faust, Henger, Dobson
$100,877.18 $30,850.07 Total: $131,727.25
26. The township supervisors, as a matter of course, performed various duties
and made a number of decisions regarding the pension plan and the purchase of
insurance benefits from 1970 through 1985. Township supervisor minutes
indicated the following actions of the township supervisors.
Mr. A. Ray Shaffer
Page 10
January 4, 1960, Ray Shaffer is appointed secretary /treasurer.
A motion was made by Charles Wirick and seconded by Clarence Holsople
for Ray Shaffer to be roadmaster.
b. January 19, 1972, Grant Wirick, Ray Shaffer and Charles Wirick are
board members. All supervisors agree to act as road foremen.
c. January 7, 1980, township supervisors' meeting, Bruce Statler has
Taken the oath of office. Ross Weaver serving as chairman. All
three supervisors agree to act as roadmasters. Grant Wi rick was
hired as an operator at $6 per hour.
d. September 13, 1982, Weaver moved that the pension plan be amended as
follows:
"Emi. l oyee" shall mean any person who is regularly employed by
the employer on a full -time basis, excluding such persons whose
customary employment is less than 40 hours in any one week, or less
than 12 months in any calendar year.
e. On May 16, 1983, a motion was made by Ross Weaver to pay the
pension into the no -load fund "if we don't hear from the township
solicitor by May 21, 1983." The motion was seconded by A. Ray
Shaffer with Statler agreeing.
f. January 3, 1984, Ross Weaver, Chairman, A. Ray Shaffer, Vice
Chairman, Bruce Statler, Secretary /Treasurer. Weaver and Statler
appointed as roadmasters, Shaffer as laborer when needed.
27. On October 2, 1981, representatives of the Pennsylvania Department of
Community Affairs, reviewed the administrative structure and bookkeeping
methods of Paint Township.
a. That review included an objective consideration of the administrative
and non - fiscal operations and systems of the township.
b. As part of the review, a municipal finance consultant from the Bureau
of Local Government Services in the Department reviewed the employee
pension plan and noted the following:
"As participation in the pension plan is a form of compensation, the
township auditors must approve participation in the pension plan by
members of the board of supervisors. The board should have or have
access to documentation that evidences such approval by the township
board of auditors."
Mr. A. Ray Shaffer
Page 11
28. On March 31, 1983, a letter was forwarded to the chairman of the township
auditors, Kenneth Faust, from B. Kenneth Grieder, the Executive Director of
the State Association of Township Supervisors.
a. Attached to that letter was a February 12, 1982 memorandum advising
township supervisors that pension contributions by the township are a
form of compensation for township supervisors.
b. The memo further indicated that township supervisors may participate
in the township pension plan only with respect to his function as an
employee and not in relation to his function as a supervisor.
c. The memo stated that any pension plan so adopted must be approved by
the township board of auditors to the extent that the plan affects
township supervisors as employees.
29. Paint Township made payments on behalf of the township supervisors for
Life Insurance and flexible annuity pension programs from 1970 onward. The
life insurance and pension plan was originally provided by Lincoln National
Life Insurance, Incorporated. The program was later transferred to Volunteer
State Life Insurance Company. Investments were also made on behalf of the
supervisors in the Templeton Growth Fund and the Volunteer State Life No Load
Side Fund. The life insurance provided to the township supervisors was whole
life with cash surrender value.
30. Payments on behalf of township supervisor, A. Ray Shaffer, were made as
follows:
VOLUNTEER VOLUNTEER TEMPLE- VOLUNTEER
YEAR LINCOLN LIFE LINCOLN V.A. STATE LIFE F. P. A. TON NO -LOAD
1970 $256.13 $ 423.60
256.13 $ 423.60
1972 $368.53 $ 627.90
197.3 $659.42 $1,259.49
1974 $659.42 $1,259.49
1975 $659.42
1976 $659.42
$162.44
$334.64
$1,586.96
$2,039.58
Mr. A. Ray Shaffer
Page 12
VOLUNTEER VOLUNTEER TEMPLE- VOLUNTEER
YEAR LINCOLN LIFE LINCOLN V.A. STATE LIFE F. P. A. TON NO -LOAD
1977 $659.42
1978 $659.42
1979 $659,42
198u $659.4_
1981 9659.42
1982
1983
1984
Total: $5,815.57
Total:
$540.57
$'57.25
$757.25
$757.25
$757.25
$2,868.67
$3,854.76
$3,854.76
$3,854.76
$2,025.00
$3,138.98
$6,500.98
$3,994.08 $4,066.65 16,472.53 11,664.96
$6,194.00
$49,207.79
31. Pursuant to a letter from your Attorney, Samuel D. Clapper, dated May 1,
1985, he asserts on your behalf that it is and has been the position that the
N:ditore approved the original pension plan but because the auditors, in those
(Lys, did nut maintain detailed minutes and records and because one euditor is
deceased and one is incompetent and the other cannot recollect either
approving or disapproving the plan, the supervisors cannot be assessed any
penalty for violating the State Ethics Act or receiving the plan
inappropriately,
32. it has been asserted, on your behalf through your attorney, that the
retroactive approval of the township pension plan program by the current
auditors is an approriate mechanism of approval that the pension plan is now
authorized legally from its inception.
33. It has been asserted, through your attorney, that this procedure of
retroactive approval was accomplished as a precautionary matter and that you
still assert that the plan was approved originally by the township auditors
in 1970.
Mr. A, Ray Shaffer
Page 13
were contacted and consulted about the pension plan.
B. Discussion: As a Township Supervisor you are a public official as that
term is defined in the State Ethics Act. 65 P.S. §402. As such, your conduct
is subject to the requirements thereof. Sowers, 80 -050; Glova, No. 326; Hunt,
No. 384 -R.
Generally the Ethics Act provides 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).
The question of the propriety of pension and annuity plans for
supervisors of second class townships has been reviewed by this Commission on
many occasions. McCutcheon, No. 127; Hoak, No. 128, Marcello, 85 -003. The
Commission determinations in these matters has been reviewed and affirmed by
the Commonwealth Court of Pennsylvania. McCutcheon v. State Ethics
Commission, 77 Pa. Commw. Ct. 529, 466 A.2d 283, (1982).
Generally, in situations such as the instant matter, it must be
determined whether the official used his position to obtain or secure
financial gain other than the compensation that is authorized by law.
It is now clear that pension benefits such as the type herein question,
constitute a financial gain. See, McCutcheon v. State Ethics Commission, 466
A.2d 283, at 288.
the additional question to be answered is, th ereror - e, whether such
benefits are compensation provided by law. A complete analysis of this exact
issue has been set forth in the above authorities. See also; Hendricks v.
East Rockhill Township, 1 D & C 3d 763, (1977). Generally, the compensation
to be paid to a township supervisor who serves only in that position is
specifically set by Statute. 53 P.S. §65515. A Supervisor who is also
employed by the township in one of the positions authorized in the Second
Class Township Code, may receive additional compensation. Such compensation,
however, in order to be authorized by law, must be affirmatively fixed by the
Township Board of Auditors. 53 P.S. §65542.
Mr. A. Ray Shaffer
Page 14
We have also ruled in accordance with the above, that a non- working
township supervisor may not receive health, medical, life or other insurance
benefits without violating the provisions of the State Ethics Act. Krane,
84 -001; Glova, 326.
Once again, while a working supervisor would be eligible for this type of
compensation, such must be affirmatively fixed by the township board of
auditors. See, In re: Appeal of the auditors report of Muncy Creek Township,
16 iycoming Rep 159; Conrad v. Exeter Township, 27 D & C 3d 253, (Berks
1983). (1983); In re: North Strabane Township Board of Supervisors, 63 Wash.
Co. 137, affirmed per curiam 470 A.2d 524, (1984).
We have reviewed the instant matter in light of these now established
concepts of law as well as under the policy pronouncement of the Commission.
51. Fa. Code §7.1.
It is clear that you have been a participant in the township pension and
anmity programs since at least 1970. The facts reveal that your
participation terminated in 1981. It is also clear, from the facts that we
havo reviewed, that you were appointed to a position of employment by the
township as authorized in the Second Class Township Code. As a result and
b €:-ed upon the foregoing discussion, you were clearly eligible to receive
aduitional compensation. The question, thus, arises as to whether the pension
and insurance benefits that you received were affirmatively fixed by tyre
township board of auditors. In this respect, we note that the township
acc'i tors' minutes never reflect an actual fixing of the pension and insurance
benefits as part of your salary. In 1971, however, the auditor minutes do
indicate that the township would provide for hospitalization benefits for
working supervisors. The auditor minutes are silent, thereafter, as to the
pension program and insurance benefits until 1983, when the auditors discussed
the pension that had been provided to you. With relation to the statements
provided by the auditors, at least one auditor, Kenneth Faust, indicated that
hi wLs unaware of the existence of the pension plan until your retirement. It
was only at that point in time that he became aware of the program. Roy E.
Dobson, along with a number of other auditors, could not recall anything about
the hospitalization or pension programs for supervisors. While the prior
actions of the auditors are unclear as to whether they approved the program
from its inception, there is no doubt that in 1983, the township board of
auditors affirmatively stated that no money from township funds would be used
fcr the pension or life insurance for supervisors /roadmasters until such time
as the auditors approved the amount of money or legality of such a plan. Once
again, this motion was made and the same position was taken by the auditors in
1984. Regardless of this clear instruction from the township board of
auditors, the township supervisors, in 1983, continued to provide payments
Mr. A. Ray Shaffer
Page 15
into the pension program for themselves. This is a clear violation of the
State Ethics Act. The supervisors, in providing themselves funding for
pension and insurance coverage during the year when the auditors clearly and
specifically delineated that such was not to he done, was a use of public
office in violation of the State Ethics Act.
While we are aware of the fact that in 1 the township hoard of
auditors, then in office, retroactively approved all contributions to the
pension plan, we do not helieve that such retroactive approval had any effect
on the actions in 1983 and 10514.
This Cnrm has clearly stated, in the past, that township auditors
may not retroactively approve compensation pail in a prior year. Saunders,
R5- 006 -R. Our decision in that matter was primarily hased upon our reading of
the Second Class Township Code._ That Code, in part, provides as follows:
The auditors of townships shall meet annually, at the
place of meeting of supervisors, on the date following the
day which is fixed hy this act for organization of the
township supervisors; and shall organize hy 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 compensation for the current ear authorized
in Section 515 hereof. 53 P.S. 565542, (emphasis added).
A literal reading of this provision indicates that only the hoard 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 suhsequent year is
of no validity whether it he hy the same or hy another Board of Auditors.
Short v. Gilson, 1.07 Pa. 315, A , (10514); Commonwealth v. Scanlon, 202
A. 250, 51 A.QRh, (jy02).
Similarly, when a municipal corporation or municipal official undertakes
actions that are utterly beyond the statutory jurisdiction set forth hy
legislative grant, such actions are "ultra vires" and may not he suhsegently
ratified or approved. • See, Albright v. fity of Shamokin, 777 Pa. Super. 344,
419 A.2d 1176, (19510).
Thus, we helieve that the retroactive approval of the township auditors
in 1985 had no effect on the decision hy the auditors in 1983 not to fund the
Mr. A. Ray Shaffer
Page 16
pension program for that particular year. As such, we believe that any
financial gain received in that year would not be in accord with the State
Ethics Act. In the instant situation, you terminated your township service in
1981 and, thus, received no benefits for 1982. Thus, there was no violation
of the Act relating to that year. In relation to the other years, we do not
believe that the evidence is sufficient at this time to warrant any further
finding that the act has been violated. We have based this decision primarily
upon the fact that as early as 1971, the auditors did, in fact, mention in
their minutes the provision of hospitalization benefits for the supervisors.
Additionally, we make note of the fact that all of the auditors who were in
office were interviewed and many of these individuals could not recall what,
if any, decision had been reached by the auditors in relation to these types
of benefits. Because of the possibility that the auditors could have approved
the program, we do not believe that it would be just for us to impose any
additional penalties. --
C. Conclusion: There is no violation of the State Ethics Act as the evidence
did not indicate that the auditors did not affirmatively affix the pension
program as part of the compensation to be paid to you as a Working supervisor.
The year for which the auditors did not fix this compensation, 1983, is not
applicable in this case as you had retired from service in 1981.
Our fi'es 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 challen9e 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).
JJC /na
By the Commission,
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G. Sieber Pancoast
Chai man