HomeMy WebLinkAbout542-R WeaverMr. Ross Weaver
c/o Samuel D. Clapper
Barbera & Barbera
146 West Main Street
P.O. Box 775
Somerset, PA 15501
Re: 84 -09 -C
Dear Mr. Weaver:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
ORDER OF THE COMMISSION
Order No. 542 -R
DATE DECIDED: July 21, 1987
DATE MAILED: July 28, 1987
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 based are as follows:
I. Allegation: That you, Supervisor in Paint Township, violated Section 3(a)
of the Ethics Act which restricts a public official or public employee from
using public office or confidential information received through holding that
office to obtain financial gain other than compensation provided for by law
for himself, a member of his immediate family, or a business with which he is
associated, in that you are or did participate in a pension - annuity, life
insurance or stock plan paid for out of township funds and received benefits
thereunder, which plan was not approved by the township auditors but 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
1972 through 1985.
2. You were also employed by the township as a roadmaster, laborer or
secretary /treasurer during your years of service.
3. On June 29, 1970, the Paint Township Board of Supervisors, consisting of
Grant Wirick, Charles Wirick, and A. Ray Shaffer established a retirement
program for all full -time employees of the township.
4. The plan was set up through the Robert F. Huebner Agency and insurance was
provided through Lincoln National Life Insurance Company.
Mr. Ross Weaver
Page 2
5. The plan contained the following features:
a. Immediate commencement for all present full -time employees of the
township.
b. Newly hired employees must acquire a one -year waiting period before
they are eligible to participate.
c. All contributions on behalf of employees shall be vested in the
owners of the plan, the Paint Township Board of Supervisors, until
the employee acquires ten years of employment with the township on a
full -time basis.
d. thereafter, the benefits accrued in the employee retirement plan will
vest in the individual employee.
e. Benefits will be based on 50% of the employee's salary and further
integrated with primary social security benefits.
f. Normal retirement age is fixed at 65 years.
g. Monies for provision of the employee benefits will be 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
and the Lincoln National Life Insurance Company. The benefits of the
plan are to be vested in the Paint Township Board of Supervisors.
Mr. Ross Weaver
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.
g. Normal retirement is set at age 65.
8. The original plan established in 1970 was developed as a defined benefit
prototype plan, Fund B individual VA products, variable annuity participant
and life insurance. The 1972 amendment to the plan was made in order to
utilize the Fund A Group VA product.
9. The township pension program was not enacted through the adoption of a
township ordinance.
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 the 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.
a. 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.
a. As part of that resolution, all assets of the previously existing
plan were transferred to the new plan. These assets were considered
Mr. Ross Weaver
Page 4
as initial contributions by the township to the credit of the
accounts of the respective employees of the new plan. Twenty point
eleven percent (20.11 %) of the asset 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,
credited to the account maintained 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 maintained on behalf of Wendy Shaffer; and 3.4% of
the assets of the existing plan were transferred to the account
maintained on behalf of Jeffrey Penrod.
b. Ordinance No. 76 provided in part:
The aforementioned contributions to be made to the accounts of
certain employees with assets received from cashing in the assets of
the present plan were determined on the basis of the average annual
compensation for the past three years determined on a yearly basis
and multiplied by the number of years of actual service to the
township and then calculating a contribution based upon 8% of such
annual compensation with appropriate interest factor, as calv►lated
by the Township pension consultants, Post Associates, Inc. The
Township Supervisors hereby declare that in their judgment and
discretion as public officials, they believe said allocation tc Lc
fair and reasonable and the Township auditors, by approval of the
pension plan and this Resolution, further consent and ac;ree that said
allocation of the assets from the existing plan is fair and
reasonable.
c. The township supervisors also engaged the firm of Post Associate,
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, f ;he
chairman of the board of supervisors was authorized and empowered to surrender
and'deiiver 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. The
memorandum provides in substance as follows:
Mr. Ross Weaver
Page 5
a. The township supervisors would seek the preparation of a new plan.
(defined contribution). "Said new plan shall involve a termination
of the present plan with the consent of any employees whose consent
is required..."
b. "Upon adoption of the new plan, termination of the present plan and
payment over of the assets of the present plan to the new plan, the
auditors agree to approve the old plan retroactively to its inception
and through its termination. The auditors noted their beleif that
the supervisors had acted in good faith."
c. You have asserted that when the new plan was set up the allocations
were not made as contemplated in the memorandum of understanding and
that the allocations actually made were not related to the particular
supervisor's fund balance under the old plan.
16. On April 2, 1985, the township board of auditors adopted a resolution
which provided as follows:
a. The auditors noted that the township prepared an ordinance and
resolution establishing and adopting a pension plan for all
non - uniformed full -time employees.
b. The auditors, in accordance with the Second Class Township Code,
approved said pension plan as set forth in the prepared resolution
and ordinance.
17. By letter dated April 4, 1985, the Paint Township Board of Supervisors
instructed Securities Fund Services to liquidate the Templeton Growth Fund,
No. 83010028 and remit payment to Paint Township.
18. By letter dated April 4, 1985, the Paint Township Board of Supervisors
instructed the Volunteer State Life Insurance Company to liquidate all Paint
Township policies including the following:
a. Ross 0. Weaver - Nos. 377237
369608
400591
361635
349033
361636
b. Bruce Statler - Nos. 377240
400592
377239
385401
392 460
Mr. Ross Weaver
Page 6
c. Policies for Richard and Wendy Shaffer and Jeffrey Penrod were also
terminated at that time.
d. Payment was to be remitted to the township.
19. By letter dated April 4, 1985, the Paint Township Board of Supervisors
instructed the Lincoln National Life Insurance Company to liquidate policies
No. 64- 3010725 and No. 64- 3060475 regarding Ross 0. Weaver and remit payment
to the township.
20. By letter dated May 6, 1985, Volunteer State Life Insurance Comm ny
transmitted check No. 498631 in the amount of $36,867.58 to Paint township.
See Finding 18.
21. Surrender transaction form Nos. 64457 and 64458 dated May 16, 1985
indcath that check Nos. A427869 and A42870 in the amount of $1,564.89 and
$2,::0.87 (Total $3,915.76) were transmitted by the Lincoln National Life
Insu.•�nce Company to Paint Township. See Finding 19.
22. By letter dated May 23, 1985, Volunteer State Life Insurance Corr,{+any
transmitted check No. 499848 in the amount of $8,230.12 to Paint Township.
See Finding 18, .
23. Templeton Growth Fund LTD transaction payment dated M 24, 1985
indicates full redNmpti on of the account and payment in the ar.3un
$14,185.10. See Finding 17.
24. The Paint Township Supervisors' pension and retirement plan savings
account No. 11 -A1020 at the Citizens National Bank of Windber monthly
statement indicates tithe following deposits:
Date Deposit Balance
3/31/85 $807.55
5/2/85 $14,165.10 $14,92.68
5/9/85 $36,867.58 $51,840.26
5/22/85 $3,915.76 $55,756.02
5/30/85 $8,230.12 $63,986 -40
Interest $182.26 $64,168.40
Mr. Ross Weaver
Page 7
25. On May 30, 1985, $64,168.40 was transferred from the Paint Township
pensions savings account No. 11A1020 to the Paint Township road supervisors
pension and retirement fund, account No. 03 -69668 at the citizens National
Bank in Windber.
26. The Accrued investments for Township Supervisors Weaver and Statler in
the Liquidated accounts were as follows:
a. Ross 0. Weaver:
Volunteer State Life $21,953.35.
Volunteer Investment Fund $6,231.02.
Templeton Fund $14,165.10.
Lincoln National $3,915.76.
Interest (Savings Account) $724.85.
Total: $46,990.08.
b. Bruce Statler:
Volunteer State Life $8,817.40
Volunteer Investment Fund $1,999.10.
Interest (Savings ACcount) $169.46.
Total: $10,985.96.
27. The remaining assets of the Liquidated plan ($6,192.36) were for the
credit of Richard and Wendy Shaffer and Jefferey Penrod.
a. Total assets equaled $64,168.40.
28. Upon establishment of the new pension plan, the following amounts were
allocated for supervisors Weaver and Statler:
Ross 0. Weaver:
From prior Plan: $32,790.05.
Mr. Ross Weever
Page 8
New Contribution: $ 2,839.62.
Total:
Bruce Statler:
$35,629.67.
$13,545.95
New Contributions: $ 2,839.62.
Total: $16,385.57.
29. The net effect to Ross 0. Weaver from the establishment of the new plan
was as follows:
Prior Plan Assets $46,990.08.
New Plan Assets: $35,629.67.
Loss: $11,360.41.
'0. The new effect to Bruce Statler from the establishment of the new plan
as as follows:
Prior plan assets: $10,985.96.
New Plan Assets: $16,385.57
Gain: $5,399.61.
31. The status of each supervisor and employee participating in the plan was
Eased upon the studies performed by the consultants retained by the township.
32. The original plan allowed a percentage participation as follows:
Weaver 73.23.
Statler 21.11.
R. Shaffer 4.35.
W. Shaffer 4.49.
Penrod .81.
Mr. Ross Weaver
Page 9
33. The new plan allowed a percentage participation as follows:
Weaver 51.10.
Statler 21.11.
R. Shaffer 13.13.
Penrod 3.46.
34. The increase in the percentage participation for Statler and the others
resulted from the implementation of a new formula that considered years of
service rather than the actuarial formula for a defined benefit plan.
35. The minutes of the Paint Township Board of Auditors reveal the following
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.
Mr. Ross Weaver
Page 10
g. January 8, 1976, pay raise of $.35 per hour granted by auditors to
working supervisors. The minutes further indicate as follows:
"All three supervisors are classified as roadmasters which entitles
them to roadmaster's pay. This will grant a nine -hour day with no
overtime charge on a time and a half basis."
h. January 4, 1977, Faust still chairman, no mention of supervisor
compensation.
i. March 13, 1977, auditors agree to grant Paint Township Supervisors
$.50 per hour raise effective March 14, 1977.
j. January 5, 1978, auditors agree to $.50 per hour raise for township
supervisors.
k. December 5, 1978, discussion by auditors on use of personal vehicles
by township supervisors. Auditors met in an executive session to
discuss this matter. Eight dollars a week compensation retroactive
to December 1, 1978 for supervisors' use of personal vehicle approved
for checking township road and township business.
1. January 3, 1979, no discussion of wage at this time.
m. June 6, 1979, auditors grant $.40 per hour wage increase to the
supervisors.
n. January 8, 1980, supervisors request 7% wage increase. Twenty -five
cents per hour wage increase granted retroactive to January 1, 1980.
Reason for this increase was based on the $8 a week car useage
reimbursement given in 1978 plus the $.40 an hour pay increase in
June, 1979.
o. January 5, 1981, supervisors requested $1 per hour wage increase.
Auditors discussed the increase and decided to grant $.65 an hour
increase effective January 1, 1981.
p. January 5, 1982, Faust elected as chairman. No mention of wage
increase or wages.
q. January 4, 1983, Faust elected chairman. Minutes indicated that "Ken
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."
Mr. Ross Weaver
Page 11
Roadmaster /supervisors granted $.50 per hour pay increase. Ken Faust
will also see what effect the raise will have on the pension plan
costs.
r. 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
insurance for supervisors /roadmasters until such time as the auditors
approve the amount of money or the 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.
36. You assert that the contributions made in 1983 were appropriate in that
the auditors conditioned their approval upon the solicitor approving the
legality of the pension plan.
a. You assert that the solicitor approved the plan as to legality and,
therefore, the contributions were valid. See Finding 35R.
37. The township solicitor confirms that he approved the legality of the
pension plan.
38. Paul F. Henger, a former Paint Township Auditor, stated that he 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. Henger stated that he didn't hear much about the program prior to
this.
39. 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.
Ross Weaver
Page 11
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.
40. Roy E. Dobson became an auditor in 1977. He was an auditor for
approximately 6 years.
a. He advised that during the t:Jae of his service, none of the
supervisors ever discussed a township pension plan with him.
b. He was never aware that the supervisors had a pension plan until Ross
Weaver, Supervisor, advised them of such.
c. He also does not recall discussing hospitalization plans for the
supervisors.
d. He advised 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 hi:
term.
41. Janet Gi ndl esperge r served as an auditor in 1983. During 'ier term of
office, the township supervisors requested to roll over the l'd pension pl;
i- a new program.
a. As an auditor, she believed that the new pension p' n wou'.d be fair
and equitable.
b
Her term as auditor expired in 1985.
42. John Burkett was elected in November of 1984 to serve as a.,!e i for 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 pens :on plan. This plan would
cost the township less.
c. He further acknowledged that he knew that the money from the old plan
was rolled over into a new plan in accordance with the aforementioned
resolution and ordinance.
Mr. Ross Weaver
Page 13
43. Patrick Mulcahy served as a township auditor for 1 year.
a. In 1983, the township auditors instructed the board of supervisors to
discontinue payments into the retirement plan until the matter was
reviewed.
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.
44. 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, Botlock, Henger, Dobson, Gindlesperger, Mulcahy and Penrod.
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, Botlock
1974 $ 475.93 $ 5,096.35 Faust, Fleck, Botlock
1975 $2,840.49 $ 4,859.08 Faust, Henger, Botlock
1976 $ 8,776.01 Faust, Henger, Botlock
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
Mr. Ross Weaver
Page 14
Insurance/
Year Annuities Retirement Auditors
1981 $3,634.65 $14,094.33 Faust, Henger, Dobson
1982 $ 520.52 $ 9,132.55 Faust, Henger, Dobson
1983 $ 8,725.00 Giridlesperger, Mulcahy, Penrod
Totals: $30,850.07 $109,602.18 $140,452.25
45. 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.
a. 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 and Ray Shaffer are board members.
All supervisors agree to act as road foreman.
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 Wirick was
hired as an operator at $6 per hour.
d. September 13, 1982, Weaver moved that the pension plan be amerJed as
follows:
"Employee" shall mean any person who is regularly empioycd 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.
Mr. Ross Weaver
Page 15
46. 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."
47. On March 31, 1983, a letter was forwarded to the chairman of the township
board of 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.
48. 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.
49. Payment on behalf of township supervisor, Ross Weaver, were made as
follows:
Mr. Ross Weaver
Page 16
VOLUNTEER VOLUNTEER TEMPLE- VOLUNTEER
YEAR LINCOLN LIFE LINCOLN V.A. STATE LIFE F. P. A. TON N0 -LOAD
1972 $295.30 $329.04
1973 $520.52 $597.14
1974 $520.52 $597.14
1975 $520.52 $ 78.50 $726.74
1976 $520.52 $161.15 $ 881.55
1977 $520.52 $285.04 $1,136.13
1978 $520.52 $415.02 $1,436.78
1979 $520.52 $415.02 $2,212.45
1980 $520.52 $415.02 $2,451.65
1981 $520.52 $415.02 $3,181.54
1c82 $520.52 $415.02 $3,181.54 $900.34
1983 $415.02 $4,319.64
1984
1985
Total: $5,495.82 $3,014.81 $12,490.64 $726.74 5,219.98
Total: $26,947.99
50. 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
auditors approved the original pension plan but because the auditors, in those
days, did not maintain detailed minutes and records and because one auditor 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.
Mr. Ross Weaver
Page 17
51. 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.
52. 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.
53. Grant Wirick, a retired township supervisor, advised that the auditors
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. Accordingly, you are
subject to the Ethics Act and the restrictions therein are applicable to you.
Section 3(a) of the Ethics Act provides:
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, 127; Hoak, 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 a
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.
Mr. Ross Weaver
Page 18
The question then becomes 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
i•,ho 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 of Auditors. 53 P.S.
§65542.
This Commission has decided 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.
In order for a working supervisor to 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 Lycoming Rep 159; Conrad v. Exeter Township, 27 D & C 3d 253, (Berks,
1983); In re: North Strabane Township Board of Supervisors, 63 Wash. Co.
137, affirmed per curiam 470 A.2d 524 (1984).
The instant matter has been reviewed in light of these now established
concepts of law as well as under the policy pronouncement of the Commission.
51 Pa. Code §7.1.
It is clear that you have been a participant in the township pension and
annuity programs since at least 1972. It is also clear from the above facts
that you were appointed to a position of employment by the township as
authorized in the Second Class Township Code. Based upon the foregoing
discussion, you were clearly eligible to receive additional compensation
within certain parameters. The question, thus, arises as to whether the
tension and insurance benefits that you received were affirmatively fixed by
ti,e township board of auditors. In this respect, the township auditors'
mnutes never reflect an actual fixing of the pension and insurance
tenefits 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 A. Ray Shaffer. With relation to the
statements provided by the auditors, at least one auditor, Kenneth Faust,
indicated that he was unaware of the existence of the pension plan until the
retirement of A. Ray Shaffer. It was only at that point in time that he
Mr. Ross Weaver
Page 19
became aware of the program. Roy E. Dobson, along with a number of other
auditors, could not recall discussing hospitalization or pension programs for
auditors. 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 for 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
instruction from the township board of auditors, the township supervisors, in
1983, continued to provide payments into the pension program. In 1985 the
township board of auditors, then in office, retroactively approved all
contributions to the pension plan. Although it is argued that the retroactive
approval legally authorizes the pension plan back to its inception, the
commission finds that such approval has no effect in to your actions
two years earlier.
This Commission has clearly stated, in the past, that township auditors
may not retroactively approve compensation paid in a prior year. Saunders,
85- 006 -R. The decision in that matter was primarily based upon a 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 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 compensation 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 be 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, (1984); 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
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Page 20
legislative grant, such actions are "ultra vires" and may not be subseqently
ratified or approved. See Albright v. City of Shamokin, 277 Pa. super 344,
419 A.2d 1176, (1980).
Thus, the retroactive approval of the township auditors in 1985 had no
effect on the decision by the auditors in 1983 not to fund the pension program
for that particular year. As to years prior to 1983 or 1984, there is
insufficient evidence to determine whether Section 3(a) of the Ethics Act has
been violated. The records do not reflect any payments for 1984 and, hence,
there was no gain and, consequently, no Section 3(a) violation for that year.
In 1983, it appears that contributions to the plan were made even though
the auditors had indicated that such was not approved. You did not, however,
receive any financial gain as a result of this unauthorized contribution.
This is so in that the old plan was terminated at which time all assets of
that plan were paid over to a new plan in which respective individual
'Vocations were not related to the supervisor's fund balance under the former
plan. It is noted that the township board of auditors timely approved the new
plan. The fact that the new plan had no relation to the old is evidenced by
the fact that Weaver incurred a loss of $11,360.41 while Statler derived a
gain of $5,399.51. Thus, while there would have been a violation of Section
3(a) of the State Ethics Act in relation to 1983, no financial gain was
received and steps were taken to insure that an authorized plen was
established. Based upon the divestment from the old pension plan coupled with
the auditors` approval, this Commission finds that there is now no basis for
any further action.
C. Conclusion and Order:
1. As a Supervisor of Paint Township, you are a pubic official as that term
is defined in the Ethics Act and, as such, your conduct is subject to the
requirements thereof.
2. Based upon the facts and circumstances as outlined above, while there was
a violation of Section 3(a) of the State Ethics Act regarding the township's
contribution made to the pension program for you in 1983 when such had not
been approved by the township board of auditors we will take no further
action in this matter in that no financial gain was received as a result of
your actions and as steps were taken to insure that no future gain would be
received as a result of said violation.
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
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Page 21
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,
Aff ic7,6144A. Oita "
G. Sieber Pancoast
Chairman