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HomeMy WebLinkAbout573 DouglasMr. Daniel A. Douglas 9781 Cross Station Extension Girard, PA 16417 Re: 85 -129 -C STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION Order No. 573 DECIDED: May, 26, 1987 MAILED: June 2, 1987 Dear Mr. Douglas: 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, a Supervisor in Girard Township, violated Section 3(a) of the Ethics Act, 65 P.S. .5403(a), which prohibits a public employee's or public official's use of office or confidential information gained through that office to obtain financial gain other than compensation allowed by law when you received pay from the township without being properly appointed to a position and having auditor approval of your wages. A. Findings: 1. You served as a Girard Township Supervisor from January, 1980 until December, 1986. As an elected public official you are subject to the provisions of the State Ethics Act. 2. Minutes of the Girard Township Supervisors' reorganization meetings disclosed that for the years 1980 through 1985, the board appointed a roadmaster to supervise the road crew. a. Records further disclose that during tIfis period, the board of supervisors did not authorize any supervisors to be employed as part -time road workers. You were not appointed roadmaster in any year from 1980 -1985. 3. Minutes of the Girard Township Auditors for the years 1980 through 1987 disclosed the follov.ing regarding compensation for township supervisors: a. January 8, 1980: Part -time supervisor salary set at $5.75 /hour. $350.00 annual salary set for supervisors attending outside meetings. Payment to be a non - taxable reimbursement for travelling expenses. Conventions, schools, and supervisor meetings shall be paid by state mandate. Mr. Daniel A. Douglas Page 2 b. January 6, 1981: Roadmaster salary set at $7.00 /hour; part -time supervisor wage set at $6.25 hour. $350.00 annual pay set for supervisors attending outside meetings. c„ January 5, 1982: Roadmaster salary set at $13,000.00 /year. Part -time supervisor wage set at $ /hour. $400.00 annual •pay set for supervisors attending outside meetings. d. January 18, 1982: Auditors passed motion that the supervisor keep a written record of all meetings attended and location of meetings. Full -time qualified roadmaster salary set at $16,965.00. e. January 14, 1983: Roadmaster pay set at $17,737.20/year. Part -time supervisor wage set at $6.80 /hour. Auditors recommend use of PennDot form MS907 by al' supervisors to substantiate their pay. Outside meeting pay for supervisors set ?': t.i a same hourly rate as part -time supervisors plus $.17 /mile. Auditors motion that the supervisors appoint one person as the delegate and submit a voucher listing the name, nature of :he meting and location monthly to the township secretary/ treasurer. Insurance benefits: Ray Sanders: Life -.$21.45/quarter. Hospitalization $319.27 /quarter. Daniel Douglass: Life - $ /quarter Hospitalization $306.56 /quarter, Mr. Daniel A. Douglas Page 3 William Borland: f. January 4, 1984: Roadmaster pay set at $362.00 /week. Outside meeting pay set at $7.20 /hour plus $.20 /mile for use of personal vehicle. Insurance benefits: Borland - Hospitalization - $498.14 /quarter Life - $21.45 /quarter Pension - $500.00 /year. Sanders - Hospitalization - $473.24 /quarter Life - $21.45 /quarter Douglas - Hospitalization - $363.07 /quarter Life - $21.45 /quarter. January 8, 1985: Roadmaster pay set at $375.00 /week. Supervisors working part -time - $7.45 /hour. Outside meeting pay for supervisors designated as the township representative set at $7.45 /hour plus $.20 /mile for use of personal vehicle. g. Life - $21.45 /quarter Hospitalization $426.55 /quarter. Pension - $500.00 /year. Insurance Benefits: Borland - Hospitalization - $498.14 /quarter Life - $21.45 /quarter Pension - $500.00 /year Sanders - Hospitalization - $473.24 /quarter Life - $21.45 /quarter Douglas - Hospitalization - $363.07 /quarter Life - $21.45 /quarter h. January 8, 1986: Roadmaster pay and benefits to remain the same as 1985. Mr. Daniel A. Doi!.! Page 4 No hospitalization or life insurance approved for non - working supervisors (Douglas, Sanders) per recommendation of Solicitor Schroeck by letter dated September 18, 1985. Roadmaster pay set at $ /week, plus overtime for overtime over 40 hours. Life insurance and hospitalization to terminate when full -time employment ceases pension plan disapproved. Pay for supervisor working part -time approved at $7.00 /hour. 4. Girard Township payroll records confirm that amounts as a part -time supervisor/laborer: you were paid the following a . b. c . d. e. f. 1980: 167 hours at 1981: 114.5 hours 1982: 249.5 hours 1983: 108 hours at 1984: 121.5 hours 1985: 222.5 hours a. b. c . d. e . f. i . January 6, 1987: 5. Township payroll records also confirm that you were paid the following amounts for outside meeting pay: 1980: 1981: 1982: 1983: 1984: 1985: $350.00 $350.00 $400.00 $120.79 - 6 meetings at $148.40 - 9 meetings at 187.20 - 7 meetings at $ b. Ciscussion: Township supervisors in publi as that term is defined §402. As such, their conduct must confo Ethics Act. See, Sowers, 80 -050. $5.75 /hour = $960.25 at $6.25 /hour = 715.63 at $6.50 /hour = $1,621,75 $6.50 /hour = $734.40 at $7.20 /hour = $874.80 at 7 .44 /hour = $1,653.00 $6.80 /hour plus $.20 -- ileage $ /hour, plus $.20 mile °ge. 7.45 /hour, plus $.20 mileage. ; townships of the second class are in the State Ethics Act. 65 P.S. rm to the requirements of the State • Mr. Daniel A. Douglas Page 5 The State Ethics Act provides as follows: 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 the above provision of law, this Commission has already determined that township superviors may not approve or accept any compensation for themselves that is not in accordance with the compensation set forth in the Second Class Township Code. This determination has been affirmed by the Commonwealth Court of Pennsylvania. See McCutcheon v. State Ethics Commission, 77 Pa. Comm. 529, 466 A.2d 283, (1982). Compensation awarded or received by a township supervisor that is not in accordance with the provisions of law could constitute a violation of the above cited Section of the State Ethics Act. The Second Class Township Code provides that township supervisors shall receive the following compensation: Compensation of Supervisors -- Supervisors may receive from the general township fund, as compensation, an amount fixed by ordinance not in excess of the following: Township Population Not more than $,9999 5,000 to 9,999 10,000 to 14,999 15,000 to 24,000 25,000 to 34,999 Such salaries shall be payable menthly or quarterly for the duties imposed by the provisions of this act. The population shall be determined by the latest available official census figures. The compensation of supervisors,, when acting as superintendents, roadmasters or laborers, Annual Maximum Compensation Fifteen hundred dollars Two thousand dollars Twenty -six hundred dollars Thirty -three hundred dollars Thirty -five hundred dollars Mr. b<.ni1 A.. DougTaS Page 6 shall be fixed by the township auditors either per hour, per day, per week, semi- monthly or monthly, which compensation for the use of a passenger car, or a two axled four - wheeled motor truck having a chassis weight of less than two thousand pounds when required and actually used for the transportation of road and bridge laborers and their hand tools and for the distribution of cinders and patching material from a stock pile, as the auditors shall determine and approve; but no supervisor shall receive compensation as a superintendent or roadmaster for any .time he spends attending a meeting of supervisors. 65 P.S. §65515, as amended Act 68,1985. (Prior to the above amendment, the above provision provided for a set fee of $50 per meeting). In reference to the meetings for which supervisors may receive compensation, the code, as applied for the time period in question further provided as follows: The township supervisors shall meet for the transaction of business at least once each month, at a time and place to be fixed by the board, but they shall not be paid for more than sixteen meetings in any one year, except in any township where, on account of the exercise of governmental functions other than those relating to roads, more meetings are necessary, in which case, the number of meetings for which the supervisors may be paid may be increased to any number, not exceeding fifty meetings in any year which shall include hearings of a judicial or quasi - judicial nature. Two members shall constitute a quorum. Except as otherwise provided in this act, an affirmative vote of a.majority of the entire board of supervisors shall be necessary in order to transact any business. Necessary expenses incurred in such meetings, including office rent, stationery, light and fuel, shall be paid out of the general township fund. 53 P.S. §65512. • (The above provision was amended in 1985) Mr. Daniel A. Douglas Page 7 The duties that a supervisor is responsible for performing are also regulated by statute. As can be seen from the foregoing, the compensation to be paid for a supervisor who is not otherwise employed by the township is strictly regulated by the Second Class Township Code. A supervisor may only receive compensation, as set forth above, for supervisor meetings regarding the transaction of township business. The type of meetings for which a township supervisor may be compensated must be one at which official township business is transacted. Additionally, the township code provides for compensation at the specific meetings outlined in §65512, above. The code does not appear to permit the compensation of a township supervisor for attending other types of meetings or for performing the administrative functions of his office. Any other compensation must be earned in and as part of the services performed while serving in one of the statutory authorized positions. Thus, if the township supervisors were to award to themselves compensation for attendance at meetings that are not official township meetings of the board of supervisors, or for performing duties not authorized by law such would violate the provisions of the State Ethics Act as such payment would not constitute compensation provided by law. We note that the above interpretation of the Second Class Township Code is a view that has also been expressed by the State Association of Township Supervisors which specifically indicated that supervisors may not be compensated for meetings with engineers, solicitors, planning commissions, authorities, or recreation boards. See Township News, May, 1985, Page 66. The township code sets forth clearly when supervisors may receive compensation other than as set forth above. Generally, township supervisors may be employed by the township as a roadmaster, laborer, or secretary /treasurer. 53 P.S. §65410. The compensation to be paid to supervisors working in such positions is to be fixed by the township board of auditors. 53 P.S. §65515; §65531; §65410. Township supervisors may not receive any other compensation except as provided above. This concept has been upheld by various courts in the Commonwealth. In Coltar v. Warminster Township, 8 Pa. Commnw. Ct. 163, 302 A.2d 859, (1973), the Commonwealth Court of Pennsylvania held that a second class township supervisor may not appoint himself to positions other than those set forth in the township code (roadmaster, laborer, or secretary /treasurer), and receive compensation therefor. See also Conrad v. Exeter Township, 27 D & D 3d 253, (Berks 1983). It is clear, therefore, that the duties for which a township supervisor may be compensated are strictly regulated by the township code, and when performing in the positions set forth in the code, the supervisors' pay must be i4r. Daniel A. Douglas Page 8 specifically set matter indicated compensated were in that position) No. 539. forth by the township board of auditors. Our review of this that the "administrative services" for which you were not related to the roadmaster position (you were not serving but were related to the office supervisor. See Szymanowksi You, thus, received compensation that was not part of that provided for by law. With relation to the fact that the auditors approved this compensation, we note that this Commission has already held that township auditors have no authority to fix compensation for township supervisors who are performing duties outside of those fixed by law or for working in positions not established in the township code. Nanovic, 85 -005. Thus, even though the auditors may have indicated an approval for this "administrative pay" such was of no effect as the auditors did not have the power to fix a compensation that was not allowed by law and that was regulated by statute (compensation as a supervisor). We also note that in 1980, the funds were allocated not as compensation but for reimbursement for expenses incurred. The funds received by you as "outside meeting pay" as outlined in the findings totalled $1,206.39. (Finding No. 5). Our conclusion and the appropriate remedy in respect to this matter are set forth further below. II. Allegation: That you, a Supervisor in Girard Township, violated Sectior 3(a) of the Ethics Act, 65 P.S. 403(a), which prohibits a public employee's or public official's use of office or confidential information gained through that office to obtain financial gain when you received and retained mo :ley a `rom, pension benefits program in which you participated up to 1981, despite your solicit;)r's advice that you were not entitled to these benefits. III. Allegation: That you, a Supervisor in Girard Township, violated Section 3(a) of the Ethics Act, 65 P.S. §403(a), which prohibits a public employee's or public official's use of office or confidential information gained through that office to obtain financial gain by having the township pay for hospital and life insurance in which you participated. A. Findings: 6. Finding number 1 through 5 are incorporated herein by reference. Mr. Daniel A. Douglas Page 9 7. Girard Township records disclose that on October 5, 1973, the township supervisors entered into a Group Pension (Annuity) Plan, #DA -153 with Columbia Life Insurance Company. a. The plan was a Group Deposit Annuity contract. All supervisors and full -time employees were eligible to participate. b.. The plan had 100% full and immediate vesting. c. The application was signed by Girard Township Supervisors Korb Bryant and Ray Sanders and was dated December 28, 1973. d. The register and anniversary dates of the plan was listed as October 5, 1973. 8. Minutes of the township supervisors meeting of October 1, 1973 discloses on motion by Sanders, second by Korb Bryant and passed unanimously the township approved the group pension plan as well as an accident and health plan with Columbia Insurance Company. 9. Township records confirm that in 1980 the township made a $300.00 contribution to the Columbia Life Insurance pension plan on your behalf. a. By letter dated September 17, 1981 from Gail Kipp, Columbia Life Pension Manager, the township was advised that no billing was made for you or supervisor, Ray Sanders in 1981. The reason for that was due to a conversation with Solicitor James Toohey in regard to supervisors who are not ful 1 -time working employees. 10. Contributions to the group annuity were discontinued in 1981 upon the advice of Solicitor James Toohey that such contributions were improper. Toohey presented, to the township, an opinion dated May 13, 1981 drafted by Toohey's law partner. That opinion cited the case of Hendricks v. East Rockhill Township, 1 D & C 3d 763 (1977), and held that such contributions were improper. That opinion also stated in part: a. In addition to holding that supervisor) per se are not entitled to pension benefits, the case also holds that in this situation where one or more of the supervisors are appointed as roadmaster, then in that event the auditors must approve the payment into the pension plan pursuant to 53 P.S. 65514 and 53 P.S. 65515. Mr. Daniel A. Doug.: Page 10 be As far as the money contributed to tne plan on behalf of tne supervisors is concerned, it would be my opinion, based on the Rockhill Township case, that that money is properly the property of the township and should be refunded. 11. Township records confirm that by letter dated December 20, 1985, you requested that all of your pension money be returned to the township as of December 31, 1985. a. Records disclose that receipt No. 16949 dated February 3, 1986 was issued to you in an amount of $455.07 for endorsing Columbia check #010066 to the township. The amount of $455.07 represented the 1980 contribution, plus interest through December 31, 1985. 12. Findings number 1 through 11 are incorporated herein by reference. 13. Girard Township paid accident, health and life insurance premiums on your behalf to Columbia Insurance Company from 1980 through 1985 to policy number KSM 3674. Payments were made on a quarterly basis. a. 1980: Accident and Health Life b. 1981: Accident and Health Life c. 1982: Accident and Health Life d. 1983: Accident and Health Life e. 1984: Accident an Health Life $1,044.02 95.43 1,139.45 $1,120.12 85.80 $1,205.92 $ 840.09 64:35 904.44 (3 payments) $1,616.79 107.25 $1,724.04 $1,452.28 85.80 (3 quarterly $1,538.08 payments) Mr. Daniel A. Douglas Page 11 14. By letter dated December 20, 1985, you informed Columbia Life Insurance Company to discontinue your accident, health and life insurance policies. 15. Records from the township disclosed that in 1984 and 1985, the township solicitors were asked for opinions regarding accident and health insurance for non - employee supervi sors and part -time empl oyee supervi sors. a. By correspondence dated March 29, 1984 addressed to William Borland, Chairman of the Board of Supervisors, Solicitor Howard Rubenfield issued an opinion that a non - employee supervisor may not participate in the township medical and hospitalization plan. Further, an employee - supervisor may be covered only if such coverage is specifically approved by the township auditors as part of the employee - supervisor's compensation. b. By correspondence dated September 18, 1985 addressed to Daniel Douglas, Chairman of the Board of Supervisors, Solicitor George Schroeck issued an opinion that a part -time employee supervisor may not participate in the township's medical and hospital or life insurance plans. Further, an employee - supervisor may be covered only if such coverage is specifically approved by the township auditors as part of this compensation. 16. You were interviewed by a State Ethics Commission investigator on November 18, 1986 and made the following statements: a. When elected to the board, the supervisors were already receiving pension benefits, accident and health and life insurance and outside meeting pay. b. You did not know why the accident and health insurance was not discontinued until late 1985. The auditors approved the plan. Also, members of the State Association of Township Supervisors indicated that the law would change permitting all supervisors to receive the insurance. You thought the issue would be resolved in your favor. c. You received outside meeting pay at a flat rate in 1980, 1981, and 1982. The supervisors were receiving outside meeting pay prior to your election. In 1983, supervisors were paid by the hour for attending outside meetings. You received outside meeting pay for attending meetings of the area communications center, a body which you were appointed the township representative. You were required to submit a slip naming the meeting hours attended and mileage driven. Mr. Daniel A. Douglas Page 12 d. After the solicitor's 1981 ruling, the pension plan was terminated. You refunded a check in excess of $400.00 to the township. You planned on seeking an earlier refund but were advised against it by Columbia Insurance Agent Frank Gigliotti who told you to seek reimbursement at the end of the year, thereby earning more interest. 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; Sowers, 80 -050. Your conduct as such an official must, therefore, conform to the requirements of the State Ethics Act. Generally, the State Ethics Act provides as follows: 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 the above provision of law, this Commission has previously determined that a township supervisor may not receive at the township's expense pension health, hospitalization, medical and life insurance benefits when such supervisor acts only in the capacity of a supervisor. Krane, 84 -001; Cowie, 84 -010. Additionally, even if such a supervisor is employed by .he township as a roadmaster in accordance with the Second Class Township Code, such benefits are considered compensation and must, therefore, be fixed as such by the township board of auditors. See Synoski v. Hazle Township, Pa. Commw. , 500 A.2d 1282, (1985); In re: Appeal of the Auditors Report of Muncy Creek Township, Pa. Commw. Ct. , 520 ).2d 1241, (1985); Hunt, No. 348 -R. Any benefits received other than as provided for above, would consitute a financial gain obtained in violation of the State Ethics Act. See, McCutcheon v. State Ethics Commission, 77 Pa. Commw. 529, 466 A.2d 283, (1983 Conrad v. Exeter Township, 2 D & C 3d 253, (1983). These principles of law are now well settled and constitute the law under which this situation must be reviewed. See, In Re: Report of Auditor South Union Township, 47 Pa. Commw. 1, 407 A.2d 9 1 Mr. Daniel A. Douglas Page 13 In the instant situation, while you were not an appointed township roadmaster, you did work on the township roads and, therefore, may have been eligible to receive the in question benefits. Such, however, required approval by the township board of auditors in order to be considered part of your authorized compensation. See, McCutcheon v. State Ethics Commission, supra. The facts in the instant situation clearly reveal that the auditors never fixed as part of your compensation the pension benefits. You never received a financial gain in relation to these benefits in that the funds were returned to the township. (See finding 11) As such there would have been no violation of the State Ethics Act in relation to the pension benefits. Additionally as noted, you also received life and hospitalization benefits as outlined in Finding 13. Once again, while you may have been eligible for such benefits, auditor approval was required. From 1980 through 1982 no such approval was obtained. In 1983 through 1985 approval was received as follows for your benefits: 1983 Life Insurance Hospitalization 1984 Life Insurance Hospitalization 1985 Life Insurance Hospitalization The township expended benefits as follows: 1983 1984 and you, as supervisor, approved payment for your Total $1,724.04 Total $1,538.08 As such in 1983, your received $412.00 in excess of that provided for by the auditors. r 21.45 /quarter, $ 85.80 /year 306.56 /quarter, 1,226.24/year Total $1,312.04 21.45 /quarter, $ 85.80 /year 363.07 /quarter, 1,452.28 /year Total $1,538.08 21.45 /quarter, $ 85.80 /year 363.07 /quarter, 1,452.28/year Total $1,538.08 Additionally and as noted, the township expended funds as follows in 1980 - 1982 when no auditor approval was obtained. Mr. Daniel A. Dougla_ Page 14 1980 Total $1,139.45 1981 Total 1,205.95 1982 Total 904.44 $3,249.84 The above plus the excess from 1983 total $412.00 equals $3,661.84. It also should be noted that even if these benefits had been received in good faith, such would not be controlling. Good faith receipt of such benefits, even when based upon a solicitor's advice, will not alleviate the necessity of a public official reimbursing governmental body for the receipt of a financial gain for which he was not entitled. See Allegheny County v. Grier, 179 Pa. 639, 36 A. 353, (1897); McCutcheon v. State Ethics Commission, 77 Pa. Commw. 539, 466 A.2d 283, (1983); Kestler Appeal, 66 Pa. Commw. 1, 444 A.2d 761, (1982). As a result, we believe that you must reimburse Girard Township for this financial gain. The State Ethics Act provides as follows: Section 9. Penalties. (a) Any person who violates the provisions of Section 3(a) and (b) is guilty of a felony and shall be fined not more than $10,000 or imprisoned for not more than five years, or be both fined and imprisoned. 65 P.S. 409(a). (c) Any person who obtains financial gain from violating any provision of this act, in addition to any other penalty provided by law, shall pay into the State Treasury a sum of money equal to three times the financial gain resulting from such violation. 65 P.S. 409(c). In addition to the above, the State Ethics Act provides that the Commission may forward the results of any investigation to the appropriate prosecuting authority unless the alleged offender removes himself from the conflict of interest by divesting himself of any financial gain received in violation of the State Ethics Act. 65 P.S. §40a 9(iii). See also, McCutcheon v. State Ethics Commission, 77 Pa. Commw. Ct. 529, 466 A.2d 283, (198` (Commission may order restitution of financial gains received in violation of the law.) 1 .Mr. Daniel A. Douglas Page 15 In relation to allegations I and III as set forth, we believe that this is the appropriate remedy. C. Conclusion and Order: As a township supervisor in a township of the second class your are a public offficial and subject to the provisions of the State Ethics Act. Your receipt of "outside meeting pay" and life and hospitalization benefits in and through that position was a violation of the State Ethics Act. As such, you used your public office to receive a financial gain other than the compensation provided by law. The amount of gain received total $4,868.23 ($1,206.39 + $3,661.84). You are hereby ordered to remit to the State Ethics Commission, within thirty (30) days of the date of this order, the amount of $4,868.23 made payable to Girard Township as restitution for the financial gain that you received. Failure to comply with the provisions of this order will result in a referral of this matter to the appropriate authority for further civil or criminal proceedings. There was no violation of the Act in relation to the pension benefits as these funds were turned over to the township. 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 ssi on 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, St/ . std ,«2t— aa- . , c� G. Sieber Pancoast Chairman Mr. Daniel Douglas 7603 Welcana Drive Fairview, PA 16415 Re: Order 573, File 85 -129 -C Dear Mr. Douglas: JJC /na cc: Public Binder STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PA 17120 TELEPHONE: (717) 783 -1610 June 29, 1987 On June 29, 1987, the State Ethics Commission received your payment for reimbursing Girard Township as required by Order 573. We have forwarded your check No. 547 in the amount of $4,868.23 to the township. This letter will be part of the Order and a public record as such. Sincerely, C k i -w ti )- � t - John J. Contino Executive Director