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Home My WebLink About706-R StanfordMr. Rex Stanford c/o E. Max Weiss, Esquire 911 Diamond Park Meadville, PA 16335 -2693 Re: 86 -112 -C Dear Mr. Stanford: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 RECONSIDERATION ORDER OF THE COMMISSION Order No. 706-R Before: Helena G. Hughes, Chair G. Sieber Pancoast Dennis C. Harrington Michael J. Washo Date Decided: July 27. 1989 Date Mailed: A„gi g, 1989 Your request for Reconsideration with respect to the above- captioned pursuant to 51 Pa. Code 2.38. The Commission to grant reconsideration is was received on June 23, 1989, Order issued on June 8, 1989, discretion of the State Ethics properly invoked when: (b) Any party may ask the Commission to reconsider an order within 15 days of service of the order. The person requesting reconsideration should present a detailed explanation setting forth the reason why the order should be reconsidered. Reconsideration may be granted at the discretion of the Commission only where any of the following occur: (1) a material error of law has been made; (2) a material error of facts has been made; (3) new facts or evidence are provided which would lead to reversal or modification of the order and where these could not be or were not discovered previously by the exercise of due diligence. 51 Pa. Code S2.38(b). Mr. Rex Stanford Page 2 The Commission, having reviewed your request, must DENY your request because none of these circumstances are present. You submit three major arguments in your reconsideration request which will be considered seriatim: material errors; Act 41, Res judicata. In your first argument concerning material errors of law and fact, you discuss two subject areas: an analysis of various cases involving the propriety of certain compensation for supervisors and a review of the township auditors' actions relative to the insurance benefits for employee supervisors. In your argument on the applicable decisional law, you discuss five cases which were cited in the Order. You attempt to distinguish Svnoski v. Hazel Township, 93 Pa. Commw. Ct. 168, 500 A.2d 1282 (1985) on the basis that the case was limited to the question of whether the auditors abused their discretion in setting the hourly rate for supervisors at a lower rate than for the union crew. Such a limited analysis ignores the full Opinion of Commonwealth Court which interpreted 5515 of the Second Class Township Code to mean that the auditors have discretion in setting the compensation of employee supervisors and such compensation specifically includes fringe benefits such as insurance. As to the case of In re: Appeal of the Auditors' Report of Muncv Creek Township, 103 Pa. Commw. Ct. 607, 520 A.2d 1241 (1987), you assert that the case stands for the proposition that non employee supervisors are not entitled to township paid insurance benefits. While the foregoing is a true statement, it ignores the following analysis by the Court as to receipt of insurance benefits by employee supervisors: "...S515 of the Code requires affirmative action by the township auditors before the township can purchase insurance contracts covering the supervisors as employees...." Id. at 1245. Turning to Yocabet v. State Ethics Commission 109, Pa. Commw. Ct. 432, 531 A.2d 536 (1987), you view the case as being limited to the propriety of a supervisor voting for himself for the position of secretary /treasurer. However, Commonwealth Court noted that the Second Class Township Code specifically required auditors to set compensation for employee supervisors. Mr. Rex Stanford Page 3 You then argue that McCutcheon v. State Ethics Commission, 77 Pa. Commw. Ct. 521, 466, A.2d 283 (1983) does not support the proposition that participation by employee supervisors in a township paid insurance plan requires auditor approval. In particular, you assert that the case is distinguishable because the program only included supervisors but excluded township employees and because the payments in the program produced a cash surrender value or annuity payout. You conclude your analysis of McCutcheon by noting that the decision deals with pension benefits for supervisors but does not address the question of hospitalization benefits for township employees which would include supervisors. Your analysis totally ignores the legal principles espoused by the Court in McCutcheon: "S515 [requires] that the township auditors shall fix the amount of supervisors' compensation where the supervisors serve as employees." Id. 288. In accord is the Auditors of South Union Township Appeal, 47 Pa. Commw. Ct. 1, 407 A.2d 906 (1979), wherein Commonwealth Court clearly noted that compensation for employee supervisors required auditor approval. Two prescribed legal principles emerge from the above cases: first, supervisors who serve in enumerated working positions must have their compensation affirmatively fixed by the auditors and second, compensation includes pension, insurance and other fringe benefits. Having established that affirmative auditor approval is required for township paid insurance benefits for employee supervisors, we will now focus upon the second aspect of your first argument regarding whether the auditors gave approval in this case. It is obvious that you have ignored the operative facts. Although you place emphasis upon the dispute between Chairman Corbert and the other auditors regarding the issue of insurance benefits for the supervisors, the argument is actually self- defeating since you note that "... approval was intended but wrongfully blocked..." As we previously noted, decisional law establishes that there must be affirmative auditor approval to fix the compensation of township supervisors. The facts in this case reflect that no such affirmative approval was given by the Board of Auditors. Mr. Rex Stanford Page 4 Turning to the second of your three arguments, you assert that this Commission incorrectly interpreted Act 41 of 1988 which amended 5515 of the Second Class Township Code regarding compensation of supervisors. In your view Act 41 only provides amnesty to non employee supervisors; working supervisors were not accorded amnesty since they are arguably entitled to receive these benefits as township employees. Your argument in this case fails because your faulty premise leads to an incorrect conclusion. Act 41 of 1988 which was signed into law on March 30, 1988, was effective immediately but not retroactively. The township paid insurance benefits, upon which we ordered restitution, were received after the amnesty period (January 1, 1959 to March 3, 1985). Nowhere did Section 515 authorize employee supervisors to receive township paid insurance benefits until the enactment of Act 41 on March 30, 1988 which now authorizes participation by supervisor employees in such insurance plans without auditor approval subject to certain requirements in Section C(1). Thus, the insertion of the language in Section C(1) confirms that employee supervisors, as of March 30, 1988, could receive compensation in the form of township paid insurance benefits; Section C(1) changed prior law wherein supervisor employees were not entitled to such benefits without auditor approval. Your argument is incorrect because affirmative auditor action was required to approve township paid insurance benefits for employee supervisors prior to March 30, 1988, the effective date of Act 41 of 1988. In this case affirmative action by the Board of Auditors was lacking and the receipt of the insurance benefits was a financial gain other than compensation provided for by law in violation of Section 3(a) of the Ethics Act. Turning to your argument regarding whether the Commission is barred from considering the issue of res judicata resulting from the decision of the Court of Common Pleas of Crawford County, your argument fails for two reasons. First, this Commission is the administrative agency authorized in law to determine whether a public official /employee has violated provisions of the Ethics Act. 65 P.S. 407. The decision of the court on a matter of an auditors' report is not a directive to this Commission regarding fulfilling its statutory obligation to decide whether a public official /employee has violated provisions of the Ethics Act. Secondly, the court's holding that the inclusion of employee supervisors in a nondiscriminatory hospitalization plan did not require auditor approval is contrary to the foregoing decisions of the Commonwealth Court of Pennsylvania. Accordingly, the doctrine of res judicata is inapplicable in the instant matter. Upon review of the Order in conjunction with the arguments which you have made, no material error of law or fact has been shown by your request for consideration. Mr. Rex Stanford Page 5 In light of the foregoing, the State Ethics Commission concludes that your request'for reconsideration must be DENIED. Accordingly, you have thirty (30) days from the date of this - Reconsideration denial to comply with the terms set forth in the original Order. That Order and this decision denying reconsideration are final and shall be made available as public documents on the fifth (5th) business day following the date of this Order. By t16 Commiss 'on, A9 ena G. Hug air es