HomeMy WebLinkAbout418-R WagnerMr. Samuel Wagner, Jr.
1000 Fifth Avenue
Beaver Fall, PA 15010
Re: 84 -153 -C
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
ORDER OF THE COMMISSION
May 2, 1986
Order No. 418 -R
Dear Mr. Wagner:
The State Ethics Commission has received a complaint regarding you and a
possible violation of Act 170 of 1978. The Commission has now completed its
investigation. A hearing on the matter was conducted on December 4, 1985, at
which time relevant testimony and evidence was received. The individual
allegations, conclusions, and findings on which those conclusions are based
are as follows:
I. Allegation: That you, a Councilmember for the City of Beaver Falls,
violated Section 3(a) of the Ethics Act, 65 P.S. 403(a), by having the city
pay for a hospitalization /medical plan and a life insurance policy in which
you participate.
A. Findings:
1. You have served as a city councilmemher in Beaver Falls since January,
1984 and, as such, are subject to the Ethics Act (Act 170 - 1978).
2. You state that you learned that Beaver Falls provided health care benefits
after you ran as a candidate in the 1983 primary election.
a. Upon the assumption of your duties as a city councilmember, in 1982
you were requested by the city clerk to sign a card enrolling you in the
Beaver Falls Insurance Programs.
h. You did not participate in any vote in order to receive this
hospitalization or life insurance.
c. The insurance programs were in effect prior to your assumption of
office in 1982.
3. You helieve your participation in this program is authorized by a city
ordinance and the Third Class City Code.
Mr. Samuel Wagner, Jr. May 2, 1986
Page 2
4. According to the city clerk, officials are automatically added to the
hospitalization and life insurance plans when they assume office.
5. The city auditor acknowledges that he was aware the city paid for borough
officials participation in life and hospitalizat plans but never questioned
it.
6. City council took the following actions relating to insurance;
a. Ordinance #975 by council April 13, 1951 and signed by Mayor
Edward C. Corcoran, authorized contracts with .insurance companies
insuring the employees of the City of Beaver Falls under policies for
group insurance covering life, health and accident insurance and
agreed that the borough could pay part of the premimums. This
ordinance was based on Section 2403 of the Third Class City Law as
amended May 22, 1933, which authorized coulcil to contract with
nsurance companies insuring its employees under group insurance
policies for life, health, or accident insurance.
b. This ordinance authorized the city to contract for group life
insurance for its employees with Sun life Assurance Company of
Canada and Zurich General Accident and Liability Insurance Company,
LTD, insuring its employees under a group, health and accident
policy.
c. The city was authorized to pay approximately 2/3 of the premiums or
charges for such contracts but this payment was not to exceed $7 per
month for each employee.
The city clerk and mayor who were in office in 1951 and who were
involved in the passage of Ordinance #975 have affirmed that it was
the intent of the city council, at that time, to include city
officials and officers within the provi sions of the ordi nance.
7. The council also approved an ordinance in 1976. This ordinance involved
changes in compensation, expenses, bonds and organization of the police
department but did not affect Ordinance #975. The 1976 ordinance did not deal
with life insurance or hospitalization benefits.
a. Ordinance #975 was passed prior to your term of office.
The city has paid premiums for your life insurance as follows:
a. F ;.cxn February, 1984 through September, 1984 $ 72.00
b. From October, 1984 through September, 1985 $108.00
9. The total cost to the city for your life insurance from February, 1984
through September, 1985 was $180.00.
Mr. Samuel Wagner, Jr.
Page 3
May 2, 1986
10. The city has paid the following premiums for your participation in the
hospitalization program:
a. From February, 1984 through October, 1984 $2,037.69
(1) You contributed $27.50 each month to this plan for the above .
period for a total contribution of $247.50.
(2) Total paid by city for above period - $1,790.19
b. From November, 1984 through September, 1985 $2,240.83
(1) You contributed $27.50 each month to this plan for the above
period for a total contribution of 302.50.
(2) Total paid by the city was $2,246.33.
11. The total premiums paid by the city for your hospitalization program fran
February, 1984 through September, 1985 was $4,036.52.
12. The city of Beaver Falls maintained a group vision plan for city
officials. You did not participate in this plan at the city expense.
13. Other city officials have received similar hospitalization and life
insurance benefits at city expense.
14. You served the city of Beaver Falls as a councilperson and are not
employed by the city in any other capacity.
15. The Beaver Falls city council routinely has passed ordinances adopting
city budgets. These budgets included payments for hospitalization and life
i nsurance.
16. You no longer serve in public office.
B. Discussion: As an elected member of city council, you were a public
official as that term is defined in the State Ethics Act. 65 P.S. §401 et.
seq. As such, your conduct must conform to the requirements thereof. Boyle,
80 -020; Rosenfeld, 82 -010.
The Ethics Act provides, in part, that:
Section 3. Restricted activities.
(a) No public official or public employee shall use his
public office or any confidential infomation 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).
Mr. Samuel Wagner, Jr. May 2, 1986
Page 4
W'ithiu this provision of law, this Co; . n;ssion =nap determined that a public
official may not rce his office to approve, obtain, accept or otherwise
receive financial gain other than his compensation provided by law. This
Commission has also held, on a number of oc..asions, that insurance coverage of
the type herein ineolved is, in fact, financial gain. See Krane, 84 -001;
Cowie, 84 -010; Demalakes, 85 -010, See also Conrad v Township of Exeter et.
a l . , 76 Rerks 7 7 7 3 d 253, (1983).
The question tc be resolved, therefore, is whether this insurance
coverage is compensation provided by law.-, For this answer, we must look to
the Third Class City CoY,e.
The Code provides that:
1 536016. Salaries
;our,ci linen shat .c receive for their services during
their term of service annual salaries, to he i xed by
ordinance, payable in monthly or semimonthly instalments (sic).
Councils may, by the ordinance fixing said salaries,
provide for the assessment and retention therefrom of
reasonable fines for absence from regular or special
meetings of council or councilmanic comre"ittees. The
salary pair; to any councilman shall not he less than two
hundred end fifty dollars per year.
• •
36208. Salary
Th, mayor of each city shall receive for his services
dur „g the term of service an annual salary to he fixed hy
ordinance, payable in such equal instalments (sic) as council
shall provide.. The council shall, hy ordinance, fix the
amount of salary to be paid to the mayor for his services,
and may provide for the assessment • end retention therefrom
of reasonable fines for absence from regular or special
meetings of council or councilmanic committees. The
amount of salary in cities shall not he less than five
hundred dollars.
The compensation to he received hy councilmen shall not
he increased or diminished after their election; hut
succeeding councils may change ail compensation, said
change to take affect as to councilmen taking office at
'c ast six months after the passage of the ordinance
previdiny for such change. 53 P.S. §360i6
Mr. Samuel Wagner, Jr. May 2, 1986
Page 5
The amount of compensation for the mayor in any of the
said cities shall not be increased or diminished after his
election. Succeeding councils may change the amount of
the mayor's compensation, but such change shall not affect
the compensation of the mayor then in office or of any
person taking office as mayor within six months of final
passage of the ordinance providing for such change. 53
P.S. §36208
The Code also provides:
§37403. Specific powers
In addition to other powers granted by this act, the
council of each city shal 1 have power, by ordinance:
To make contracts of insurance with any insurance
company, or nonprofit hospitalization corporation, or
nonprofit medical service corporation, authorized to
transact insurance business within the Commonwealth,
insuring its elected or appointed officers, officials and
employes, or any class or classes thereof, or their
dependents, under a policy or policies of group insurance
covering life, health, hospitalization, medical service,
or accident insurance. 53 P.S. §37403
The code clearly provides a mechanism for the purchase of insurance of
the type here in question for elected or appointed officials of cities of the
third class. The code also sets forth the method by which the salaries of
councilmembers and the mayor is to be fixed.
Our reading of the law also clearly indicates that when a public official
has the power to fix compensation for himself, the mechanism provided for such
power must be complied with strictly.
While it cannot be questioned that the General Assembly has the inherent
power to declare the public policy of the Commonwealth and may confer upon
members of council of municipalities power to appoint themselves to membership
upon boards of authorities and to fix their own salaries as it has been done
here, such grant of power must be strictly construed and strictly applied.
Commonwealth ex. rel. McCreary v. Major, 343 Pa. 355, (1941); See also
Warmi sister Township appeal, 56 D &C 2d 99, (1971); Genkinger v. New Castle,
368 Pa. 547, (1951); McCutcheon v. State Ethics Commission, 77 Commw. 529,
(1981). Both the salary of councilmen and the mayor, as well as the purchase
of insurance benefits for officials, must be authorized by a duly enacted city
ordinance. There is no other mechanism through which these benefits may be
obtained by such officials. In the instant situation, an ordinance was passed
in 1951 which authorized the city to contract for the purchase of various
Mr. Samuel Wagner, Jr.
Page 6
May 2, 1986
insurance benefits for employes of the city. While the ordinance did not
reference to such coverage fo officials or officers of the city, we have
received the sworn statements of several individuals who were in office at the
time of the passage of the ordinance. These individuals, i n substance, have
indicated that it was the intent of the ordinance to extend the insurance
coverage to members of council and other city officials. The council had
believed that the ordinance, in fact, had accomplished this goal.
In sever al matters we have, in the past accepted the statements of
intent of authorized officials as sufficient evidence of appropriate approval.
Kiniry, 84 -008; Saunders, 85- 006 -R. Based upon wr prior decisions, we
believe that the intent of Ordi nance #975 was to extend the insurance coverage
to the city officials.
We rn st Mere note that the argument has been advanced; that the
officials and officers of the city are, in fact, employees within the meaning
of that term. Our decision herein is not based upon that analysis and we
believe that the officers and officials are not employees of the city. See,
e.g., Conrad v. Exeter Township, 76 Berks L.J. No. 2p. 7, (1983); in Re:
Appeal of Auditors Report of Muncy Creek Township, 16 Lycomi ng Rep. 159,
(1985).
Our decision is based solely upon our findi ;xJ that the Third Class City
Code allows for the purchase of such insurance benefits for city officials and
our finding that the ordinance enacted was intended to implement this
provision of the code.
As such, we do not believe that you violated the State Ethics Act in the
instant situation.
We must note, that the problems encountered in this matter were
occasioned by the faulty language of the in question ordinance.
In this respect, we strongly suggest that said ordinance be amended so as
to include the proper language to clearl: extend the benefits to officials
end officers of the city.
C. Conclusion: Based upon the foregoing, we do not believe that you violated
the State Ethics Act when you received certain insurance benefits. The Third
Class City Code allows for the purchase of such benefits for officials of a
city when a duly enacted ordinance is promulgated. Here, while the ordinance
only references to such benefits for employees, we believe that it was also
the intent of the council to provide said benefits to officials and officers
as well. We do suggest that an appropriate ordinance be enacted so as to
avoid future problems of this type.
Mr. Samuel Wagner, Jr. Nay 2, 1986
Page 7
Our files in this case will remain confidential in accordance with
Section 8(a) of the Ethics Act, 65 P.S. 408(a). However, this Order is final
and will be made available as a public document 15 days after service (defined
as mailing) unless you file documentation with the Commission which justifies
reconsideration and /or challenges pertinent factual findings. See 51 Pa. Code
2.38. During this 15 -day period, no one, including the Respondent unless he
waives his right to challenge this Order, may violate this confidentiality by
releasing, discussing or circulating this Order.
Any person who violates the confidentiality of a Commission proceeding
is guilty of a misdemeanor and shall be fined not more than $1,000 or
imprisoned for not more than one year or both, see 65 P.S. 409(e).
By the Commission,
At. 48,44,4A.
G. Sieber Pancoast
Chairman