HomeMy WebLinkAbout1342 SmithIn Re: B. Edward Smith
File Docket:
X -ref:
Date Decided:
Date Mailed:
Before: Louis W. Fryman, Chair
John J. Bolger, Vice Chair
Donald M. McCurdy
Paul M. Henry
Raquel K. Bergen
03 -033
Order No. 1342
9/20/04
10/1/04
This is a final adjudication of the State Ethics Commission.
Procedurally, the Investigative Division of the State Ethics Commission conducted
an investigation regarding a possible violation of the Public Official and Employee Ethics
Act, Act 9 of 1989, P.L. 26, 65 P.S. § 401 et seq., as codified by Act 93 of 1998, Chapter
11, 65 Pa.C.S. § 1101 et seq., by the above -named Respondent. At the commencement of
its investigation, the Investigative Division served upon Respondent written notice of the
specific allegation(s). Upon completion of its investigation, the Investigative Division
issued and served upon Respondent a Findings Report identified as an "Investigative
Complaint." An Answer was not filed and a hearing was deemed waived. The record is
complete. A Consent Agreement and Stipulation of Findings were submitted by the parties
to the Commission for consideration. The Stipulation of Findings is quoted as the Findings
in this Order. The Consent Agreement was subsequently approved.
Effective December 15, 1998, Act 9 of 1989 was repealed and replaced by Chapter
11 of Act 93 of 1998, 65 Pa.C.S. § 1101 et seq., which essentially repeats Act 9 of 1989
and provides for the completion of pending matters under Act 93 of 1998.
This adjudication of the State Ethics Commission is issued under Act 93 of 1998
and will be made available as a public document thirty days after the mailing date noted
above. However, reconsideration may be requested. Any reconsideration request must be
received at this Commission within thirty days of the mailing date and must include a
detailed explanation of the reasons as to why reconsideration should be granted in
conformity with 51 Pa. Code § 21.29(b). A request for reconsideration will not affect the
finality of this adjudication but will defer its public release pending action on the request by
the Commission.
The files in this case will remain confidential in accordance with Chapter 11 of Act
93 of 1998. Any person who violates confidentiality of the Ethics Act is guilty of a
misdemeanor subject to a fine of not more than $1,000 or imprisonment for not more than
one year. Confidentiality does not preclude discussing this case with an attorney at law.
Smith, 03 -033
Page 2
I. ALLEGATION:
That B. Edward Smith, a (public official /public employee) in his capacity as Manager
of the Blairsville Municipal Authority violated the Section 1103(a) of the Public Official and
Employee Ethics Law (65 Pa.C.S. §1101 et seq.) when he used the authority of his office
for a private pecuniary gain, including but not limited to directing subordinate employees
compensate him for unused sick leave at rates not approved by the authority board of
directors; and when he directed that said payments be issued over four separate pay
periods during calendar year 2002.
II. FINDINGS:
1. B. Edward Smith served as the Executive Director of the Blairsville Municipal
Authority from January 1988 until September 1, 2002, when he retired.
a. Smith simultaneously served as both Executive Director of the Blairsville
Authority and Blairsville Borough Manager from January 1988 to January 3,
2000.
2. From 1998 through January 2000 Smith was responsible for all aspects of the
operation of the Borough and the Authority.
a. Smith continued to be responsible for all aspects of the operation of the
Authority through September 1, 2002.
1. After January 3, 2000, Smith was no longer Borough Manager nor
responsible for Borough operations.
3. Minutes of the December 15, 1987 Blairsville Water Authority Board's Special
Meeting reflect the following in regard to the hiring of Smith:
"Following a report by Authority screening committee members John B. Zahornacky
and J. Wayne George, the Authority approved applicant B. Edward Smith, 50, of
Johnstown, Pa., as the preferred applicant for that post. The Authority unanimously
approved the selection, agreed to share one -half the annual salary of $28,000.00
plus $80.00 per travel expense and stipulation that the applicant purchase or rent a
residence in Blairsville and reside therein within six months.
4. The December 15, 1987, Blairsville Borough Council Meeting Minutes confirm the
hiring of Smith for the position of borough manager at conditions the same as
adopted by the authority.
5. There is no written job description for the position of Executive Director /Manager for
the Blairsville Municipal /Water Authority.
a. No specific job description has been approved by the Authority Board.
b. The duties performed by Smith were similar to his duties as Blairsville
Borough Manager.
6. Generally, Smith was responsible for, as authority general manager, all the day to
day operations of the authority. These duties included, but were not limited to the
following:
- Preparation and Administration of the Authority Budget
- Supervising all authority employees
- Authorizing payments to vendors for services /goods provided
Smith, 03 -033
Page 3
- Making purchases for the authority up to $4,000 without board approval
- Preparation of financial reports to the board concerning financial status of all
borough accounts including water and sewage
- Responsibility for preparation of all bill lists and invoices submitted to the board
for payment
7 Authority Board members relied on Smith to run the day -to -day operations of the
Authority, and to report all relevant information to the Board.
a. Smith had broad discretion to make decisions without board approval.
b. Smith was responsible for maintaining the budget, and providing the Board
with monthly financial reports for the water, sewer and refuse accounts.
8. During Smith's tenure of simultaneous service as borough manager and authority
manager, the Borough and Authority shared Smith's salary as the chief
administrator of both entities.
a. Borough council and the Authority board acted separately in approving
increases in the percentage of Smith's salary they each paid.
1. The percentage paid by each entity varied between 1988 and 2000.
b. Generally 60% of Smith's salary was paid by the Authority and the remaining
40% by the Borough.
1. Beginning in 2000, the Authority assumed 100% of Smith's salary.
c. All payroll checks are issued by the borough.
1. The authority will make payment to the borough for its share of
employee wages.
9. Smith's compensation and benefits for the authority were not documented in an
agreement or contract until December 2000.
a. Until December 2000, Smith received some of the same benefits as
employees who were covered by a union contract, including: vacation, sick,
personal and bereavement leave; paid holidays; hospitalization and life
insurance; and pension.
1. Smith was not a member of the union and his benefits were not part of
any negotiation between the union and the municipality.
b. Smith was afforded three weeks vacation in his third year of employment
with the Borough /Authority.
c. The rate of Smith's pension contribution was the same as the union
employees, however Smith was permitted to invest the contribution made by
the borough /authority outside the union pension plan.
d. Smith's holidays, hospitalization and life insurance benefits were the same
as union employees.
e. No distinctions for Smith regarding sick, personal and bereavement leave
are noted in borough or authority records.
Smith, 03 -033
Page 4
f. Smith's salary increases were not tied to the union contract.
10. Union contracts, in effect or executed during Smith's employment with the Borough/
Authority, contained provisions relating to sick leave accumulation and buy backs
by the authority and /or borough.
Contract Number Accumulated Buy Back
Period of Days Days Rate
1987 -1989 12 30 $15.00 /day
1990 -1992 12 60 $10.00 /day
1993 -1996 10 120 $10.00 /day
(1997 -1998 — Continuation of previous Agreement)
1999 -2001 10 120 $10.00 /day
a. The 1987 -1989 sick leave provision applied to union employees having
completed two full calendar years service as a regular employee.
1. This provision was in effect when Smith was hired January 1, 1988.
b. The 1990 -2001 sick leave provisions applied to employees having
completed one full calendar year service as a full time employee.
c. As an incentive bonus, union employees could sell unused sick days back to
the Borough /Authority at the end of each year at the rate of $10.00 /day up to
10 days.
11. Sick leave provisions in effect in 1999 as outlined in the union contract permitted
the accumulation of 120 sick days, payable upon termination of employment at the
rate of $10.00 per day.
a. Termination of employment included retirement, death, resignation, etc.
b. This applied to contract periods 1999 -2001.
c. Sick days accumulated in excess of 120 days were not subject to buy -back.
d. The maximum amount for sick leave payout for union employees was $1,200
(120 days x $10 /day).
12. During the time period from December 1987 through January 3, 2000, the period of
Smith's simultaneous services as Blairsville Borough Manager and Authority
Manager, no written policy existed regarding Smith's accumulation of and payment
for sick leave.
13. Smith was not re- appointed Blairsville Borough Manager at the January 3, 2000,
reorganization meeting.
a. Smith did continue as authority general manager.
14. The issue of compensation for accumulated sick leave was raised by Smith when
he was terminated as Borough Manager in January 2000.
a. Smith claimed the borough owed him for the 120 sick days he had
accumulated.
b. The borough made a settlement with Smith which included a general release
for the amount of $4,300.
Smith, 03 -033
Page 5
15. At the January 3, 2000 Reorganization Meeting of Blairsville Borough Council,
Council agreed to enter into a financial settlement with Smith.
a. The settlement, approved by Council in April 2000, was in the form of a
General Release.
b. The settlement was prepared by the borough solicitor and included a sick
leave payout.
c. The borough's settlement with Smith was not binding on the authority.
16. Smith's status with the authority and his compensation was discussed between
authority chairman Joseph Serwinski and borough council president Jonathan Jack.
17. On March 9, 2000, following a lunch meeting between Authority Board Chairman
Joseph Serwinski and Borough Council President Jonathan Jack, Serwinski e-
mailed Jack with a number of follow -up issues, including the issue of paying Smith
for sick leave subsequent to Smith's removal as Borough Manager. The relevant
portion of the e-mail, identified as item #6, is as follows:
"What is our organizational status in regards to liabilities. Do we
have a shared status or an independent status? This has
implications clear down to our work management contract. This is an
area I wish Council would have consulted with the Authority before
they took the "plunge ". I will gladly let Council obtain a legal opinion
on this matter. Our solicitor can either concur or object; but, I don't
think we both have to spend money on researching a legal opinion ".
a. Serwinski's e-mail was directed to Jack, Smith, Authority Clerk Wendy
Trimble, and Authority board members George, Graff, K. Smith, and
Cavender.
18. On March 10, 2000, Jack responded to Serwinski, and addressed the concern
Serwinski related in item #6 of his e-mail.
"received your e-mail about our lunch meeting and needs some clarifications. As to
line item #6 dealing with the organizational status in regard to liabilities. I am not
sure what "plunge" you are referring to. After our meeting I spoke with Matt about
Mr. Smith's final pay. The concerns of setting a past standard of paying an
employee who is on a salary for sick time, was never set. Our final pay figures for
Mr. Smith were as one sum. There was no break down of the monies stated in the
agreement."
19. On April 5, 2000, a General Release was executed between Smith and the Borough
in regard to his dismissal from the position of Borough Manager in January 2000
which included a pay -out for sick time.
a. The settlement in the amount of $4,390.50 was paid to Smith, which included
the following:
8 vacation days @ $23.25/hr x 8 hours = $1,488.00
Regular pay for 12/99 (50 hrs. @ $23.25/hr.) = $1,162.50
Sick leave (30 days @ 8 hrs /day @ $7.25/hr) = $1,740.00
$4,390.50
b. The General Release was negotiated by Borough Solicitor Matthew Kovacik
Smith, 03 -033
Page 6
20. The sick leave payout made to Smith by the borough exceeded the maximum
allowed by the union contract in existence in 2000 by $540.00.
a. The contract allowed a payout of $1,200 (120 days @ $10 /day).
b. Smith was paid $1,740.00 for sick leave.
21. Smith did not have an employment contract with the borough for 2000.
a. Smith continued to receive salary and benefits paid solely by the authority.
b. Salary and benefits were the same as Smith received when employed by
both the borough and the authority.
c. A job description between Smith and the authority was not adopted until
December 2000.
22. At the December 20, 2000 Authority Board meeting, the board adopted the
Blairsville Municipal Manager Compensation Package -Year 2001, which provided
the following:
Salary:
Health Insurance:
Long Term Illness:
Holidays:
Vacation:
Pension:
Vehicle:
but no copy of the calculation which had a specific amount for sick leave,
was provided to Edward Smith or to the municipal authority board members.
Reimbursed Expenses:
Reporting:
Sick leave, Personal
Days, Bereavement,
Jury Duty:
Base pay - $44,000.00 /year
Performance pay — Up to 10% of annual pay based on
meeting mutually agreed objectives; not to become part of
the base pay.
Same as contracted employee. Coverage is for the same
period the manager qualifies for salary payment.
If the manager is not able to normally function in his
normal duties for more than 30 days he may request a
leave of absence to be considered by the Authority on it's
[sic] merits.
Same as contracted employees.
First year — one week
After one year — two weeks
After seven years — three weeks
After fifteen years — four weeks
Subject to ARISA clarification.
A vehicle including maintenance as determined by the
Authority will be furnished to the Manager. Not to be used
for personal use.
All reimbursement requests shall be made on a standard
expense form.
The Manager will notify Authority's
itinerary.
Included in the salaried position
manager's discretion.
office of his daily
and used at the
23. The Authority board adopted a similar Compensation Package for 2002 with the
exception of increasing Smith's salary to $45,760.00 /year.
a. The pension provisions were the same as contracted employees (based on
2080 hours worked annually).
Smith, 03 -033
Page 7
b. Sick leave, bereavement leave and personal days are the same as the
previous employment agreement.
c. Smith's title was changed from Executive Director to Manager.
24. When approving Smith's employment contract, the authority board did not specify
sick, annual or bereavement leave.
a. The board concluded that since Smith was a salaried employee, he was
permitted to be away from work, with pay, for sick or vacation time.
b. Smith was not required to account for his time as long as authority business
was completed.
25. Minutes of the December 20, 2000, Authority Board meeting confirm that the board
discussed benefits for Smith which included various types of leave including sick,
annual and bereavement.
a. Three of the five board members were present, including Chairman Joseph
Serwinski, Ken Smith and Scott Cavendar.
b. During the meeting, Chairman Serwinski and member Scott Cavender stated
it was not the intent to take away Smith's accrued sick leave.
1. Smith's vacation and sick time and other benefits are grandfathered.
2. Smith would not lose any sick leave accumulated while an employee
of the borough.
3. Smith was to continue receiving three weeks vacation.
c. Member Ken Smith questioned whether the salary was based on a 281/2 hour
week.
1. Serwinski explained there are no hours, a salaried position is not
hourly.
2. If Smith could do the job in 10 hours per week, that is all he would
work but if it takes 50 hours per week, he would work 50 hours a
week.
d. Serwinski explained sick leave, bereavement leave and personal days are
included in the salaried position and used at the manager's discretion.
e. Ken Smith asked about long -term illness.
1. Serwinski advised the manager could ask for a leave of absence.
26. Neither the manager job description for 2001 or 2002 contained any provision for a
buy back of accumulated sick leave.
27. The authority board was not provided with the number of sick days Smith had
accumulated as borough manager.
a. The board did agree that Smith would maintain any sick leave accumulated
while simultaneously working for the authority and the borough.
Smith, 03 -033
Page 8
b. The authority board was aware when approving the 2001 job description that
Smith had received a partial sick leave payout from the borough.
28. Neither of the employment contracts adopted by the authority for Smith contained
any provisions for a sick leave payout.
a. Neither contract contained any authorization for the accumulation of sick
leave.
29. At the April 24, 2002 Authority board meeting, Smith announced his intention to
retire effective September 1, 2002.
30. Smith had generally commented to several board members, including Wayne
George, the Authority Treasurer, individually that, upon his retirement, the payout of
his sick leave would be a substantial amount.
a. George believed that a sick leave benefit for Smith was grandfathered for his
prior work for the Authority and the borough.
1. George was not aware of any specific amount claimed by Smith.
b. The conversations took place outside of board meetings.
c. The conversations occurred in or about December 2000 when the board
approved the Manager's Agreement, and again in April 2002 around the time
he announced his retirement.
d. Board members considered the comments casually, but were of the belief
they would have the opportunity to review and vote on any retirement
package for Smith.
31. The Authority Board did not formally meet to discuss or approve a retirement
package for Smith.
a. The board specifically did not approve any sick leave payout.
32. Mary Jane Brown is the Payroll Clerk for Blairsville Borough.
a. Brown is a subordinate employee of B. Edward Smith.
b. Brown prepares payroll for both the Borough and Authority employees.
c. Brown also maintains leave records for all employees, including Smith.
33. By way of memo dated June 6, 2002, Smith directed Mary Jane Brown to pay him
for unused sick leave (120 days) in four payments during the period June 7 through
August 30, 2002. The typed, unsigned memo stated the following:
"Back in Jan. 2000, the Borough paid me off at the rate of $25.00 per hour.
I have 120 sick days.
The Boro. paid $7.50 per hour.
The M/A owes the balance $17.50 per hour.
$17.50 per hour X 8 hours = $140.00 per day X 120 days = $16,800.00.
Please pay me $5,000.00 the last pay in June 2002.
The balance will be paid in July — Aug. — 2002.
Thanks
Ed"
Smith, 03 -033
Page 9
34. The payments Smith directed Brown make to him for unused sick leave were not
approved by the Authority board.
a. Smith did discuss with the Authority Chairman, Treasurer and Board Member
Ken Smith, that the employee benefit was approved in the past and that it
would be handled as it had been in the past.
1. In the past, union employees were paid $10 /day for a maximum of
120 days.
35. Mary Jane Brown issued the payments to Smith as he directed, in four installments,
two at $5,000.00 and two at $3,400.00. The payments issued were as follows:
CHECK CHECK PERIOD GROSS DEFERRED NET
NUMBER DATE ENDING PAY COMP PAY
4801 6/21/02 6/08/02 $6,848.00 $4,735.00 $1,056.65
4826 7/05/02 6/22/02 6,848.00 4,000.00 1,576.08
4882 8/02/02 7/20/02 5,248.00 135.00 3,389.91
4907 8/16/02 8/03/02 5,248.00 135.00 3,389.91
a. Check nos. 4801 and 4826 included $5,000 sick leave payouts while check
nos. 4882 and 4907 included $3,400 sick leave payout.
b. Smith's regular gross pay was $1,848.00
36. Payments issued to Smith which included the sick leave payouts were direct
deposited into Smith's personal bank account.
a. In February 2002, Smith began to participate in direct deposit of his pay.
37. Direct Deposit "paychecks" did not require live signatures of authority members.
a. Authority board members did not sign the payroll checks issued to Smith,
which included sick leave payouts.
1. Payroll was issued by the Borough.
38. The Authority board of directors approved line item accounts payable, which related
to the sick leave payments that Smith directed Brown to issue.
a. The line items were not identified as sick leave payments.
39. It is Mr. Smith's contention when the line items were approved by the board that
was the only approval required by the board for the sick leave approval.
40. Authority board members are provided with meeting packets approximately one
week prior to the monthly meetings.
a. Packets included the "Budget Summary by Department" reports.
41. Budget Summary's were provided to the Authority board for each department within
the Authority, including water, sewer and refuse.
a. Budget Summary's listed the yearly budget, current month expense, year to
date expense, percentage of budget used, and amount remaining for each
line item.
Smith, 03 -033
Page 10
42. The Authority Board voted monthly to approve the accounts payable which included
a lump sum paid to the Borough to cover the Authority's share of payroll costs.
a. The Board was not provided with a breakdown of the payroll, particularly as
payments related to sick leave payout for Smith.
b. The board did not review the line item relating to Smith's salary because
Smith, as a salaried employee, was always paid the same amount.
43. Board members did not become aware of the sick leave payout to Smith until
approximately December 2002.
a. Board members believed that Smith should have submitted a retirement
compensation package to them for formal approval.
b. No retirement package had previously been established for Smith.
c. No action had been taken on the rate Smith would be paid for his
accumulated sick leave.
44. Payment of Smith's accumulated sick leave was charged to the Authority Water
Account, and was reflected on the Budget Summary Report as follows:
Check Sick Pay Total Current YTD Remaining
Date Amt. Budget Month Actual Budget
6/21/02 $ 5,000.00 $22,580.00 $ 6,801.80 $16,107.86 $ 6,472.14
7/05/02 $ 5,000.00 $22,580.00 $ 6,801.80 $22,909.66 ($ 329.66)
8/02/02 $ 3,400.00 $ -- $ -- $ -- $ --
8/30/02 $ 3,400.00 $22,580.00 $10, 403.60 $33,313.26 ($10, 733.26)
Total: $16,800.00
45. In or about January 2003, Robert Swetz, CPA, auditor for the authority, requested
to review Smith's sick leave payout.
46. On January 24, 2003, Swetz provided comments to the Authority Board.
a. Swetz received the general ledger postings and related monthly budget
statements for the four checks issued to Smith for his accrued sick leave.
1. All of the amounts were posted to Smith's normal salary account on
the Water Fund.
2. The line item showed that 75% of the budget had been used by the
end of June; a negative balance by the end of July; and a $10,000.00
overage by the end of August.
b. Swetz found that the board had no reason to review the line item relating to
Smith's salary because he was always paid the same amount.
c. Swetz recommended the board adopt a policy of requiring that the
Manager's pay be approved in advance, if it varies from the regular salary
amount for any reason.
III. DISCUSSION:
At all times relevant to this matter, the Respondent, B. Edward Smith, hereinafter
Smith, has been a public employee subject to the provisions of the Public Official and
Smith, 03 -033
Page 11
Employee Ethics Law, Act 9 of 1989, Pamphlet Law 26, 65 P.S. § 401, et seq., as codified
by the Public Official and Employee Ethics Act, Act 93 of 1998, Chapter 11, 65 Pa.C.S. §
1101 et seq., which Acts are referred to herein as the "Ethics Act."
The allegations are that Smith, as Manager of the Blairsville Municipal Authority
violated Section 1103(a) of the Ethics Act when he directed a subordinate employee to
compensate him for unused sick leave that was not approved by the authority board of
directors.
Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is
prohibited from engaging in conduct that constitutes a conflict of interest.
The term "conflict of interest" is defined under Act 93 of 1998 as follows:
Section 1102. Definitions
"Conflict" or "conflict of interest." Use by a public
official or public employee of the authority of his office or
employment or any confidential information received through
his holding public office or employment for the private
pecuniary benefit of himself, a member of his immediate family
or a business with which he or a member of his immediate
family is associated. "Conflict" or "conflict of interest" does not
include an action having a de minimis economic impact or
which affects to the same degree a class consisting of the
general public or a subclass consisting of an industry,
occupation or other group which includes the public official or
public employee, a member of his immediate family or a
business with which he or a member of his immediate family is
associated.
65 Pa.C.S. § 1102.
Section 1103(a) of the Ethics Act prohibits a public official /public employee from
using the authority of public office /employment or confidential information received by
holding such a public position for the private pecuniary benefit of the public official /public
employee himself, any member of his immediate family, or a business with which he or a
member of his immediate family is associated.
As noted above, the parties have submitted a Consent Agreement and Stipulation of
Findings. The parties' Stipulated Findings are reproduced above as the Findings of this
Commission. We shall now summarize the relevant facts as contained therein.
Smith served as Executive Director of the Blairsville Municipal Authority (BMA) and
as Manager of Blairsville Borough (Borough) from January of 1988. Smith continued as
Borough manager until his termination in January of 2000 and as Executive Director of the
BMA until his retirement in September of 2002. In both positions, Smith was responsible
for all aspects of the operations of the Borough and BMA. At the BMA, the members relied
on Smith not only to run the day to day operations but also gave him broad discretion to
make decisions without board approval.
For BMA, Smith's compensation and benefits were not documented in any
agreement or contract until December of 2000. Up to that time, Smith received some of
the same benefits as employees who were covered by a union contract including vacation,
sick, personal and bereavement leave, paid holidays, hospitalization, life insurance and a
pension. There were no distinctions accorded to Smith regarding sick, personal or
bereavement leave and Smith's salary increases were not connected to the union contract.
Smith, 03 -033
Page 12
Union contracts at the time contained provisions relating to sick leave accumulation and
buybacks by BMA or the borough. See, Fact Finding 10. In addition, the 1999 union
contract allowed for the accumulation of 120 sick days payable upon termination of
employment at the rate of $10.00 per day.
During the period December of 1987 through January of 2002 when Smith was
simultaneously serving as manager and BMA executive director, there was no written
policy regarding Smith's accumulation or payment of sick leave. Smith raised the issue of
accumulated sick leave when he was terminated as borough manager in January of 2000.
In particular, Smith claimed the borough owned him for 120 sick days that he had
accumulated. The matter was resolved through a settlement where the borough would
obtain a general release from Smith in return for a payment of $4,300.00 which would be a
final payout figure. However, on April 5, 2002, a general release was executed between
Smith and the Borough which had a total payment of $4,390.50, including inter alia sick
leave for 30 days equaling $1,740.00. The sick leave payout made to Smith by the
Borough exceeded the maximum allowed by $540.00. See, Fact Finding 20.
Although BMA did not have an employment contract for Smith, ajob description was
adopted in December of 2002. The board adopted a compensation package, the details of
which are delineated in Fact Finding 22. When the BMA board approved Smith's employment
contract, it did not specify sick, annual or bereavement leave. The board concluded that
Smith, as a salaried employee, could be away from work with pay for sick or vacation time.
Neither job description for Smith in 2001 and 2002 contained any provision for any
buyback or accumulation of sick leave. The BMA board did agree that Smith could retain
any sick leave accumulated while he simultaneously worked for the BMA and the borough.
Neither contract contained any authorization for the accumulation of sick leave.
At a BME board meeting on April 24, 2002, Smith announced his intention to retire
on September 1 of that year and commented that his sick leave payout would be
substantial. The board members believed that they would have an opportunity to review
and vote on any retirement payout for Smith. There was no board approval as to a sick
leave payout for Smith.
In a memo dated June 6, 2002, Smith directed Mary Jane Brown, a subordinate
employee who prepared payroll for the borough and BMA employees, to make a payment
to him of $5,000.00 in June based upon his calculation that he was entitled to 120 days
sick leave at $140.00 per day equaling $16,800.00. Smith told Brown that the balance
after the $5,000.00 payment in June would be paid in July or August of that year. The
payments that Smith directed Brown to make to him for the unused sick leave were not
approved by the BMA board. Brown, at Smith's direction, made four payments to Smith for
the unused sick leave, two in the amount of $5,000.00 and two in the amount of $3,400.00.
See, Fact Finding 35.
Since the four payments were directly deposited into Smith's account, they did not
require any signatures of BMA board members. The BMA board members approved line
item accounts payable which related to the sick leave payments that Smith directed Brown
to make. However, the board was not provided with a breakdown of payroll as it related to
the sick leave payout for Smith. The BMA board members did not become aware of the
sick leave payout to Smith until approximately December of 2002. The BMA board
members believed that Smith should have submitted a retirement package for formal
review and action by the BMA board.
In January of 2003, a CPA auditor for BMA reviewed Smith's sick leave payout and
recommended to the board that a policy be adopted requiring that a manager's pay be
approved in advance if there would be any variation from the regular salary amount for any
reason.
Smith, 03 -033
Page 13
Having highlighted the Stipulated Findings and issues before us, we shall now apply
the Ethics Act to determine the proper disposition of this case.
The parties' Consent Agreement sets forth a proposed resolution of the allegations.
The Consent Agreement proposes that this Commission find:
"a. That B. Edward Smith, in his capacity as Manager of the Blairsville Municipal Authority
violated Section 1103(a) of the Ethics Act when he directed subordinante [sic]
employees issue payments to him for unused sick leave without obtaining the
formal approval of the Blairsville Municipal Authority Board of Directors."
In addition, Smith agrees to make pay $7,000.00 to the BMA through this Commission
within thirty (30) days of the mailing of this order.
In applying Section 1103(a) of the Ethics Act to the stipulated facts, there were uses
of authority of office on the part of Smith. But for the fact that Smith was the Executive
Director of the BMA, he would not have been in a position to direct Brown, a subordinate
employee, to take the necessary actions to directly deposit four payments totaling
$16,800.00 into his account. Those payments were not approved by the BMA board but
rather were Smith's own determination as to his own entitlement. It was Smith's action
which resulted in him receiving those funds. All such actions were uses of authority of
office. See, Juliante, Order 809. Those uses of authority of office resulted in pecuniary
benefits to Smith consisting of the payments he received as purported sick leave payouts.
Such pecuniary benefits were private in that they were not authorized by the BMA board
and hence, were compensation other than provided for by law. See, O'Connor, Order
1269. Lastly, those private pecuniary benefits inured to Smith himself. Accordingly, Smith
violated Section 1103(a) of the Ethics Act when he directed a subordinate employee to
issue four payments to him for sick leave payout without obtaining approval of the BMA
board of directors.
We determine that the Consent Agreement submitted by the parties sets forth the
proper disposition for this case, based upon our review as reflected in the above analysis
and the totality of the facts and circumstances. Accordingly, Smith is directed to pay
$7,000.00 to the Blairsville Municipal Authority through this Commission within 30 days of
the mailing of this order. Compliance with the foregoing will result in the closing of this
case with no further action by this Commission. Noncompliance will result in the institution
of an order enforcement action.
IV. CONCLUSIONS OF LAW:
1. Smith, as a Executive Director /Manager of the Blairsville Municipal Authority, was a
public employee subject to the provisions of Act 9 of 1989 as codified by Act 93 of
1998.
2. Smith violated Section 1103(a) of the Ethics Act when he directed a subordinate
employee to issue four payments to him for sick leave payout without obtaining
approval of the BMA board of directors.
In Re: B. Edward Smith
ORDER NO. 1342
File Docket: 03 -033
Date Decided: 9/20/04
Date Mailed: 10/1/04
1 Smith, as a Executive Director /Manager of the Blairsville Municipal Authority,
violated Section 1103(a) of the Ethics Act when he directed a subordinate employee
to issue four payments to him for sick leave payout without obtaining approval of the
BMA board of directors.
2. Per the Consent Agreement of the parties, Smith is directed to pay $7,000.00 to the
Blairsville Municipal Authority through this Commission within 30 days of the mailing
of this order.
a. Compliance with the foregoing will result in the closing of this case with no
further action by this Commission.
b. Non - compliance will result in the institution of an order enforcement action.
BY THE COMMISSION,
Louis W. Fryman, Chair