In this case out of Pike County, the Commonwealth Court determined that a current Board of Auditors could not rescind a past Board of Auditor’s approval for supervisor-employees to participate in a Township pension plan, despite not being presented with the specific pension plan adopted by the municipality. Further, the court held that such pension plans were not compensation of the elected office and therefore supervisor-employees who adopted the plan did not have to be reelected to participate in it.
In March 2006, the Delaware Township Supervisors (“Supervisors”) approved the creation of a new pension plan for township employees. At this time, all 3 supervisors were also paid township employees. Section 606(b) of the Second Class Township Code (the “Code”) requires Board of Auditor approval for such supervisor-employees to participate in pension plans that they adopt. On March 28, 2006, Supervisors held a special meeting with the Board of Auditors (“Auditors”) to consider whether the supervisor-employees could participate. No written documentation of the plan was provided to Auditors at this meeting. The township solicitor and Supervisors merely provided a verbal overview of the plan being considered. The meeting minutes reflect that the proposed plan would cost $79,000 per year, and that the Pennsylvania State Association of Township Supervisors (PSATS) would contribute 50% of the cost after 3 years. At the conclusion of the meeting Auditors signed a resolution recommending that employee-supervisors be allowed to participate in the proposed plan.
Several years later, Auditors filed a declaratory judgement action, asserting the plan actually adopted by Supervisors was fundamentally different from that approved by Auditors. Specifically, the cost fluctuated and PSATS would never contribute. Auditors asked the court to declare that the prior Board of Auditors had never approved the plan adopted by the Supervisors, as required by the Code. They further sought to prevent one of the supervisor-employees from participating in the plan because she had not been reelected after the plan’s adoption. The pension plan, Auditors argued, constituted compensation of the elected office, and, pursuant to § 606(a) of the Code, any change in such compensation did not become effective until the beginning of the supervisor’s next term.
The Court of Common Pleas of Pike County sustained Supervisors’ preliminary objections, which asserted the claim should fail as a matter of law because Auditors had approved the plan and that the supervisor-employees did not have to be reelected to participate in the plan. Auditors appealed.
On appeal, the Commonwealth Court affirmed the lower court’s determination. It found that there was no indication that Auditors did not give their approval to a specific plan in accordance with their statutory duties. Whether the plan cost more or that PSATS’s contribution was unknown were of no moment because those figures could not realistically have been known at the time. Therefore, any facts averred that the approval was based on flawed estimates would not establish a § 606(b) violation. As to the re-election requirement, the court held that the plan was compensation for the supervisor-employees in their role as employees, not elected officials. Thus, they did not have to be reelected to participate.