SCHUYLKILL HAVEN BOROUGH v. SCHUYLKILL HAVEN POLICE OFFICERS ASSOCIATION, Appellant.
Commonwealth Court of Pennsylvania.
Decided Dec. 22, 2006.
Argued June 8, 2006.
¶ 13 For these reasons, I respectfully dissent.
Scott E. Blissman, Philadelphia, for appellee.
BEFORE: PELLEGRINI, Judge, and LEADBETTER, Judge, and KELLEY, Senior Judge.
OPINION BY Judge PELLEGRINI.1
Schuylkill Haven Police Officers Association (Union) appeals from an order of the Court of Common Pleas of Schuylkill County (trial court) vacating in part an “Act 111”2 interest arbitration award (Award) providing the terms and conditions of employment with Schuylkill Haven Borough (Employer) for 2005 through 2007.
The Union and Employer entered into a collective bargaining agreement (CBA) effective January 1, 2002, through December 31, 2004. Upon expiration of the CBA,
5. Deferred Compensation—If contributions to a deferred compensation plan are determined to be illegal, they are to be discontinued.5
* * *
7. No Layoff—There shall be no layoffs of currently full-time Officers during the term of this Agreement.
8. Reopener—In 2005, for effect in 2006, there will be a reopener in the contract solely to address issues of officer pension contributions and part-timer participation in overtime opportunities.
Because Paragraph 9 of the Award left in place “all existing benefits contained in previous awards and written agreements not modified by this award shall remain as is,” the net effect was that mandatory Employer contributions and limitations on employee contributions were carried over from the expired CBA.
Contending again that those provisions were illegal or in derogation of its management rights, Employer appealed those provisions of the Award to the trial court. Agreeing with Employer, the trial court vacated the challenged provisions reasoning: while Employer was allowed to create a deferred compensation accounts plan under
A.
The Union contends that the trial court erred in vacating that portion of the Award requiring Employer to make mandatory contributions to an employee deferred compensation plan because it had no authority under the Borough Code to voluntarily contribute to an employee‘s deferred compensation plan. While recognizing that an arbitration award can only mandate a benefit that a public employer could voluntarily grant by law, the Union argues that Employer had the authority to match contributions to a deferred compensation plan under
Similarly, nothing in
Because Employer had no legal authority to match employee contributions even if it wanted to, the trial court, when vacating Paragraph 5 of the Award, properly found that the Board of Arbitrators was acting illegally by requiring Employer to match employees’ contributions.
B.
Regarding the provision providing that no employed full-time police officer may be laid off, the Union contends that the trial court erred in vacating that provision because it violated an inherent management right. It contends that a no layoff issue was properly raised before the Board of Arbitrators, and it was within their jurisdiction and authority to decide because it affected terms and conditions of the employees’ employment.
The courts that have dealt with this issue have drawn a very fine line in distinguishing between the total number of persons on the force (not arbitrable), and the number of persons on duty at a station, or assigned to a piece of equipment, or to be deployed to a fire (all arbitrable because they are rationally related to the safety of the firefighters). However, this Court finds merit in that distinction, because the result still leaves in the municipality the ultimate decision concerning what level of fire protection it wishes, or can afford, to provide to the citizens. If it finds that the arbitrable situations cause an imbalance in certain areas of the force, it retains the authority to decide whether to hire more employees, close stations, revamp the force, or take some other managerial action. Since the method of resolving the imbalance may have far-reaching political and economic implications, especially if taxes must be raised, it should remain within the purview of those who were elected and/or appointed to make such decisions. (Emphasis in original.)
Id. at 781.
Because the number of police officers that Employer desired to employ was a management prerogative and not subject to bargaining, the trial court properly vacated Paragraph 7 from the Award as the Board of Arbitrators exceeded its authority by providing that any current employee may not be laid off for the term of the award.
C.
Paragraph 8 of the Award provided, “[i]n 2005, for effect in 2006, there will be a reopener in the contract solely to address issues of officer pension contributions,” and Paragraph 9 provided, “[a]ll existing benefits contained in previous awards and written agreements not modified by this award shall remain as is.” The net effect was that the Award carried over Article 12.2(d) of the expired CBA,12 limiting the maximum employee contribution to 5% percent of wages. The trial court vacated that paragraph from the Award because it infringed on an exclusive management prerogative given to Employ-
Recently, in Borough of Jefferson Hills v. Jefferson Hills Police Department Wage and Policy Committee, 904 A.2d 61 (Pa.Cmwlth.2006), we addressed the effect of Act 30‘s amendment of Act 600 on when employee contributions to the police pension fund could be eliminated or reduced, albeit in the context of whether Act 30 applied retroactively to a collective bargaining agreement entered before its enactment. In holding that it did not, we explained:
Section 6(a) of Act 600, 53 P.S. § 772(a) , provides that “[m]embers shall pay into the fund, monthly, an amount equal to not less than five per centum nor more than eight per centum of monthly compensation.” [Before the amendment,]Section 6(c) of Act 600, 53 P.S. § 772(c) , provided:If an actuarial study shows that the condition of the police pension fund of any borough, town, township or regional police department is such that payments into the fund by members may be reduced below the minimum percentages hereinbefore prescribed, or eliminated, and that if such payments are reduced or eliminated contributions by the borough, town, township or regional police department will not be required to keep the fund actuarially sound, the governing body of the borough, town, township or regional police department may, on an annual basis, by ordinance or resolution, reduce or eliminate payments into the fund by members. (Emphasis in original).
This language permitted a governing body to reduce or eliminate pension contributions by police officers only if the governing body would not thereafter be required to make contributions to keep the fund actuarially sound. Prior contributions were based upon the funding requirements of the plan. Officers had to contribute at least 5% of their salaries to meet actuarial funding requirements before the Borough would be required to
On April 17, 2002, Act 600 was amended by Act 30, effective immediately. Act 30 deleted the first part of Section 6(c) (as italicized above) to provide:
The governing body of the borough, town, township or regional police department may, on an annual basis, by ordinance or resolution, reduce or eliminate payments into the fund by members. Except as otherwise provided in this subsection, reduction or elimination of member contributions shall not permit the return of contributions or any interest or fund earnings to be made to members while actively employed as a police officer by any borough, town or township subject to this act. [Where an agreement, collectively bargained or otherwise, arbitration award or court decision was agreed to, issued or rendered on or prior to February 23, 1994, which provided for a return of contributions, with or without interest, or fund earnings to members, a return of contributions, with or without interest, or fund earnings shall be made to members and any such return of contributions shall reduce or eliminate any entitlement to refunds pursuant to section 9. No borough ... making such return or member receiving such return shall be required to restore to the fund any such contributions, interest or fund earnings.]
The passage of Act 30 eliminated the statutory requirement that a police officer contribute to the pension fund of which he or she is a member before municipal contributions are required to keep the fund actuarially sound. In other words, members of the fund will no longer be legally required to contribute to their own plan before the municipality is required to contribute. The parties can now reduce or eliminate officer contributions regardless of the actuarial status of the pension fund. (Emphasis added.)
Id. at 63-64.
Employer contends that it has the sole discretion to decide whether police officer contributions should be reduced because
Accordingly, that portion of the trial court‘s order vacating Paragraphs 5 and 7
ORDER
AND NOW, this 22nd day of December, 2006, the order of the Court of Common Pleas of Schuylkill County, dated November 30, 2005, at No. S-1145-2005, vacating Paragraphs 5 and 7 of the Board of Arbitrator‘s Award, dated April 12, 2005, at No. 14 L 360 00527, is affirmed, and that portion of the order vacating Paragraph 8 of the Board of Arbitrator‘s Award regarding payment of pension contributions is reversed.
CONCURRING AND DISSENTING OPINION BY Senior Judge KELLEY.
I concur with the Majority‘s disposition of the first two allegations of error raised in this appeal. However, with respect to the Majority‘s disposition of the final claim raised, I respectfully dissent.
Paragraph 8 of the arbitrators’ award provides, in pertinent part, that “[i]n 2005, for effect in 2006, there will be a reopener in the contract solely to address issue[] of officer pension contributions....” (Reproduced Record) RR at 96a.1 Paragraph 9 of the arbitrators’ award provides, in pertinent part, that “[a]ll existing benefits contained in previous awards and written agreements not modified by this award shall remain as is....” Id. Thus, by delaying the disposition of the pension contributions issue until the reopener to the fol- lowing year, the award carried over the pension contribution provisions of the former CBA to the successor agreement for the initial year of the successor agreement. Municipality of Monroeville v. Monroeville Police Department Wage Policy Committee, 767 A.2d 596, 599 (Pa. Cmwlth.), petition for allowance of appeal denied, 566 Pa. 672, 782 A.2d 551 (2001).
In addition, Section 6 of Act 6002 provides, in pertinent part, that “[m]embers shall pay into the fund, monthly, an amount equal to not less than five per centum nor more than eight per centum of monthly compensation....”
[T]he governing body of the borough ... may, on an annual basis, by ordinance or resolution, reduce or eliminate payments into the fund by members. Except as otherwise provided in this subsection, reduction or elimination of member contributions shall not permit the return of contributions or any interest or fund earnings to be made to members while actively employed as a police officer by any borough ... subject to this act....
However, Section 12.5 of the CBA provides:
Effective January 1, 1990, to the extent that contributions made by Police Officers to the Police Pension Fund are in excess of the necessary funding, the Borough shall refund contributions made by Officers with appropriate interest. The Fraternal Order of Police and/or the Borough of Schuylkill Haven Police Department shall indemnify and save the Borough harmless against all claims, demands, suits or other forms of liability that shall arise out of or by reason of action taken or not taken by the Borough at the request of the Fraternal Order of Police and/or Borough of Schuylkill Haven Police Department for the purpose of complying with this clause. Further, this provision of this clause applies only to Police Officers in the employ of the Borough on or after
January 1, 1990. This provision is not applicable to any Police Officer who may have previously been employed by the Borough on or before December 31, 1989.
RR at 44a. Thus, the foregoing provisions of the CBA conflict with the express provisions of Sections 6 and 9 of Act 600,
In turn, Section 9 of Act 600 provides, in pertinent part:
Any member of a police force of a borough ... who for any reason whatsoever, shall be ineligible to receive a pension after having contributed any charges to a police pension fund established pursuant to the provisions of this act, or to a police pension fund existing on the effective date of this act supplanted by a police pension fund established pursuant to the provisions of this act, shall be entitled to a refund of all such moneys paid by him into such funds plus all interest earned by such moneys while in the police pension fund, less any return of contributions and interest made to members pursuant to section 6, as determined by regulations of the governing body immediately upon discontinuance of his employment with the police force....
Notes
[W]here an agreement, collectively bargained or otherwise, arbitration award or court decision was agreed to, issued or rendered on or prior to February 23, 1994, which provided for a return of contributions, with or without interest, or fund earnings to members, a return of contributions, with or without interest, or fund earnings shall be made to members and any such return of contributions shall reduce or eliminate any entitlement to refunds pursuant to section 9. No borough ... making such return or member receiving such return shall be required to restore to the fund any such contributions, interest or fund earnings.
In [Lee v. Municipality of Bethel Park, 722 A.2d 1165 (Pa.Cmwlth.1999)], this Court followed the decision in [Borough of Dormont v. Dormont Borough Police Department, 654 A.2d 69 (Pa.Cmwlth.), petition for allowance of appeal denied, 541 Pa. 628, 661 A.2d 875 (1995),] and held that where there is an interest arbitration award, an employer may subsequently assert the illegality of a condition or provision because it did not have an opportunity to do so during the bargaining process. Moreover, a board of arbitrators exceeds its power when an award requires a municipality to take an action that is prohibited by statutory law. Swatara Township v. Swatara Township Police Department, [642 A.2d 660 (Pa.Cmwlth. 1994)], petition for allowance of appeal denied, 540 Pa. 589, 655 A.2d 519 (1995). In Swatara, this Court stated as follows:
In cases where both Act 111 and Act 600 are applicable, we have held that the provisions of Act 600 limit the authority granted by Act 111 with respect to arbitration. In [In re Arbitration Between] Borough of Berwick [and] Borough of Berwick Police Dep‘t, [618 A.2d 1185 (Pa.Cmwlth.1992), petition for allowance of appeal denied, 536 Pa. 647, 639 A.2d 33 (1994)], where arbitrators violated Act 600 by permitting police to retire after only twenty years of service, we stated that:
there must be excluded from the scope of the Act [Act 111] and necessarily outside of the definition of bargainable issues, any subject which would require the government employer to perform any duty or to take some action which is specifically or impliedly prohibited by the statutory law governing its affairs. Such subjects are, of course, equally beyond the scope of an arbitration award.
Swatara, 642 A.2d at 662 (footnote omitted) (quoting Borough of Berwick, 618 A.2d at 1188).
401(K) Pension Plan. In addition to wages set forth above, [Employer] will contribute to each Full Time Police Officer who is a participant in the current voluntary 401(k) styled pension plan (which is presently through the Pennsylvania State Association of Boroughs) the following amounts on the following dates.
(a) [Employer] will increase to four percent (4%) for 2002, five percent (5%) for 2003, and six percent (6%) for 2004. The percentage contribution by [Employer] shall be the aforementioned percentages of the officer‘s gross wages including Borough related overtime (specifically excluding drug task force overtime).... The aforementioned [Employer] contributions will match the officer‘s contribution up to the aforementioned percentages for the appropriate year. It is well settled that this Court may affirm the decision of the trial court on any basis, without regard to the basis on which the trial court below relied. Upper Makefield Township v. Pennsylvania Labor Relations Board, 562 Pa. 113, 753 A.2d 803 (2000).
The governing body of any ... political subdivision may, by contract, agree with any employe to defer, a portion of that employe‘s compensation and may subsequently, with the consent of the employe, purchase government bonds or purchase life insurance contracts, annuity contracts, or mutual fund shares from any life underwriter or mutual fund salesman duly licensed by the State who represents any company licensed to contract such business in this State or make deposits on behalf of the employe in savings accounts in institutions authorized to accept such deposits.
In [Lee v. Municipality of Bethel Park, 722 A.2d 1165 (Pa.Cmwlth.1999)], this Court followed the decision in [Borough of Dormont v. Dormont Borough Police Department, 654 A.2d 69 (Pa.Cmwlth.1995),] and held that where there is an interest arbitration award, an employer may subsequently assert the illegality of a condition or provision because it did not have an opportunity to do so during the bargaining process. Moreover, a board of arbitrators exceeds its power when an award requires a municipality to take an action that is prohibited by a statutory law.
(a)(1) Each borough ... of this Commonwealth maintaining a police force of three or more full-time members ... shall ... establish, by ordinance or resolution, a police pension fund or pension annuity to be maintained by a charge against each member of the police force, by annual appropriations made by the borough ... by payments made by the State Treasurer to the municipal treasurer from the moneys received from taxes paid upon premiums by foreign casualty insurance companies ... and by gifts, grants, devises or bequests granted to the pension fund....
(2) Such fund shall be under the direction of the governing body of the borough ... and applied under such regulations as such governing body, by ordinance or resolution, may prescribe for the benefit of such members of the police force....
Monthly pension or retirement benefits other than length of service increments shall be computed at one-half the monthly average salary of such member during not more than the last sixty nor less than the last thirty-six months of employment.
In the event that the sum of 12.1(a) and (b) above does not equal or exceed said Total Contribution Due for the applicable Plan Year, the contribution of Plan Members for the applicable Plan Year shall be increased to that percentage of W-2 wages and salaries, but in no event greater than the maximum five (5%) percent limit as now established by the Ordinance, which is necessary to pay the Plan the difference between the Total Contribution Due as determined by the actuary, and the amount received from [the Pennsylvania General Municipal Pension System State Aid Program] attributable to Police Officers, as described in 12.2(b) above. (Emphasis added.)
In cases where both Act 111 and Act 600 are applicable, we have held that the provisions of Act 600 limit the authority granted by Act 111 with respect to arbitration. In [In re Arbitration Between] Borough of Berwick [and] Borough of Berwick Police Dep‘t, 152 Pa.Commonwealth Ct. 242, 618 A.2d 1185 (1992), where arbitrators violated Act 600 by permitting police to retire after only twenty years of service, we stated that:
[T]here must be excluded from the scope of the Act [Act 111] and necessarily outside of the definition of bargainable issues, any subject which would require the government employer to perform any duty or to take some action which is specifically or impliedly prohibited by this statutory law governing its affairs. Such subjects are, of course, equally beyond the scope of an arbitration award.
