LGA Lyceum

Towards Better Pension Accounting: A Practitioner's View

On July 28, 2009 LGA convened a Roundtable discussion in order to provide comments in response to the Governmental Accounting Standards Board’s (GASB) Invitation to Comment (ITC) on Pension Accounting and Financial Reporting. The comments were provided to the GASB in order to communicate the group’s suggestions on how to proceed with this important topic. We asked one of our participants, Bob Lentz, Assistant Deputy for Accounting, Allegheny County Controller’s Office, to provide some insights and opinions on the ITC process and what is needed in terms of changes to pension accounting.

The ITC is a useful document that gives governmental officials and financial managers, as well as the public, a forum to express their opinions to the GASB before they adopt standards on an accounting issue.

With regard to Pension Accounting and Financial Reporting, the main two calculations associated with the basic premise of the Pension ITC currently exist in Allegheny County’s government-wide statements or within the notes of its financial statements. For example, the first calculation determines the Annual Required Contribution (ARC) that is expected to provide sufficient resources for funding both normal costs and the Unfunded Actuarial Accrued Liability (UAAL) over an amortization period of 30 years or less. The County’s cumulative deficiency of underfunding the required annual contribution on December 31, 2008 was $27.8 million. As required, this deficiency is recorded on governmental-wide statements. However, the second calculation that estimates the UAAL is only disclosed in the notes and is $181.4 million. Based on the distinct possibility that this liability may be recorded in the near future, the County’s unrestricted net deficit at December 31, 2008 would have grown from $30.7 million to $184.3 million.

To remain consistent with private industry and GASB 34 standards, which indicate that government-wide statements should assess government finances in their entirety, the pension UAAL should be recorded. Most users of governmental financial statements are well aware of the unfunded long-term pension liability.

Though I agree with recording the full liability, calculating and liquidating the liability remains a more difficult enigma to solve. At present, the County uses a rate of return of 8% on the investment of present and future assets. While this rate may seem high for the last two years, the County utilizes an aggressive 15 year amortization period. In order to ensure that governments produce consistent and comparable financial data, the GASB must ensure that the number of acceptable actuarial cost methods is reduced; amortization periods be standardized; discount rates be determined objectively and address whether cost-of-living adjustments should be included in projected pension benefits.

But, once accurate and consistent liabilities are recorded, what plan does the government have to fund these liabilities? Although the UAAL is recorded, there is no guarantee that funds will be available to liquidate the liability. The most feasible process would be to pay the ARC, calculated using standards adopted above, to prevent future generations from being saddled with the entire unfunded liability. In addition, steps should be taken to reduce the UAAL by eliminating excessive overtime, lump sum payments and other one-time enhancements from the pension calculation.

Also crucial is that the County and municipalities avoid reacting to short-term economic changes. In 2000 and 2001, the County reduced the employee and employer contribution, through its Pension Plan, to 3.8% of covered payroll from its previous and current rate of 6%. The Pension Plan would have better withstood the poor investment returns of the past two years if it had not reacted to the previous boon years.

Finally, the ITC expressed that many participants in the GASB’s research group would like to see the UAAL recorded in the Plan’s statements and include a statement of changes in the liability from year to year. Because the primary government negotiates labor contracts and has the ability to exert pressure for pension plans to increase or decrease contribution rates, the ARC and/or UAAL liabilities should only be recorded on the County’s government-wide financial statements.

The invitation to comment is only the start of the GASB standard setting process. Watch for future LGA events providing opportunities to engage and express opinions on emerging standards and expectations for local governments.

Municipal Leaders Learn about Accelerating the Policy & Practice of Sustainable Development

Submitted by
Michael A. Spotts
Sustainable Pittsburgh
425 Sixth Avenue, Suite 1335
Pittsburgh, PA 15219
www.sustainablepittsburgh.org

On June 4, 2009, the Sustainable Development Academy (an ongoing training initiative of Sustainable Pittsburgh and the Local Government Academy) presented Sustainable Community Development Essentials: Tools, Strategies, and Case Studies. This hands-on program engaged 32 representatives from 22 local governments and organizations from around the region. Faculty representing diverse community interests led the session, including Susan Hockenberry of the Local Government Academy, Matt Mehalik of Sustainable Pittsburgh, John Trant of Cranberry Township, and Joy Wilhelm of the DCED Governor’s Center for Local Government Services.

The seminar introduced participants to the concept of sustainability with the goal of helping them lead by example through governance, policymaking, municipal operations, and education. The seminar began by identifying sustainability as a process for continuous improvement that takes into consideration social equity, natural capital, and a resilient and restorative economy. The conversation then transitioned to implementation as the audience learned about the steps Cranberry Township has taken to adopt sustainability as the framework for municipal operations, planning, and programming. Finally, attendees learned about the attributes of a municipal government supportive of sustainability. Namely, a sustainable government features principles, policies, and practices that:

• Enhance organizational capacity
• Utilize best management practices
• Exhibit professionalism
• Encourage intergovernmental cooperation
• Foster civic engagement
• Attract investment
• Provide strong stewardship for the community
• Establish sustainable development as a culture of practice and policy

The session emphasized the point that a municipal government’s financial situation is fully linked to its sustainability. Fiscal health is necessary for a municipality to be responsive to the needs of its constituents, from service provision to proper maintenance of infrastructure. This fiduciary responsibility includes budgeting and planning, completing the audit process, and performance monitoring/evaluation.

Furthermore, the municipal budgeting system can serve as a leverage point for implementing sustainability initiatives. Through budget planning and reconciliation, the net costs and benefits from activities (for instance, newly adopted energy saving techniques) can be quantified, and hopefully serve as a catalyst for broader acceptance and implementation.

The session identified critical factors in the development of sustainable communities through fourteen Sustainable Community Essentials resource sheets. Attendees applied the lessons from the seminar and these Essentials in a case study of Shaker Heights, a suburb of Cleveland, OH. Looking at statistical and municipal information about the community, they conducted a Rapid Assessment of Shaker Heights’ strengths, weaknesses, and areas for improvement.

The Sustainable Community Essentials resource sheets and Rapid Assessment used in this seminar are available to the public at: www.sustainablecommunityessentials.org. For more information about the Sustainable Development Academy and other Local Government Academy events, please visit: http://www.localgovernmentacademy.org/ or subscribe to Sustainable Pittsburgh's weekly e-news, 3E Links by emailing info@sustainablepittsburgh.org.

Michael A. Spotts, Intern
Sustainable Pittsburgh
425 Sixth Avenue, Suite 1335
Pittsburgh, PA 15219
Office Phone: (412) 258-6649
Fax: (412) 258-6645
E-mail: mspotts@sustainablepittsburgh.org
www.sustainablepittsburgh.org

Federal Stimulus Funds Available for Municipal Broadband Projects

Submitted by

Daniel S. Cohen
Cohen Law Group
www.cohenlawgroup.org

 

Much has been published on the recent federal stimulus legislation, known as the American Recovery and Reinvestment Act, including funding opportunities for municipal projects.  These opportunities are typically discussed with respect to transportation, education, energy and housing projects.  Very little has been reported, however, on the substantial stimulus funding that is available for municipal broadband projects, especially in the area of public safety.    

 

The stimulus package allocated allocates a total of $7.2 billion for broadband-related projects through two programs: 1) $4.7 billion for the Broadband Technology Opportunities Program (“BTOP”) in the Department of Commerce; and 2) $2.5 billion for the Distance Learning, Telemedicine and Broadband Program (DLTB”) in the Department of Agriculture.  The specific agencies charged with disbursing the funds are the National Telecommunications and Information Administration (“NTIA”) for the BTOP program and the Rural Utilities Service for the DLTB program.  The federal share of any projects funded by these programs may not exceed 80% (in other words, there is a 20% local match).

 

            The grant recipients for these programs expressly include local governments. The Act requires that the agencies disperse all monetary awards by September 30, 2010 and that the projects supported by these awards be substantially completed within two years of receiving a grant.  Local governments may never again see such a tremendous opportunity to receive federal assistance for broadband technology projects.  It is important, therefore, that local officials learn about these programs so as not to miss out on any timely opportunities.  Given the higher funding allotment for the BTOP program and the space constraints of this article, we will focus on the BTOP program here.

 

            The purposes of BTOP are as follow: 1) providing access to broadband service in unserved areas; 2) improving access to broadband services in underserved areas; 3) providing broadband education, awareness, training, access, equipment, and support; 4) improving access to, and use of, broadband service by public safety agencies; and 5) stimulating the demand for broadband, economic growth, and job creation. (emphasis added)  Based on our firm’s experience in representing municipalities in cable and telecommunications matters, improving public safety communications is a universal need among local governments.  The opportunity now exists to receive federal grants to fund these needs. 

 

            Grants awarded under the BTOP may be used for many purposes, including acquiring equipment for broadband services; constructing and deploying broadband service related infrastructure; and constructing and deploying broadband facilities that improve public safety broadband communications services.  While the NTIA has not yet specified the types of eligible public safety projects, it appears that such projects may include mobile data units for public safety vehicles, digital surveillance camera systems, and public safety interoperability enhancement.  Our discussions with the NTIA have revealed that the agency will be receptive to projects that include partnerships with other community anchors, including other levels of government, school districts, or hospitals.

 

To be eligible for a financial award under the BTOP, an applicant must submit an application during one of the three rounds of grant periods.  As of today, the first round is expected to be August-September, 2009.  The second round is currently scheduled for November- December, 2009, and the third round is scheduled for April-May 2010.  It is expected that one-third of the available funding will be awarded during each round.

 

            The application must meet the criteria outlined by the NTIA which requires, among other things, that the applicant provide a detailed explanation of how any award received will be used to carry out the purposes of the Act in an efficient and expeditious manner, including a showing that the project would not have been implemented during the grant period without federal grant assistance.  The applicant must show that it has the ability to meet the 20% match requirement and disclose any other federal or state funding that the applicant receives to which the application relates.

 

            The full text and of the BTOP is found in Section 6001 of the American Recovery and Reinvestment Act of 2009. The NTIA’s website, www.ntia.doc.gov/broadbandgrants, and the RUS’s website, www.usda.gov/rus/telecomalso provides important information.  Finally, many local governments are employing consultants to guide them through the application process, due to complexity of these grant programs, the fact that they are brand new, and the short timeframe for application submission.  If you have any questions regarding these broadband stimulus grants, please feel free to contact Dan Cohen (412-447-0130 x11 or dcohen@cohenlawgroup.org) or Phil Fraga (412-447-0130 x12 or pfraga@cohenlawgroup.org).

 

Daniel S. Cohen

Cohen Law Group

1000 Gamma Drive, Suite 305

Pittsburgh, PA 15238

Phone: 412.447.0130 ext. 11
Fax: 412.447.0129

dcohen@cohenlawgroup.org

www.cohenlawgroup.org

 

Attributes of Governance that Support Sustainability

Submitted by:

Anita Lengvarsky, Director of Programs
Local Government Academy 

 

 

The following outline was created for the 9th Annual Southwestern Pennsylvania Smart Growth Conference entitled "Sustainable Community Essentials" held on May 21, 2009.  Visit http://www.sustainablecommunityessentials.org/ for more information and to provide comment.

Below are seven attributes of governance that support sustainability and resources available from the Local Government Academy to attain them.

 

 

7 Attributes of Governance that Support Sustainability and LGA Resources

1.      Organizational Capacity

 

Newly Elected Officials Course - provides a comprehensive review of the basic duties of municipal officials, taught by experts in their fields.  Offered every other year following the municipal election, it is a one-of-a kind course, unique in Pennsylvania for its scope and content.
Next Scheduled: Opening Day - November 21, 2009

Municipal Intern Program - provides a service to communities by placing students from graduate and undergraduate programs at local colleges and universities in municipalities, authorities and Councils of Governments to complete summer internships.
Next Application Deadline – January 31, 2010  

Pillars of Good Government - for use in evaluating the value and performance of local government services.  The process for establishing the standards engages local governments, the academic community, businesses and nonprofit organizations around 8 "pillars" of good government.  Contact LGA to serve on a Pillars Team

 

2.   Best Management Practices

 

Annual Training Calendar - various best management practice sessions for elected officials and staff in the areas of human resources, public safety, public works, budget and finance, intergovernmental cooperation, ethics, community development, and powers & duties of municipalities and local officials. 
Visit the LGA website to sign up for an e-newsletter to receive program updates.

 

LGA Lyceum – a forum to create dialogue on current local government issues.  Read and comment on local government best management practices.  
www.lgalyceum.org

 

Municipal Intern Program – see above

 

3.    Professionalism

 

Pledge to Excellence - Candidates for local office have an opportunity to demonstrate to voters their commitment to good government and professional development by signing the Pledge to Excellence. The pledge is a commitment to lifelong learning and meeting the requirements of public office through professional and personal development.    Sign the pledge online at www.localgovernmentacademy.org 

 

Local Government Job Network - LGA is often contacted by municipalities and other organizations looking for help in finding individuals with the knowledge and skills relevant to local government.     http://lgjobnet.org

 

Newly Elected Officials Course – see above 

  

4. Intergovernmental Cooperation

 

Multi-Municipal Planning Grant Program - supports the creation and implementation of multi-municipal plans in conformance with the PA Municipalities Planning Code (MPC).  Applicants are eligible for grants up to $8,500 per municipality.  The program is administered by LGA with funds from the Heinz Endowments. 

Next Application Deadline – November 1, 2009

Road to Excellence Conference – Annual conference on intergovernmental cooperation

Next Scheduled: Intergovernmental Cooperation in Public Safety  September 17, 2009    9:00 – 3:00  

 

5.      Civic Engagement

 

Contemplating Governing - is an introduction to serving in local government.  These sessions will help individuals decide if local government service is right for them and encourage responsible campaigning.  This program provides citizens the chance to consider the opportunities, challenges, requirements, and reasons to serve in local elected office. 

Next Scheduled: January 2011  

LGA Lyceum – a forum to create dialogue on current local government issues.    www.lgalyceum.org

 

Newly Elected Officials Course – see info above

 

6.      Attract Investment

 

Annual Training Calendar - of Community Development programs including sessions on topics such as planning, zoning, economic development, reducing blight, stormwater, transportation, and more.

Next Scheduled: Sustainable Community Development Essentials June 4, 2009  9:00 – Noon  

 

Before the Storms: 2009 Stormwater Conference  September 3, 2009  9:00 – 3:00  

7.      Stewardship

 

Annual Training Calendar - of Budget & Finance sessions, as well as programs on Ethics and Accountability

Next Scheduled: Act 32 Earned Income Tax Collection: Is Your School District or Municipality Ready?  June 2009 Multiple Dates & SWPA Locations 

2009 Grant Writing Workshop  June 10, 2009  9:00 – 3:30 

GASB 54 program  Summer Date TBA

 

Technical Assistance is available through the Local Government Academy in all of the above 7 attributes.

Visit www.localgovernmentacademy.org for more information.

 

Anita Lengvarsky
Director of Programs
Local Government Academy
alengvarsky@localgovernmentacademy.org

PA Supreme Court Rules on Permissible Local Land Use Regulation of Natural Gas Well Drilling Activity

 

Submitted by
Blaine A. Lucas, Esquire
Babst Calland Clements & Zomnir
2 Gateway Center
Pittsburgh, PA 15222

412-394-5400

 

On February 19, the Pennsylvania Supreme Court issued two landmark decisions addressing the extent to which the Pennsylvania Oil and Gas Act (the “Act”) preempts, or supersedes, local municipal regulation of gas well drilling activity. Both decisions were unanimous.

 

In Huntley & Huntley v. Borough Council of the Borough of Oakmont, the Supreme Court reversed the Commonwealth Court’s decision that a local ordinance was preempted by the Act. The Supreme Court ruled that a municipality has the power to designate zoning districts where oil and gas wells can be permitted or prohibited.

 

In Range Resources – Appalachia, LLC v. Salem Township, the Supreme Court upheld the invalidation of a township subdivision and land development ordinance that extensively regulated gas well drilling operations in the township, on the basis that the township was attempting to enact its own “comprehensive regulatory scheme relative to oil and gas development within the municipality.”

 

The implications of these two decisions are significant for both the oil and gas industry and Pennsylvania local governments. The most notable impact is that as a result of the decision in Huntley & Huntley oil and gas companies will have to comply with municipal zoning ordinances which (1) require an operator to go through a public hearing and approval process as part of a conditional use or special exception application; or (2) in the most aggressive scenario, prohibit the drilling of wells altogether in designated zoning districts. On the other hand, the Range Resources opinion makes it clear that a municipality cannot adopt a “regulatory apparatus parallel to the one established by the Act and implemented by the Department” of Environmental Protection on matters such as well bonding, drilling permits, site restoration and plugging. Whether there are any other permissible categories of municipal regulation between these two extremes remains open to question.

BCCZ’s Natural Resources Development Group closely tracks state and local regulatory and litigation developments. For more information regarding the cases discussed above or their impact on your business, please contact Blaine A. Lucas at (412) 394-5657 or blucas@bccz.com, Joseph K. Reinhart at (412) 394-5452 or jreinhar@bccz.com or Kevin J. Garber at (412) 394-5404 or kgarber@bccz.com.

 

Copyright 2009* Babst, Calland, Clements and Zomnir, P.C.
Two Gateway Center*Pittsburgh, PA 15222 * 412-394-5400

Where We Are: Status of Implementation of Act 32 Consolidated Earned Income Tax Collection

GOVERNOR’S CENTER FOR LOCAL GOVERNMENT SERVICES RESPONSIBILITIES

 

Submitted by Michael Foreman, Local Government Policy Specialist

Department of Community & Economic Development

Governor's Center for Local Government Services 

 

Act 32 of 2008 amended Act 511 of 1965, the Local Tax Enabling Act which authorized municipalities and school districts to levy a local earned income tax. Act 32 of 2008 establishes the collection and administration of the local earned income tax on a countywide level by establishing 69 tax collection districts of which Allegheny County is divided into four. The Act also sets forth strengthened administrative, accountability and enforcement provisions.

Act 32 identifies the Department of Community and Economic Development (DCED) as the lead State agency through the Governor’s Center for Local Government Services (Center) to work with political subdivisions to provide technical assistance to implement provisions of the law as they transition into the new collection system which is to be fully implemented by January 1, 2012.

 

Following enactment of Act 32 in July 2008 the Center formed an internal Implementation Committee made up of Center management and staff and assisted by the DCED Legal Office to strategize transition and implementation issues and to fulfill the Department’s responsibilities under the Act. The Center is directly engaged in ongoing outreach efforts to communicate information to government officials and the public on transition and implementation provisions. A continuously updated list of frequently asked questions, timetable of key implementation deadlines and other general information on Act 32 is now being maintained on the DCED website (www.newpa.com).

 

Informational sessions are being conducted by Center staff with elected and appointed officials of political subdivisions throughout the Commonwealth. A comprehensive training program is planned for this spring at locations around the Commonwealth.  Responses to inquiries are being provided by Center staff through our toll free number (1-888-223-6837).

 

The Center has established an Earned Income Tax Collection System Advisory Committee made up of stakeholder organizations (i.e., legislative caucus, municipal and school associations, non-profit organizations representing business community) who were involved in the process leading to the enactment of the new law. The Advisory Committee will continue to provide input and feedback to the Center on its various responsibilities concerning phases of transition and implementation efforts over the next few years.

DCED has certain responsibilities to meet under Act 32 as part of the ongoing transition and implementation process. Several are being undertaken simultaneously.

 

The Governor’s Center published a list of each of the 69 tax collection districts on January 28, 2009 in the Pennsylvania Bulletin. This list and an accompanying map are currently available on the DCED website.

 

As called for in the Act, the Center is undertaking a study of existing earned income tax collection best practices with particular attention to current tax bureaus for the purpose of identifying, collecting and comparing those practices, methods, structures, bylaws, budgets, policies/procedures, regulations, software/information technology, forms, codes, agreements, request for proposals, governance alternatives to promote the greatest likelihood of effectiveness, cost efficiency, loss prevention and intergovernmental cooperation.

 

No later than December 31, 2009, the Center is required to provide each tax collection district with a best practices report of the findings and recommendations including sample bylaws, procedures, regulations, forms, agreements, requests for proposals for the selection of tax officers, request for proposals for the procurement of software systems and other appropriate samples.

 

By September 15, 2009 each municipality and school district that currently imposes an earned income tax is to appoint a representative to serve on the tax collection committee. The Committee is to be convened by the Chair of the County Commissioners or County Executive depending on the form of government. The Center will develop a sample template for the first meeting of the tax collection district for county officials to use to facilitate the selection process of the chair, vice-chair and secretary of the tax collection committee which is to occur no later than November 15, 2009.  

The Center is required to calculate and release the weighted vote to each tax collection committee by September 1, 2009. The weighted vote is used for the first meeting. For subsequent meetings the weighted vote is used unless the bylaws provide otherwise.      

 

The Center is responsible for the development of an audit format for the annual audit required each year by a CPA conducted on behalf of the tax collection committee of the tax officer. The audit report is required to include specific elements and is to be filed not only with the tax collection committee but also all of the political subdivisions of the tax collection district by September 1 of each year.

 

The Center is responsible for the development of mandatory training and education for tax officers on an annual basis. The Center is required to adopt regulations, guidelines and procedures to establish the qualifications and requirements a tax officer must meet prior to appointment and must meet for continuing appointment. A tax collection committee may establish additional qualifications and requirements a tax officer must meet prior to being appointed and must meet for continuing appointment.

 

The Center is responsible for prescribing political subdivision and tax collection district codes for use by employers and tax officers.

 

Tax collection committees will have the responsibility of sending notice of the first meeting to the Center by September 15, 2009; notifying the Center of appointment of the tax officer within 10 days of September 15, 2010; and notifying the Center of whether the new tax officer will collect 2011 taxes by December 1, 2010.

 

While there is no specific funding program enacted through Act 32, DCED has agreed to prioritize funding under its Shared Municipal Services Program to assist with start-up costs. GCLGS will continue to provide technical assistance to local officials and the tax collection committees and will be fully engaged throughout the entire transition process.

 

Contact the Center at 1-888-223-6837 for technical assistance. Please check our website www.newpa.com periodically for additional resources and updated information.

 

Act 32 FAQs

 

Act 32 Timetable

 

 

Michael S. Foreman
Local Government Policy Specialist
Department of Community & Economic Development

Governor's Center for Local Government Services

1403A State Office Building
300 Liberty Avenue
Pittsburgh, PA 15222-1210
Phone: (412) 565-5199

Fax: (412) 565-7983
www.newPA.com

 

 

 

 

 

Pennsylvania Supreme Court Upholds Municipalities’ Ability to Appoint UCC Inspector

This post is a follow up to the June 23, 2008 Lyceum article where the Pennsylvania Association of Building Code Officials (PABCO) commissioned and submitted a "Friend of the Court" brief with the State Supreme Court in its consideration of the appeal by North Union Township and K2 Engineering to overturn the Commonwealth Court ruling which reversed the Fayette County Court of Common Pleas ruling in the matter. The Commonwealth Court ruled in the Fayette County case in December 2006 that North Union Township was in violation of the Uniform Construction Code when they hired K2 Engineering as a third party contractor to perform inspections of their new commercial and residential buildings. Read an article from the Pittsburgh Tribune Review on the case.  The Court's ruling has affirmed that PABCO and all other appellants were "correct" in their positions and interpretations of the UCC.

The following summary of this ruling has been submitted by: Robert W. Buddenbohn, Jr.
Executive Officer, Pennsylvania Association of Building Code Officials, Inc.

I can finally answer the one question I am asked most frequently:

YES . . . . THE PENNSYLVANIA SUPREME COURT HAS ISSUED ITS DECISION in the appeal of the Commonwealth Court Decision brought by North Union Township, K2 Engineering, Millcreek Twp, Fairview Twp, Harborcreek Twp and Building Inspection Underwriters.

By a majority of 5 to 1, the Supreme Court has OVERTURNED the Commonwealth Court Decision. 
View a copy of the majority ruling

To summarize what this decision means:

1.    Permit holders, whether they be homeowners, property owners, design professionals or contractors, do not have the authority to "select the inspector of their choice" for performing UCC-regulated inspections (unless an opt-in municipality allows the permit holder to select from among all UCC-certified inspectors).

2.    All opt-in municipalities have the authority and responsibility to determine HOW and BY WHOM the UCC will be administered and enforced within their jurisdictions.  The options that are spelled out in the PA Construction Code Act and UCC regulations remain unchanged. 

Administration and enforcement includes, but is not limited to:  Plan review and approval, permitting, inspections, certificates of occupancy and taking necessary enforcement actions.

In essence, those options are:

    A.    Hire municipal employees

    B.    Retain (contract with) ONE or more Third Party Agencies

    C.    Allow permit holders to select from an approved list of Third Party Agencies

    D.    Allow permit holders to select from any UCC-certified Third Party Agency

    E.    Contracting with another municipality

    F.    Joining in an intergovernmental agreement (may be a COG or may be other form of  
           agreement)

    G.    Any combination of the above

3.    Opt-in municipalities are not required to accept the inspection reports of any UCC-certified inspector unless they choose to do so.

4.    In essence, this ruling restores the "status quo" that existed before the Commonwealth Court Ruling and makes it very clear that the opt-in municipality is intended by the UCC to be solely responsible for determining how and by whom administration and enforcement is to be carried out.

5.    The Court has also made it clear that "conducting inspections" is part and parcel of the administration and enforcement of the UCC and was not intended to be considered a separate issue.  Whoever administers and enforces must have control over the inspection process in order to properly administer and enforce.

PABCO encourages readers to share this with your elected officials, solicitors and others within your municipality, third party agency or company.  This information should be distributed to anyone who has anything to do with the Uniform Construction Code.

Questions or comments can be addressed to:

Robert W. Buddenbohn, Jr.
Executive Officer
Pennsylvania Association of Building Code Officials, Inc.
522 Leese Road
Needmore, PA 17238
717-573-2694
717-573-2700 FAX
814-330-6444 Cell
rbuddenbohn@nfis.com
www.paofficials.com

Reducing the Size of Elected Boards

Submitted by:

Vicki L. Beatty, Esquire

Campbell Durrant Beatty Palombo & Miller, P.C.
555 Grant Street, Suite 310
Pittsburgh, PA 15219

           Questions frequently arise regarding the ability of a municipality to modify the number of elected members of a governing body or the manner in which the governing body is elected.  As with most questions involving local government in Pennsylvania, the answers to these questions are dependent upon the form of government.  It would simply be too easy for there to be a universal answer to these types of questions. 

             Despite the differences in the various codes governing the election of members of governing bodies, there are some overriding considerations. 

             The Municipal Reapportionment Act, 53 Pa.C.S.A. § 904, requires municipalities having a governing body not entirely elected at-large to be reapportioned into districts by the governing body within the year following the completion of the Federal Census.  Under the Act, the districts are to be composed of “compact and contiguous territory as nearly equal in population as practicable.”  If a governing body fails to conduct a reapportionment, one or more electors who are residents of the municipality may petition the Court of Common Pleas and the Court may then reapportion the municipality.  The Act also provides a mechanism for residents of the municipality to contest a reapportionment by filing a petition with the Court of Common Pleas signed by at least ten electors if the reapportionment does not meet the requirements of the Act.  It is certainly possible that the reapportionment process could impact the number of elected officers based on the number of wards resulting from the reapportionment.

             Similarly, the Home Rule Charter and Optional Plans Law, 53 Pa.C.S.A. § 2901, et seq., sets forth a mechanism by which a municipality may change its form of government and thereby also change the number and composition of its elected body.  This is a lengthy and complicated process that is beyond the scope of this article.

             Certain municipal codes contain additional mechanisms for the establishment or alteration of the number of members of the governing body.  These codes will be discussed separately: 

Borough Code

 

The Borough Code contains the most comprehensive guidelines for adjustment of the number of elected officials.  In fact, sorting out the various provisions could require graph paper and a pencil with a good eraser.  Without getting into the nitty gritty of each type of modification, the general standards for the number and election of Borough Council members are as follows:

1.         Boroughs not divided into wards are to have seven members of Council except in Boroughs of less than 3,000 residents, where the number of Council members may be reduced to five or three.  53 P.S. § 45806.  The Borough Code permits a petition to be filed with the Court of Common Pleas signed by at least five percent of the registered electors within a Borough to force the reduction in the number of Council members in this situation.  53 P.S. § 45818.  Note that if a Borough complies with the Municipal Reapportionment Act, there should not be a need for that type of petition. 

2.         Boroughs divided into wards may have up to two Council members per ward, subject to certain exceptions.  53 P.S. § 806.  No Borough is to be divided or re-divided into more than thirteen wards.

The Borough Code then sets forth two mechanisms by which an existing structure can be altered.  The first situation would involve the reduction in the number of Council members per ward.  The second situation would involve actually altering the ward system.

1.         In Boroughs divided into wards where there are more than seven Council members, a petition can be filed with the Court of Common Pleas by five percent or more of the registered electors to decrease the number of Council members per ward.  Under no circumstances can the number of Council members be reduced to less than seven, unless the population has dropped below 3,000.  53 P.S. § 45815.  The Code sets forth the possible reasons for such a petition.  These include seeking a less unwieldy in size, comparability to the size of Boroughs not divided into wards, obtaining an odd number of members of Council, reducing Borough expenses and expedition of the conduct of Council meetings.  Generally these types of petitions would be filed where residents were seeking to reduce the number of Council members from two per ward down to one per ward.  The Borough Code contemplates that at-large seats may need to be created to ensure that the Borough retains at least seven Council members, e.g. where there are less than seven wards, or to obtain an odd number of Council members, e.g. where there are eight wards.  Upon the filing of such a petition, the Court of Common Pleas is to provide notice of the petition through legal advertising and a hearing is to be scheduled.  If the number of Council members is reduced, the current Council members remain in office until the end of their terms. 

2.         The other mechanism set forth in the Borough Code relates to the authority of the Courts to divide Boroughs into wards, to erect new wards out of two or more existing wards, to consolidate two or more wards into one, to divide one ward into two or more, to alter lines or even completely abolish all wards.  53 P.S. § 45601.  Once again, five percent or more of the registered electors for the Borough may petition the Court of Common Pleas to take this type of action.  In addition, Borough Council itself may pass a resolution and initiate a petition with the Court.  If the petition will affect only certain wards, a petition can be filed by five percent of the electors in the wards to be effected.  The Court of Common Pleas then appoints three Commissioners to review the matter and report back to the Court.  The Commissioners must be non-residents and may not own property within the Boroughs.  Once the report is submitted to the Court, the results are advertised and will be adopted by the Court unless exceptions are filed within thirty days.

Under any of the alternatives for reducing the number of Council members, the incumbents would generally stay in office until the end of their term and the Borough Code sets forth a process by which new Council members are elected either by ward or at-large. 

First Class Township Code

 

            The First Class Township Code contains provisions similar to those contained in the Borough Code but not as specific as to the procedure to be utilized to modify the number of elected Commissioners. 

            In Townships not divided into wards, there are to be five at-large Township Commissioners.  53 P.S. § 55505.  In Townships having less than five wards, the number of Commissioners is set at five.  One Commissioner is to be elected from each ward and the remaining number of Commissioners are to be elected at-large.  In Townships having five or more wards, one Commissioner is to be elected from each ward.  53 P.S. § 55504. 

            The First Class Township Code contains provisions similar to the Borough Code with regard to the ability of the Court of Common Pleas to entertain a petition to divide or re-divide a Township into wards, erect wards out of two or more adjoining wards, consolidate wards, divide wards into two or more, alter the lines or boundaries of wards and cause the lines or boundaries or wards to be fixed and established.  No Township may be divided into more than fifteen wards.  53 P.S. § 55401.  In addition, no ward can be created which contains less than three hundred registered electors.  The appellate courts have recognized that the First Class Township Code allows the Court of Common Pleas to abolish all wards and require all Commissioners to be elected at-large under a theory that elimination of all wards is actually creation of one ward with all Commissioners to be elected from that ward. 

            The First Class Township Code originally contained language requiring a petition signed by at least one hundred property owners and residents of the Township to initiate a change in the ward structure.  The Court was then to appoint a three member commission to review the petition and make a recommendation to the Court.  53 P.S. § 55402.  This section of the First Class Township Code was repealed in 1978.  Since then, the appellate courts have not had an opportunity to determine whether there is any minimum number of signatures required for this type of petition.  In addition, the remaining sections of the First Class Township Code still refer to the report of the commission being made to the Court of Common Pleas, being subject to exceptions and the Court either confirming or rejecting the report.  The vast majority of litigation involving First Class Townships since 1978 have involved the Municipal Reapportionment Act and not this provision contained in the First Class Township Code. 

Second Class Township Code

 

            The Second Class Township Code is much different than the Borough Code or the First Class Township Code with regard to modifications to the number of elected supervisors.  The Second Class Township Code sets three supervisors as the minimum number to be elected.  53 P.S. § 65402.  The number of elected supervisors can be raised to five if a petition is filed by at least five percent of the electors of the Township or the Board of Supervisors adopts a resolution requesting that the question be placed on the ballot at the next municipal or general election.  If the question is approved by a majority of the electors, the additional supervisors are to be elected at the next municipal election.  The question of additional supervisors to be voted on cannot be placed on the ballot more than once in any three year period. 

            The same process can be utilized to reduce the number of supervisors from five to three.  In that case, the question cannot be voted on more than once in any five year period.  If there is reduction of the number of supervisors to three, the terms of all of the officers of the five member Board cease on the first Monday of January after the next municipal election.  The three vacancies are voted on at the next municipal election and the three candidates receiving the highest number of votes are to be elected. 

 There are certain overriding considerations to keep in mind when discussions regarding changing the number of elected officials arise.  First of all, municipalities in Pennsylvania only have the authority to take such actions which have been specifically granted by the legislature.  For this reason, unless your municipality is Home Rule or Optional Charter, you will need to refer to the applicable Code to determine how this change can be made.  None of the Codes permit an elected body to modify the number of its members unilaterally, outside of the reapportionment process.  Either the courts must be involved or the matter must be voted by the residents in Township of the Second Class. 

 There is no process for an “advisory” referendum on this type of issue.  Under Pennsylvania law, questions may be place on a ballot for only designated reasons.  Other than the process outlined above for Townships of the Second Class, this is generally not a ballot issue. 

 Other than the legal processes described, there are many factors impacting the size of an elected board.  It is safe to say that there is no one-size-fits-all solution as recognized by the Codes. 

Is Your Personnel System Delivering Value?

Personnel costs make up the major portion of local government budgets.  The money should be well spent.  Taxpayers should get the services that they expect and employees should be compensated appropriately for the services that they provide.  The challenge for local government officials is making sure that this happens.  To make it happen, a local government needs up-to-date job descriptions, a classification system that groups similar positions, and a pay plan that sets the pay range for each classification.

Unfortunately effective management of human resources in local government does not always happen.  When things are running well, it is easy ignore the fact that the job descriptions do not reflect the work being done, and that the classification system and pay plan have little to do with actual employee pay.  When things are not running well, there are always more important issues than reviewing the personnel system.

Now is always a good time to start the process of reviewing the personnel system.  The review can be taken in steps and spread out over months.  The first steps are to up-date job descriptions and create new ones where they do not exist.  It is usually best to have one person do the final drafting so that similar duties are consistently described across all of the job descriptions.  This makes the next step, creating a classification that groups similar positions, much easier.

The last step, creating a pay plan, should be based on both a review of current pay and a survey of what other employers pay for similar positions.  The goal should be to provide internal consistency, making sure that positions with similar responsibilities are in the same pay range, and to provide external competitiveness, making sure that positions are paid consistent with labor market if the pay system is intended to assist in attracting a high quality workforce.

Getting information to determine that external competitiveness can be difficult, but there are a number of resources that local governments can use.  The Federal Bureau of Labor Statistics publishes both private and public compensation data on its Website.  Local government associations also collect and publish compensation information.  For example, the Allegheny League of Municipalities has surveyed local governments on compensation and benefits, and provides a report to the municipalities that participated in the survey.  Other sources include the International City/County Managers Association, Pa State Association of Boroughs, and the PA State Association of Township Supervisors.  Additionally, interns available from the LGA Municipal Internship program have assisted municipalities in data collection, usually as part of a larger project. 

Finding the time to go through a review of your job descriptions and pay system can be difficult and many local governments look elsewhere for help.  The Local Government Academy provides many training programs on personnel matters and, through its Technical Assistance Program, has assisted local governments with reviews of their personnel systems.  Additionally, a number of private sector consulting firms provide assistance in developing compensation plans.  Professional organizations, such as the Society for Human Resource Management can provide contact information for such.

Effectively managing your municipality’s human resources is important to assure maximum taxpayer value through higher productivity, improved morale, and reduced legal costs.  If you have knowledge and/or experience in public sector human resource management, or are a local official concerned about this important topic, consider participating in LGA’s “Pillars of Good Government” project.  As a member of the topic team on Public Human Resource Management, you will be part of an ongoing discussion and defining of excellence in local government.

Our thanks to Dr. Michael Weir, LGA Consultant who has performed a number of job analysis and compensation reviews, for contributing to this article. 

Market Outlook for Government Investors, October 2008

 
Submitted by Tamara Dzeskewicz (dzeskewiczt@pfm.com) and John Molloy, CFA, (molloyj@pfm.com), Senior Marketing Representatives, Pennsylvania Local Government Investment Trust, 800-388-4736

 

The recent upheaval that has swept the financial system leaves in its wake a radically altered investment landscape. The latest wave of financial market realignment began on September 7th when Fannie Mae and Freddie Mac were placed into a conservatorship under the Federal Housing Finance Agency. This action secured bondholders, however shareholders’ stock values fell below $1. Further upheaval followed with a flurry of bank closings, hurried mergers, and stopgap government bailouts.

A predictable flight-to-quality ensued as investors fled to the safety of U.S. Treasuries, driving their prices up and yields to new lows. While this rally will subside when normalcy returns to the markets—be it in a month or a year—other effects of the cataclysm will remain.

The Government Sponsored Enterprise (GSE) bailout, for example, challenges two conditions—ample supply and near risk-free appearance—that have made Federal Agency debt a mainstay in many short-term, fixed-income portfolios.

                If the GSEs are privatized, investing in Fannie Mae and Freddie Mac debt may remain an option only for those permitted to invest in corporate securities. In the public sector, will this lead to increased pressure on legislative bodies to expand the scope of permitted investments? If so, then additional investors may be thrust into the world of corporate credit. This could be complicated further if the privatized GSEs fail to keep their AAA rating. It is generally accepted that without some sort of government backing, the GSEs would not have maintained this top rating in recent years.

For those who invest in anything but Treasuries and Federal guaranteed debt, in-depth credit analysis will become more critical. Credit ratings alone have proven unreliable guides to credit quality as rating agencies appear to have mischaracterized the risks of a great number of investments. Over the past year, 16 AAA-rated issuers in the Merrill Lynch 1-10 Year Corporate Master Index were downgraded to AA or A. An additional 136 issuers previously rated A or BBB fell below investment grade. Downgrades are usually accompanied by an erosion of market value as investors demand higher yields for holding lower credit bonds and in some cases are followed by defaults, which produce real losses.

GSE debt could also go from plentiful to scarce. The Fannie Mae and Freddie Mac conservatorship stipulates that beginning in 2010, each must reduce its portfolio from $750-$800 billion to $250 billion at a rate of 10% per year. A reduction in Federal Agency debt supply could result in a diminished yield advantage over U.S. Treasuries.

If the GSEs become truly private corporations and/or if their debt issuance shrinks substantially, risk-averse investors may be pushed into the U.S. Treasury market. U.S. Treasury securities, however, typically produce the lowest returns of any fixed-income investment. The recent flight-to-quality pushed short-term U.S. Treasury yields to near 0.00% in September. While this is an anomaly, 3-month Treasury Bills yielded 0.26% less than 3-month Federal Agency discount notes over the past 10 years. This translates to $650,000 less earnings on a $25 million portfolio. Investors limited to the U.S. Treasury market will face additional challenges in seeking a reasonable rate of return.

                Meanwhile, the market upheaval has also resulted in a reworking of the broker/dealer and banking landscape. The top 5 U.S. broker/dealers of a year ago are now gone, continuing the trend of consolidation and globalization of the U.S. securities markets. The number of primary dealers (broker/dealers and banks that trade U.S. Government securities directly with the Federal Reserve Bank of New York) has shrunk from 31 to 16 over the past 10 years. Today, only 6 are domestic, versus 17 in 1999. In fact, in 2007, 9 of the top 20 underwriters of U.S. corporate and GSE debt were non-U.S. broker/dealers.

With fewer primary dealers, there is bound to be less competition among trading desks. This may lead not only to less attractive quotes and increase the importance of competitive security shopping, but small money managers and in-house finance teams may see the service level they receive from remaining banks and brokerage firms significantly reduced.

Similarly, consolidation of commercial banks into a small number of super-banks is likely to bring about changes in the relationship between investors and their local bank. In this new era, the largest three or four banks will control 30% to 40% of all deposits, giving them enormous power to set prices for services and diminishing their need to raise deposits in the local market. The small local/regional banks will find it increasingly difficult to remain independent as benefits from economies of scale encourage further consolidation.

 

OUTLOOK

With unprecedented worldwide government intervention in the financial markets, the outlook is partially clouded. Each action was initiated to restore stability, but that goal has been elusive to date. In the interim, risk-averse investors have preferred U.S. Treasury securities. We continue to view GSE debt, with its explicit Federal commitment of support, to be appropriate as well.

Corporate and bank obligations should be treated with the utmost caution because the full extent of the economic downturn and the interrelationships among banks and corporate borrowers is not yet fully known.

An investment approach involving discipline, rigorous credit and counterparty analysis, and prudent risk management, will be all the more critical in navigating these difficult and uncharted investment waters.

 

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