Borough OK'd pension rate
To the editor: I feel compelled to respond to what appears to be a malicious personal attack on me and two of my former co-workers Manager Joseph Bass and Treasurer Marian Muldowney by Borough Council President Tony Matulewicz that appeared in The News-Item on June 23.
It seems apparent to me that Mr. Matulewicz is attempting to shift the blame of the current pension crisis from the borough council to the three of us. I will attempt to address all the issues raised and set the record straight on behalf of myself and the others.
With regards to the Department of Labor investigation and the subsequent Fair Labor Standards Act violation: The finding against the borough in January 2004 was a direct result of a written complaint I filed with the agency. The investigation was with regards to 1,223.50 hours of accumulated overtime ("comp" time) pay that I had earned from January 1993 through January 2004. The resulting audit revealed that the borough was in violation of the act. The borough agreed with the finding and, in order to be in compliance, the borough reduced my comp time hours to the 480-hour legal limit and paid me the audited difference less any overtime I earned while I was serving as acting chief of police, which amounted to $11,518.74.
In response to my workers' compensation injury, which resulted in me being off duty from Sept. 11, 2004, through Oct. 17, 2005: The injury I received from an on-duty fall was covered under the guidelines of the Pennsylvania Heart and Lung Act, which mandates that a police officer injured in the line of duty will receive 100 percent of his salary and earn all benefits without penalty. The borough complied with the guidelines with one exception: it deducted sick time hours from my sick time account. Once I turned over my workers' compensation insurance payment check to the borough, the borough then credited the sick time back to my account.
In December 2010, Northumberland County Judge Charles Saylor ruled against the borough in a civil action I brought for unlawfully reducing my monthly pension benefit and demanding that I repay $8,600 in what the borough falsely claimed was a pension overpayment made to me between November 2005 through May 2008. After a trial held on Oct. 28, 2010, before Judge Saylor, the ruling was that the borough had no grounds to reduce my pension or order the repayment of funds. The borough did not appeal the ruling of the court and complied with the court order by restoring my monthly pension benefit with applicable cost of living increases. The borough also was required to pay me $4,889.63 in lost pension payments that I would have been earned from May 2008 through December 2010.
To clarify the salary comparison in the article: In 2005, after 30 years with the department, I was paid $24.60 per hour or the annual equivalent of $51,168 compared to Chief Brian Shurocks 19.5 years and $54,912.60 and Chief Todd Owens 21 years and $53,768.00 annual salary.
With regards to my earnings that were used in the calculation of my monthly pension benefit, here is a breakdown of my total compensation from Nov. 1, 2002, through Oct. 30, 2005. This represents my last 36 months of employment, which was used in determining my monthly pension benefit.
2002: $10,269.87 salary, plus $ 2,292.48 health care premium = $12,562.35 (2-month total for 2002).
2003: $48,421.05 salary, plus $10,791.58 health care premium = $59,212.63 (12-month total for 2003).
2004: $54,322.88 salary, plus $13,119.08 health care premium, plus $11,518.74 (comp time payment) = $78,960.70 (12-month total for 2004).
2005: $42,642.98 salary, plus $11,792.40 health care premium, plus $22,071.74 (severance payment) = $76,507.12 (10-month total for 2005).
If Mr. Matulewicz would have continued his investigation going back to 1999, he would have discovered that the borough used the same formula for the calculation of the previous chief and added the health care premium to his gross earnings and then deducted that same amount from his pay. He also was paid a severance payment, which included comp time, vacation, personal and any unused holiday time, all of which were used in calculating his final monthly pension benefit. In fact most if not all of the five additional police officers who retired during the 1990s had their health care premiums added to their gross earning, which was included in their pension calculations and figured into their final monthly pension benefit.
The health care premium add-on was offered to the police officers by borough council beginning around 1989. By offering the addition of the health care premium to the officers' gross earnings, the result was a higher retirement benefit for the officer, with any additional costs of the higher pension being funded by the pension plan, not the borough's general fund. The end result was the replacing of the higher paid officers with new hires at substantially lower salaries and benefit rates, resulting in a savings of thousands and later tens of thousands of tax payer dollars annually.
The police pension fund is governed by state law (Act 600), borough ordinances and the terms of the police collective bargaining agreement. Borough council is the actual owner of the pension fund and is the sole authority for its operation. Borough council makes all the appointments to the police pension board, including the police representative. The pension fund is independently audited by the state Auditor General's office, which reports its findings and recommendations to the mayor and borough council for review and acceptance.
In order for a police officer to retire and receive his pension, the officer must submit his resignation and pension request notice to the borough manager. The borough council then receives a detailed report generated by the borough actuary outlining the officer's last 36 months of earnings, pension calculations and the monthly pension benefit. If borough council is satisfied with the actuary report, then, by majority vote, it can either accept or reject the resignation and pension benefit. With my retirement, borough council accepted both my resignation and authorized my monthly pension benefit.
There are many factors which caused such a great unfunded liability: 1. The economic downturn, 2. higher wages, 3. retirees living longer, 4. early retirement of Chief Shurock, 5. disability retirement of Officer Ken Sikora, 6. the early retirement benefit of 20 years of service with no age requirement, 7. the reduction of the retirement from age 55 to age 50, 8. the failure of borough council and the police officers to contribute to the fund from the mid 1980s through the end of 2004.
Borough council and the police can take two immediate steps to significantly reduce the unfunded liability: 1. Eliminate the 20-year early retirement with no age restriction, 2. return the retirement age to 55.
In closing, I feel Mr. Matulewicz was totally out of line with his false accusations and assumptions. There was absolutely no fraud, corruption, conspiracy or any illegal activity with regards to my pension, salary, benefits or anything involved with my employment with the borough by myself, Mr. Bass or Marian Muldowney. I believe the information I have provided fully supports this position.
Blaine R. Handerhan