AT a February 18, 1992 special meeting, the members of the Borough Council present were: Mayor Adams, Councilmen Herner, Russo-Alesi, Tully, Bruton, and Clark. Councilman Malick was absent, as was Borough Attorney Blasi. Borough Administrator/Deputy Clerk Horner was present, as was Borough Clerk Claire Barrett
At the beginning of the meeting, a closed session was held. From the minutes, here is the account of that meeting:
“Council returned after ten minutes and Mayor Adams explained for the record that proposals for a retirement package after 25 years service for an employee were discussed. The employee would retire with a vested pension and one consideration was the payment to him for his “sick day bank” which is provided for in the Borough Code. The Attorney will finalize an agreement to be offered to the employee for signing within five days, which will include a provision that the Borough will continue to provide the employee and family with the full health care coverage paid for by the Borough until he attains sixty-five (65) years of age. Council believes that the retirement agreement will save budget money in future years as the employee will not be specifically replaced, at least in the near future. No formal actions or votes were required or taken in the closed session.”
This was not an uncommon retirement package. When Public Works Superintendent Frank Walton retired in 1987 after 33 years of service, the resolution granting his retirement package read:
Resolution #42 Resolution Accepting Retirement of Superintendent of Public Works Department and Outlining Benefits to be Given
RESOLVING that Frank Walton be permitted to retire and, in consideration of granting such permission, that he be given the following benefits: 1) that he will be entitled to any retroactive pay increase from January 1, 1987 to his final day of retirement.; 2) that he will be entitled to cash payment, upon retirement, of his accumulated sick leave credits in the amount of fifth (50%) per cent of his unused accumulated sick leave as recorded, based on his rate of pay on his effective retirement date; 3) that he shall be entitled to Blue Cross and Blue Shield, Major Medical, Rider 3 benefits and dental plan benefits, all family coverage, from his effective date of retirement until he shall have attained the age of sixty years and on his attainment of sixty years of age, the Blue Cross and Blue Shield, Major Medical and Ride J benefits, all family coverage, shall also be continued up to his sixty-fifth year of age, as per the medical benefits code now in effect; and further resolving that his final retirement date will be determined consistent with the most benefit to him and according to PERS dictates and is expected to be on or about the date of July 1, 1987.
The roll call vote to accept this retirement package was: AYES: Bruton, Tully, Tisch, Whitworth, Herner, Malick. NAYS: None.
So, granting full paid health benefits to an employee retiring prior to age 65 appears to have been the standard proceedure, and may have save money as the Borough would not have spent as much on benefits as on salaries.
However, what happened if the retiree got both?
After the discussion of February 18, 1992, at the February 24, 1992 regular meeting of the Council, it is announced that the police chief will be retiring. On a motion by Tully/Russo-Alesi, the mayor is authorized to sign an agreement. According to the meeting minutes:
“The agreement will provide the full health benefit package … for 15 years until he becomes 65 years of age, and also includes a 1992 salary increase of 15%.”
The minutes went on to note that the Chief would “also be entitled to a 50% payout of his accumulated sick leave bank.”
All council members voted “aye.”
The full health benefits granted in 1992 for 15 years means that taxpayers paid for these until 2007.
Since the pension payment is calculated on the best 3 years that someone worked, and the raises in 1990 and 1991 were 8%, the retiree’s final pension was based on: an 8% raise in 1990 plus a 9% longevity raise; an 8% raise in 1991 plus a 9% longevity raise; a 15% raise in 1992 plus a 9% longevity raise.
This equals a 58% salary increase over 3 years.