Opinion
Argued September 8, 1975
November 7, 1975.
Policemen and firemen — Labor contract — Arbitration award — Act of 1968, June 24, P.L. 237 — Interference with inherent managerial rights — Act of 1956, May 29, P.L. (1955) 1804 — Pension fund — Reduction of retirement age — Actuarial study — Contribution rate.
1. Provisions of an award of arbitrators rendered under provisions of the Act of 1968, June 24, P.L. 237, do not improperly interfere with inherent managerial rights when they prohibit a municipal employer from using shift assignments for disciplinary purposes or from considering suspensions on a policeman's record which are more than five years old when passing on promotions or length of subsequent suspensions and when they require overtime opportunities to be offered on a seniority basis and provide that all present terms of employment remain in effect which are not modified by the award. [542]
2. Under the Act of 1956, May 29, P.L. (1955) 1804, a reduction in retirement eligibility of policemen to an age below fifty-five cannot be effectuated unless a proper actuarial study of costs affirms the feasibility of such a reduction. [543-4]
3. It is not violative of provisions of the Act of 1956, May 29, P.L. (1955) 1804, to limit the contribution of policemen to the Police Pension Fund to a maximum of 6% of wages without a confirmatory acuarial study. [544]
President Judge BOWMAN filed a concurring and dissenting opinion in which Judge MENCER joined, which was substantially as follows:
1. A reduction in retirement age eligibility and a change in contribution rates of participants can affect the actuarial soundness of a pension plan, and such changes should be made only after an actuarial study confirms the feasibility of such changes. [544-5]
Argued September 8, 1975, before President Judge BOWMAN and Judges CRUMLISH, JR., KRAMER, WILKINSON, JR., MENCER, ROGERS and BLATT.
Appeal, No. 99 Misc. Docket, from an award of a Board of Arbitration in case of In The Matter of the Arbitration between Ross Township, Pennsylvania, and Ross Township Police, No. 55-39-0009-75.
Labor negotiations conducted between public employer and policemen. Arbitrators appointed. Award rendered by arbitrators. Public employer appealed to the Commonwealth Court of Pennsylvania. Held: Award modified.
Edward H. Feege, with him Hayes and Feege., P.C., for appellant.
Dina G. McIntyre, with her McIntyre McIntyre, for appellee.
This is an appeal from certain provisions of the award of a board of arbitration made under the provisions of the Act of June 24, 1968, P. L. 237, Section 1, as amended, 43 P. S. § 217.1, et seq. Appellant appeals from specific provisions in the award which will be considered specifically.
I
Interference with Inherent Managerial Rights
The 4 specific provisions objected to on this basis, in substance, provide:
(a) Shift assignments shall not under any circumstances be made for disciplinary or punitive purposes.
(b) All general overtime details shall be made available to all Policemen on a seniority basis.
(c) Any suspension noted on a Policeman's service record that is more than five years old shall in no way be considered for determining eligibility for promotion or the length of future suspensions.
(d) All benefits and terms and conditions of employment not modified by this Award are to remain in effect.
The recent decision of the Supreme Court of Pennsylvania in Pennsylvania Labor Relations Board v. State College Area School District, ___ Pa. ___, 337 A.2d 262 (1975), while dealing specifically with the Public Employe Relations Act, Act of July 23, 1970, P. L. 563, as amended, 43 P. S. § 1101.101, et seq, sets forth the guidelines which we must follow in resolving these questions. We need not restate these guidelines here. Applying them, we conclude that these provisions do not constitute an impermissible intrusion into the inherent managerial rights of appellant. One which gives us the most problem is (c). Certainly the balance to which Justice NIX referred in State College Area School District would be tipped in favor of it being an unwarranted intrusion on the inherent rights of management if it precluded any consideration of any past suspension in determining eligibility for promotion. When the exclusion relates only to suspensions over five years old, the balance tips the other way.
II Pension Benefits
The arbitration award reduced the retirement age from 55 to 50 and under certain circumstances made it possible to force retirement after age 50. As clearly set forth in Section 3 of the Act of May 29, 1956, P. L. (1955) 1804, as amended, 53 P. S. § 769, and as discussed in Cheltenham Township v. Cheltenham Police Department, 8 Pa. Commw. 360, 301 A.2d 430 (1973), a reduction in retirement eligibility below 55 may only be made if an actuarial study of the cost shows that such reduction in age is feasible. It is clear that no such study was made in this instance which took into account the changes in cost relating to wage increases and other matters which were effectuated by this arbitration award. An actuarial study was made but, at best, it included only a wage increase of 8%, whereas this award gives a wage increase of in excess of 10%. Therefore, those parts of paragraph 6 (a) of the award relating to the reduction of age of eligibility for retirement below 55 must be set aside. The rights of a widow of a police officer to retirement benefits as set forth in paragraph 6 of the award have not been challenged.
III Pension Contributions
Paragraph 6(b) of the award provides:
"Policemen shall contribute, annually, no more than 6% of wages to the Police Pension Fund for the term of this award."
This has been challenged as being violative of Section 6 of the Act of May 29, 1956, P. L. (1955) 1804, as amended, 53 P. S. § 772, which inter alia, fixes the minimum contribution to be 5% and the maximum 8%. Appellant argues that the arbitration award could not fix 6% without an actuarial study to support it. Suffice it to say that the law makes it a statutory requirement to have an actuarial study with regard to payments into the fund by members only when reducing such payments below 5% or eliminating them.
Accordingly, we enter the following
ORDER
NOW, November 7, 1975, the award of the Board of Arbitration is modified to exclude those parts of paragraph 6 which reduce the age of retirement to 50 years of age.
It is not clear from the record whether paragraph 6 of the disputed arbitration award, which limits the members' contribution rate to a maximum of 6%, constitutes an increase, decrease or simply a continuation of the preexisting rate. In any event, it is my opinion that this provision of the award must also be set aside incident to our setting aside the reduced retirement age for want of an actuarial study as to its feasibility. The actuarial soundness of a police pension plan incident to possible reduction of retirement age eligibility may very well depend upon projected contribution rates at different percentages. These two major components of actuarial study and projection are so essential, one to the other, that I would set aside paragraph 6 of the arbitration award in its entirety.
Judge MENCER joins in this concurring and dissenting opinion.