Deferred compensation plan in Lower Merion questioned

Speaking through several murmured requests by Commissioner Paul McElhaney to stop, Commissioner Jenny Brown went on.

Brown, who did not know about Lower Merion Township's deferred compensation plan until about three weeks ago, said after doing research, she took major issue with two things, one being transparency and the other being how the plan is implemented and funded.

"I am calling for this evening an immediate suspension of township employer contributions to this plan until such time as this matter has been thoroughly investigated," Brown said. "I am also calling for the board to appoint an independent counsel to review this because I do not think the township manager and solicitor can do so. It's a conflict of interest."

Though the board took no immediate action, the discussion may reappear on the agenda in the coming weeks.

Throughout 2012, the township will spend about $302,000 contributing to 40 management-level employees' deferred compensation plans. Each employee receives 7 percent of their salary and longevity bonus combined with the exception of the township manager, who receives 8 percent, and the township secretary, who receives 10 percent. Though an employee may defer parts of his or her own salary as well, it is not a requirement.

"This is not a matching program," Brown said at Wednesday's finance committee meeting. "The township contributes 7 percent regardless of whether the employee does."

Brown continued to present a series of her own findings about the township's deferred compensation plan, which the Board of Commissioners approved in 1974. Jim McAneny, who is the executive director of the Pennsylvania Employee Retirement Commission, informed Brown township contributions to deferred compensation funds are illegal, which a 2006 ruling in Schuylkill Haven Borough v. Schuylkill Haven Police Officers Association brought to light.

In an interview today, McAneny said municipalities are allowed to have deferred compensation plans for employees, but it is only for the employee to contribute to. All state government employees can participate in a deferred compensation plan, but the state makes no contribution, which is the policy for non-management employees in Lower Merion.

"There's nothing that allows the spending of taxpayer money to a deferred compensation plan," McAneny said. "If they want to give everyone a pay raise though, they can."

McAneny's commission enforces funding of state pension plans, and he said he's not aware of any government agency that goes out and enforces municipal codes.

"I think there may be an issue here, but I'm not going to be the one to investigate it," McAneny said.

At the board meeting, Brown also pointed out that while the proposed 2012 budget mentioned deferred compensation under the term retirement on page 321, there was an additional line on a copy of the budget posted online.

Chief Financial Officer Dean Dortone later clarified that the extra sentence added to clearly define the township's contribution to deferred compensation was put in when the township printed the final version of the 2012 budget.

"What Doug and I had discussed as we were going through the process of getting the adopted budget finalized and to the printer that we should put more information in," Dortone said. "We talked about editing two sections in there that would be completely appropriate for disclosing what the deferred compensation plan is."

Though the meeting went on to address other committees' agenda items Commissioners Lewis Gould and Jane Dellheim left.

During her time at the meeting, Dellheim called Brown's statements "the latest slam against the township."

"This is a disgrace," she said.

Gould, who voiced strong support for Brown's call for an independent legal counsel to investigate the matter, said he too has been diligently trying to seek information about deferred compensation.

"If I want to know anything about what's going on here, it's up to me to figure it out myself," he said. "We cannot rely on anything else but our due diligence and our own homework."

Later apologizing to the public for the nights' turn of events, President of the Board Liz Rogan reiterated that she, the township staff and the rest of the board needed time to do their own research.

"You haven't given staff any time to get any information," Rogan said to Brown at the meeting. "The public wouldn't be given information whether it is correct or not correct but some good information that was full of things rather than what your research has shown."