Appeal from the Order of the Commonwealth Court at No. 1581 C.D. 2004 dated July 19, 2007 reversing and remanding the Order of the Union County Court of Common Pleas, Civil Division, at No. 04-0007 dated June 30, 2004 929 A.2d 671 (2007).
The opinion of the court was delivered by: Mr. Justice Baer
CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, GREENSPAN, JJ.
We granted allowance of appeal to determine whether a township's challenge to a board of supervisors' authority to enact an ordinance is procedurally time barred, and, if it is not, whether the board of supervisors of a second class township is authorized by the Second Class Township Code to provide post-retirement medical insurance, supplemental to Medicare, to supervisors who are also employees and who have been employed by the township for a minimum of twenty years. As to the first question, we conclude that the Commonwealth Court properly held that the township's challenge is not procedurally time-barred. Regarding the second question, we conclude that the board of supervisors has the authority to provide auditor-approved, post-retirement medical insurance to its supervisor- employees with twenty years of service, and, thus, respectfully reverse the Commonwealth Court.*fn1
White Deer Township (Township) is a municipality organized under the provisions of the Second Class Township Code (Township Code), Act of May 1, 1933, P.L. 103 (as amended 53 P.S. § 65101-68701). Appellant Charles Napp was a Township supervisor from January 1, 1965 through December 30, 1997, and an employee of the Township from January 2, 1968 through December 30, 1997. Appellant Leonard Caris served as a Township supervisor from January 1, 1965 through December 30, 1997, and was employed by the Township from January 1, 1969 through December 30, 1999.*fn2 Carl Hartranft (deceased) served as a Township supervisor from January 3, 1978 through June 10, 1998, and was employed by the Township from January 3, 1978 through June 10, 1998. Appellant Donald Bird was employed by the Township from 1985 through 2000.*fn3
Appellants Helen Napp, Doris Caris, and Charlotte Hartranft are the spouses of these former Township supervisor-employees.
On December 18, 1997, the Township supervisor-employees, consisting of Appellants Napp and Caris, as well as Hartranft, enacted Ordinance No. 4-97 (Ordinance), which established that the Township would provide medical insurance supplemental to that available under the Medicare program for all retired employees of the Township who had been employed by the Township for at least twenty years.*fn4 The supervisors had all been employees of the Township for twenty years when they enacted the Ordinance (with the exception of Hartranft, who reached his twenty years of service two weeks later, on January 3, 1998).
The Township Code provides that "[t]ownships shall be governed and supervised by boards of supervisors. Boards of supervisors shall consist of three members or, if approved by the electors under section 402(b), five members." 53 P.S. § 65601. The board of supervisors has the authority to provide insurance for its employees and supervisors pursuant to Section 1512(d) of the Township Code, which provides, in relevant part: "The board of supervisors may contract with any insurance company . . . to insure its supervisors under section 606, employes and their dependents under a policy or policies of group insurance covering life, health, hospitalization, medical service or accident insurance." 53 P.S. § 66512(d). Section 606 provides for the provision of compensation to supervisors, specifically including those holding the dual roles of supervisor and employee, like Napp, Caris, and Hartranft, as follows:
§ 65606. Compensation of supervisors
(a) Supervisors may receive as compensation an amount established by ordinance . . . . Salaries are payable monthly or quarterly for the duties imposed by this act. . . The compensation of supervisors, when employed . . . in any employe capacity . . . shall be determined by the board of auditors, at an hourly, daily, . . . or monthly basis, which shall be comparable to compensation paid in the locality for similar services. . . .
(b) Any benefit provided to or for the benefit of a supervisor employed by the township in any employe capacity under this act in the form of inclusion in a pension plan paid for in whole or in part by the township is compensation within the meaning of this act to the extent that benefit is paid for by the township and is determined by the board of auditors . . . .
(c) In addition to the compensation authorized under this section, supervisors while in office or while in the employ of the township may be eligible for inclusion in township-paid insurance plans. . . .
Following the retirement of Appellant supervisor-employees, the new board of supervisors concluded that Appellants lacked the legal authority to enact the Ordinance, and that the new board of supervisors could properly repeal it. On January 6, 2004, the Township filed a declaratory judgment action asserting that Appellants represent all individuals who receive benefits under the Ordinance. The Township first sought a determination that there is no authority in the Township Code to support the provision of insurance benefits to retired employees generally, and then asserted alternatively that the provision of post-retirement medical insurance benefits to retired supervisors and their families in particular violated specific prohibitions of Section 606 of the Township Code.*fn5
Finally, the Township argued that it was able legally to repeal the Ordinance providing such benefits to its retired supervisor-employees and their families. Appellants filed a preliminary objection in the nature of a demurrer challenging the legal sufficiency of the complaint, alleging that the Township supervisors did, in fact, have authority to enact the Ordinance and that the Township could not terminate their or their families' benefits.
The trial court sustained Appellants' preliminary objection and dismissed the Township's complaint. See White Deer Twp. v. Napp, No. 04-0007, slip op. at 3 (C.P. Union June 30, 2004). Although not raised by either party, the trial court, in a footnote, questioned whether the Township was precluded from challenging the validity of the Ordinance because more than thirty days had passed since the Ordinance was adopted. See 42 Pa.C.S. § 5571(c)(5) (deleted 2008) (prescribing that "questions relating to an alleged defect in the process of enactment or adoption of any ordinance . . . shall be raised by appeal or challenge commenced within 30 days after the intended effective date of the ordinance . . . ."); Borough of Nanty Glo v. Fatula, 826 A.2d 58 (Pa. Cmwlth. 2003) (holding that a municipality could not challenge the validity of the enactment of ordinances relating to pension benefits for retired police officers insofar as more than thirty days had passed since the ordinances had been enacted). Nevertheless, the trial court addressed the merits.
On the merits, to dispense with the Township's argument that the Township Code did not authorize the benefits at issue, the trial court relied on Summers v. Com., State Ethics Comm'n, 563 A.2d 1295 (Pa.Cmwlth. 1989), where supervisor-employees voted in their supervisor capacities to provide group life insurance to all municipal employees (including themselves) while employed. The Summers court held that under the former version of Section 606(c)(1), auditor approval was not required for this type of benefit because the supervisors received the same benefits available to all employees and had not discriminated in favor of themselves.*fn6 Summers, 563 A.2d at 1296. The trial court read Summers as generally supporting the participation by supervisor-employees in health insurance plans without auditor approval, without recognizing a distinction between benefits received while employed and post-employment retirement benefits.
Addressing the Township's alternative argument, the trial court relied on Newport Township v. Margalis, 532 A.2d 1263, 1265-66 (Pa. Cmwlth. 1987) to conclude that the Township could not repeal the Ordinance and eliminate the benefits provided thereunder. In Newport Township, a first class township provided its employees post-retirement health insurance, and then sought to revoke that benefit. The Commonwealth Court held that an employee who has complied with all conditions necessary to receive a retirement allowance cannot be adversely affected by subsequent legislation that changes the terms of the retirement contract. Id. at 1265. In reaching this conclusion, the Commonwealth Court noted that retirement benefits are deferred compensation resulting from an employee's labor, which cannot be abolished or reduced after the employee has entered into the retirement system. Id. In accord with Newport Township, the trial court in the instant case held that the post-retirement medical insurance was deferred compensation for the supervisor-employees that the Township could not reduce or abolish after those supervisor- employees retired. Thus, the trial court held that the Ordinance was valid and could not be repealed by the new board of supervisors.
The Township appealed to the Commonwealth Court, and pursued only the arguments related to the status of Napp, Caris, and Hartranft as supervisors, but did not further advance the position that the Township lacked authority to provide post-retirement medical insurance benefits to retired employees generally.*fn7 Rather, the Township argued that, notwithstanding their employee status, because Napp, Caris, and Hartranft were also supervisors, they were precluded from receiving post-retirement medical insurance benefits otherwise available to other employees by Section 606(c) of the Code, 53 P.S. § 65606(c). The Commonwealth Court reversed the trial court. White Deer Township v. Napp, 874 A.2d 1258 (Pa. Cmwlth. 2005) (White Deer Township I). The court initially noted that when public officials have a direct pecuniary interest in a matter being voted on, the enabling legislation granting them the power to vote on such a matter must be strictly construed. Id. at 1261 (citing Genkinger v. City of New Castle, 84 A.2d 303, 306 (Pa. 1951)). With this in mind, the court examined Section 606(c) and concluded that the language in this section limited supervisor eligibility to participate in a medical insurance program to the time the supervisors are "in office or while in the employ of the township." White Deer Township I, 874 A.2d at 1263. Although this language is facially applicable only to supervisors, and despite the fact that the Township had not actually raised the argument that the board of supervisors lacked the authority to provide post-retirement medical insurance benefits to employees generally, the Commonwealth Court broadly found that according to Section 606(c), the board of supervisors could not provide medical insurance to retired employees generally. Id. ("the plain language of Section 606(c) provides that medical benefits are only available for current employees"). Because it concluded that Napp, Caris, and Hartranft, as supervisors, were not statutorily authorized to provide post-retirement medical insurance benefits to Township employees generally, the Commonwealth Court reversed the trial court and remanded with directions to enter declaratory judgment in favor of the Township.*fn8
Upon Appellants' petition for allowance of appeal, this Court initially agreed to consider the question of "[w]hether the Second Class Township Code authorizes municipalities to provide post-retirement medical and health benefits to its employees." White Deer Township v. Napp, 890 A.2d 368 (Pa. 2005) (granting allowance of appeal per curiam). Upon further examination, however, we declined to utilize the case as a vehicle to resolve this question because we determined that it was not actually presented to the Commonwealth Court by the Township. White Deer Twp. v. Napp, 912 A.2d 781 (Pa. 2006) (White Deer Township II). We noted, however, that the Commonwealth Court's reliance on Section 606(c), which is applicable only to township supervisors, was unpersuasive on the issue of the availability of post-retirement medical benefits to employees generally. Id. at 784. We therefore enlarged our review to subsume the question of whether the Township Code prohibits the board of supervisors from providing post-retirement medical insurance benefits to its supervisors who are also employees. Id.
Regarding whether Section 606 precludes supervisor-employees from receipt of post-retirement medical insurance benefits, Appellants advocated that supervisor-employees are entitled to such benefits as deferred compensation pursuant to Section 606(a), and that nothing in Section 606 precludes them from being compensated equally with all other employees simply because they are also supervisors. Addressing this argument, we observed that Section 606 generally is "designed to curtail decision making by local supervisors on matters affecting their own self interest." White Deer Township II, 912 A.2d at 785. In this regard, we noted that the provisions of Section 606 expressly limit the amount a supervisor may receive as compensation, see 53 P.S. 65606(a); shift the responsibility to determine the compensation of supervisor-employees to a board of auditors, id.; forbid supervisors from being compensated as employees for attending meetings of the board of supervisors, id.; prescribe that any change in salary, compensation, or emoluments of the elected office become effective at the beginning of the next term of the supervisor, id.; delineate specific parameters for supervisor participation in employee pension plans, including the requirement of auditor approval, see 53 P.S. § 65606(b); and control supervisor participation in township-paid insurance plans while in office or the township's employ, see 53 P.S. § 65606(c). In light of this design, we found that the legislature intended to limit self-interested decision-making by supervisors. White Deer Township II, 912 A.2d at 785.
Examining Section 606(c), we agreed with Appellants that it did not expressly forbid supervisor-employees from receiving post-retirement medical insurance benefits. Id. at 785. We noted, however, that this was not dispositive because the heart of the Township's challenge was that the Ordinance was passed to benefit the supervisors voting on it. We held that because Section 606(c) only pertains to what supervisors may receive while in office or in the employ of the Township, it "does not operate to control the conferral of post-retirement medical insurance benefits . . . ." Id. Therefore, we concluded that the trial court erred in holding that Section 606(c) authorized the supervisors to confer post-retirement benefits on themselves. Id.; accord Summers, 563 A.2d at 1296-97 (holding that the provision of life and health insurance coverage to current supervisor-employees did not require auditor approval).
We further noted that the only prevailing theory that would support the provision of post-retirement medical insurance benefits to retired supervisor-employees was that those benefits are a form of auditor-approved deferred compensation permissible under Section 606(a) (providing that supervisors may receive compensation determined by the board of auditors). White Deer Township II, 912 A.2d at 785-86. Therefore, because compensation under Section 606(a) required auditor approval, and there was nothing in the record to establish the existence or degree of auditor involvement in the award of post-retirement medical insurance benefits to supervisor-employees, we concluded that the parties' dispute could not be resolved on the record before us. Accordingly, we held that the reasoning offered by the trial court did not support its decision to sustain the demurrer to the Township's challenge, and that the Commonwealth Court erred in directing an award of declaratory relief in favor of the Township on the ground that Section 606(c) foreclosed Township employees from eligibility for post-retirement medical insurance benefits. We remanded to the Commonwealth Court for appropriate disposition.*fn9*fn10
On remand, the Commonwealth Court viewed the issues before it as whether the Township's challenge to the Ordinance was procedurally time-barred; whether supervisor-employees may receive post-retirement medical benefits under the Township Code; whether such benefits are deferred compensation; and how auditor approval or the lack thereof impacts this case. White Deer Township v. Napp, 929 A.2d 671 (Pa. Cmwlth. 2007) (White Deer Township III).
First, considering whether the Township's challenge to the Ordinance was procedurally time barred, the Commonwealth Court examined Section 5571 of the Judicial Code, 42 Pa.C.S. § 5571(c)(5), which provided that procedural challenges relating to the enactment of an ordinance must be raised within thirty days:
[Q]uestions relating to an alleged defect in the process of enactment or adoption of any ordinance, resolution, map or similar action of a political subdivision . . . shall be raised by appeal or challenge commenced within 30 days after the intended effective date of the ordinance, resolution, map or similar action. As used in this paragraph, the term "intended effective date" means the effective date specified in the ordinance, resolution, map or similar action or, if no effective date is specified, the date 60 days after the date ...