The tab for an illegal pension benefit that cost Dunmore taxpayers more than $3.8 million since 2005 continues to escalate.
Powerless to halt payments, the borough is also on the hook to offer the benefit to three officers who have yet to retire.
Dunmore offered the benefit in 1992, providing officers 70 to 80 percent of their final year's salary with the idea it would save money by enticing older officers to retire. However, the wording of the contract means the borough must continue to pay the benefit to any officer on the force at the time the council signed the 1993-94 union contract, regardless of when they retire, said two borough officials and a pension expert.
Of the 20 members on the force in 1992, three remain employed by the borough: Police Chief Salvatore Marchese and officers Robert Ruddy and Joseph Hallinan.
Council Vice President Michael McHale and solicitor Tom Cummings said each man is entitled to receive 70 percent of his final salary when he retires - despite the fact that it violates state law, which limits police pensions to 50 percent of the average of the final three years of an officer's salary.
It remains to be seen how much each man will get as that partly depends on when each retires. In 2012, Chief Marchese earned $68,000; Mr. Hallinan, $63,968; and Mr. Ruddy, $66,881, according to borough records.
The three men will join the borough's 16 other retired officers, or their spouses, who still receive the illegal benefit, including four men who retired between 2005 and 2013 at 70 percent of their final salary.
The benefit, outlined in a Sunday Times investigation in May, contributes to significant financial problems for the police pension fund, which the state declared severely distressed. The financial woes recently forced council to borrow $5 million to shore up the police fund, as well as the firefighters and nonunion funds, which are also financially distressed.
Council tried to halt the unauthorized payments in 1996, based on the state auditor general's findings that they violate state pension law. The courts ruled the borough must pay because the borough council approved the benefits as part of a union contract in 1992.
That same legal premise requires the borough to continue to offer the 70 percent benefit to officers who retired well after 1992, and those who still have years to go before retirement, said attorney James McAneny, executive director of Pennsylvania's Public Employee Retirement Commission, which oversees municipal pension plans statewide.
"Once you agree to it you're stuck with it," Mr. McAneny said. "If a guy came to work under the understanding he's going to get 70 percent, he is entitled to hold them to that promise."
Mr. McAneny, who reviewed the Dunmore union contract and court rulings at the newspaper's request, said the borough was relieved of its obligation to pay 80 percent of the final year's salary to future retirees because the contract specifically stated the officer had to retire by Dec. 31, 1992, to get that benefit.
The wording regarding the 70 percent benefit states it will be paid to any officer who retired after Jan. 1, 1993. Because it did not specify an end date, that provision goes forward in perpetuity for any officer who was on the force when the 1993 contract was signed, Mr. McAneny said.
"No one ever said the 80 percent continued. The agreement was you had to leave by a certain date. But the 70 percent, there was no date you had to leave by to get it," Mr. McAneny said.
Mr. Cummings was not the borough's solicitor when the agreement was inked. He also played no part in rendering the legal opinion that stated the payment must continue for all officers on the force at that time. However, he concurs that the 70 percent payment must continue, even though the 1993-95 union contract expired long ago.
"Sometimes benefits extend beyond the life of a contract," Mr. Cummings said.
Eight officers receive pensions based on 70 percent of their final salaries. Four of those officers - Joseph Carra, Joseph Donly, John McCormick and Anthony Rinaldi - retired in 1995. The other four - James Boland, Salvatore Mecca, Ronald Sleboda and Patrick Reese - retired between 2005 and this year.
Those who retired in the early 1990s receive pensions ranging from roughly $41,000 to $58,000, which includes money paid from the pension fund and the borough's general fund. Officers who retired between 2005 and 2013 received pensions ranging from roughly $34,500 to $46,000 in 2012.
The borough is obligated to pay the benefits for years to come. The full benefit will be paid until the officer dies. If married, their widow will collect half of their pension until her death. No payments will be made to children, unless they are under age 18 at the time of their parents' deaths.
Contact the writer: tbesecker@timesshamrock.com