Proposed regional police pact still a headache for Adamstown

By on November 12, 2014

A new regional police draft may — or may not — be going forward as a result of Adamstown borough action.

The new regional police draft was discussed at the Nov. 4 meeting and is scheduled to be finalized by January 2016. Attorney Josele Cleary and Mark Zettlemoyer, CPA, attended the session to discuss liability issues concerning the draft.

Adamstown has been operating under a police agreement which was penned in 1978, and the borough council does not want to rush in to a new agreement even if it means not meeting the deadline.

And members said they don’t want to go in to this with East Cocalico as they did with contriversial joint municipally owned 1975 N. Reading Road property.

Some on council contend going into partnership with East Cocalico to form a new regional police has been like wanting to buy a house but not being allowed to first see it.

“Do any of us go buy a house and not know what the mortgage payments are going to be in the future?” asked Council President Randy Good.

One of the unknowns is having to pay “big pots of money” to retired East Cocalico employees, so Adamstown plans to have an actuarial study done on the retirement health care. The way East Cocalico numbers have “shot up” over the last couple years, there is a concern of what the long-term potential costs could be.

The agreement says that the regional force will assume all of East Cocalico’s liabilities relating to the police pension. How much will this be and how much will it be for Adamstown if the borough wants to get out? The current agreement has Adamstown locked in for five years.

“You have a certain cost to operate the police department,” said Cleary. “Is that cost going to have to be increased to by making additional payments to the police pension fund to litigate the unfundedness?”

The initial assets that are expected to be transferred to the new department will likely be significantly less than the amount of liabilities transferred. This will result in a deficit in net assets.

“The current East Cocalico Police Pension Plan is underfunded by approximately $2 million,” said Zettlemoyer. “This will become a liability of the proposed new regional police department.”

Other post-employment benefits (OPEB) calculates the unfunded liability associated with paying for police health insurance after officers retire. A retired police officer can collect or have the municipality pay for their post-employment health insurance for a maximum of 17 years.

“That’s a long time,” said Zettlemoyer. “There’s a cost associated with that, so make sure you know what that cost is. Under the current arbitration agreement, East Cocalico is required to pay for 90 percent of the premium associated with that. The retired police officer is required to pay 10 percent.”

There are currently 18 active police officers on the force. There are three police officers retired at this time and falling under the health insurance. The annual cost is about $33,000 a year.

“The retired police officers are contributing a minimal amount, about $12.50 every bi-weekly pay period,” said Zettlemoyer. “That is a potentially a huge cost and if you leave the agreement, how is that cost going to be allocated?”

Another big unknown Adamstown is dealing with is getting numbers from East Cocalico concerning budgeted costs and equipment East Cocalico has. The agreement states that all of the equipment is going to be valued after the agreement is signed.

“I can’t recommend that,” said Cleary. “Is there an expectation that the other three municipalities have to pay East Cocalico for the value of that equipment? When I read that it all had to be valued, that’s a very strong implication that somebody wants to get that value out of it. What if East gives you equipment they value at $100,000 which is arguably paid for over the years, and then says: ‘That’s our start up contribution; you all have to cut checks.’?”

Issues like this, to be decided after Adamstown is “locked in” to a five year period, is something “designed to create conflict,” he said.

“That air of suspicion that comes from every time we have a meeting with East Cocalico doesn’t lend itself to rushing into something and making this huge agreement by January 1st of next year,” said Councilman Dave Matz. “This throws too many flags up in my mind.”

Another issue is that the agreement says every single East Cocalico officer will be hired and every single East Cocalico non-uniformed employee will be hired as well and Adamstown will be responsible for whatever pension costs those employees have.

“You’re taking all the liabilities associated with them so you shouldn’t just concentrate on just East Cocalico police pension and the East Cocalico police contract,” said Cleary.

Another financial issue is that a prior year’s budget is operative until approvals by a majority of municipalities.

“What happens if the other three municipalities agree to an increase that is not acceptable to you?” said Cleary. “It appears that you have to pay that increase because a municipality that fails to make payments shall be subject to an interest penalty. It’s also a cost to the other three because if the money is not coming in, they are going to be on the hook to pay the officers. And if the three who vote to increase are the three with the lowest percentage, and the one is not making payments is the one with the highest percentage, you’re looking at a lot of money.”

Council voted unanimously to send a letter to regional requesting an actuarial study be done on the unfunded retirement health care. The study is to determine the liability that’s going to be assumed to help pay for the health care for officers once they retire.

“I think it’s a great concept, but after 1975 Reading Road, I just need to know what I’ve voting on,” said Good. “My biggest concern is knowing what we leave for people down the road here. Future councilmen, future citizens, existing citizens of the town that are going to retire. What is going to be the most accurate cost we can project five or 10 years from now? Two or three years ago we had zero post-retirement costs and within three years’ time we went to $33,000 with three officers retiring. What happens when we hit nine or 10 officers?”

Councilman Mark Bansner offered an overview.

“Can we get four municipalities to agree on something like this?” said Bansner. “We’re all putting some risk on the table here; we have to, in order to get this accomplished. I don’t think we’re going to be able to make it absolutely perfect for everybody involved.”

East Cocalico’s one representative at the meeting was virtually silent, taking notes.

In other news:

* Cindy Schweitzer went over the draft budget, filling in for Lisa Crouse. There is no proposed tax, water, or sewer increase. The final budget will be voted on at the December meeting.

* A DEP inspection was made at the waste water treatment plant in October. The plant passed without incident.

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