THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY GERGELY, GIBBONS, CALTAGIRONE, CARROLL, DALEY, DAVIS, DONATUCCI, HALUSKA, MUNDY, MYERS, PRESTON, READSHAW, STABACK AND WAGNER, OCTOBER 24, 2011

REFERRED TO COMMITTEE ON FINANCE, OCTOBER 24, 2011  

AN ACT

Amending the act of July 10, 1987 (P.L.246, No.47), entitled "An

act empowering the Department of Community Affairs to declare

certain municipalities as financially distressed; providing

for the restructuring of debt of financially distressed

municipalities; limiting the ability of financially

distressed municipalities to obtain government funding;

authorizing municipalities to participate in Federal debt

adjustment actions and bankruptcy actions under certain

circumstances; and providing for consolidation or merger of

contiguous municipalities to relieve financial distress," in

municipal financial distress, further providing for

collective bargaining and for status termination.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 252 of the act of July 10, 1987 (P.L.246,

No.47), known as the Municipalities Financial Recovery Act, is

amended to read:

Section 252.  [Plan not affected by certain] Relation of plan to 

collective bargaining agreements or [settlements]

awards.

(a)  Existing contracts.--A contract, a collective bargaining

agreement or an interest arbitration award in existence prior to

the approval by a municipality's governing body of a

coordinator's plan under this subchapter shall remain effective

after approval of the plan until the contract or agreement is

succeeded by a subsequent contract or collective bargaining

agreement or by an interest arbitration award establishing the

terms of a subsequent contract or collective bargaining

agreement.

(b)  Subsequent contracts.--

(1)  After the approval by a municipality's governing

body of a coordinator's plan under this subchapter, except as

set forth in paragraph (2), the following shall apply:

(i)  The municipality shall only execute a contract,

collective bargaining agreement or interest arbitration

award that is consistent with the goals of the plan.

(ii)  A contract, collective bargaining agreement or

arbitration [settlement] award executed or issued after

the adoption of a plan [shall not in any manner violate,

expand or diminish its] may deviate from the provisions

of the plan as long as the contract, agreement or award

reflects consideration of the plan and is consistent with

the goals of the plan.

(2)  The municipality may execute a contract, collective

bargaining agreement or interest arbitration award which is

not consistent with the goals of the plan if the coordinator

approves a proposed revision to the plan which demonstrates

that revenues sufficient to pay the costs of the contract,

collective bargaining agreement or interest arbitration award

will be available to the municipality for such purposes in

the fiscal years affected by the plan.

(c)  Interest arbitration awards.--

(1)  An arbitrator shall consider the goals of an adopted

plan when issuing an interest arbitration award. The

arbitrator may deviate from the plan's provisions so long as

the award reflects consideration of the plan and is otherwise

consistent with the goals of the plan.

(2)  In deciding whether to adjust wages, benefits or

working conditions in a manner that deviates from an adopted

plan's provisions, an arbitrator shall consider, in addition

to any standard or factor required under applicable law, all

of the following:

(i)  the provisions of the plan; and

(ii)  the ability of the municipality to pay or to

obtain funds to pay the cost of the wage, benefit or

working condition adjustment.

(3)  An interest arbitration award issued after the

adoption of a plan shall:

(i)  Be in writing.

(ii)  State the justification of the municipality's

financial ability to pay or obtain funds to pay the cost

of any wage, benefit or working condition adjustment.

(iii)  Be transmitted to each party to the dispute.

Section 2.  Section 253 of the act, amended June 30, 1992

(P.L.336, No.69), is amended to read:

Section 253.  Termination of status.

(a)  Determination by secretary.--Following a duly advertised

public hearing with notices given as provided in section 203 and

consideration of the factors described in subsection (c), the

secretary may issue a determination that the conditions which

led to the earlier determination of municipal financial distress

are no longer present. [The determination shall rescind the

status of municipal financial distress and shall include a

statement of facts as part of the final order.]

(b)  Determination upon petition [by a municipality].--

(1)  A financially distressed municipality, a labor

organization that is a party to a collective bargaining

agreement with a financially distressed municipality or any

other party with standing under section 202 may petition the

secretary to make a determination that the conditions which

led to the earlier determination of municipal financial

distress are no longer present or have improved such that the

status of municipal financial distress should be rescinded.

[Upon receiving the petition, the secretary may issue a

determination to rescind following a duly advertised public

hearing with notices given as provided in section 203.]

(2)  Within ten days after receiving a petition under

paragraph (1), the secretary shall schedule a public hearing

within the county where the distressed municipality is

located. The date for the hearing shall be at least two weeks

but not more than 30 days following the receipt of the

petition. The secretary shall cause notice of the hearing to

be published at least once in a newspaper with general

circulation in the municipality and shall provide written

notice by certified mail, return receipt requested, to the

petitioner, the clerk or secretary of the municipality, the

chief executive of the municipality and the municipality's

solicitor. In all other respects, the hearing shall be

subject to 65 Pa.C.S. Ch.7 (relating to open meetings).

(3)  After receiving a petition under paragraph (1) but

before the public hearing scheduled under paragraph (2), the

secretary and the petitioner or petitioners shall investigate

the financial affairs of the municipality. The results of the

investigations or any study previously conducted by the

department under section 121 shall be placed into the record

at the public hearing.

(c)  Factors to consider.--In determining whether the

conditions which led to the earlier determination of municipal

financial distress are no longer present or have improved such

that the status of municipal distress should be rescinded, the

secretary shall consider [that] each of the following criteria:

(1)  Monthly reports submitted by the coordinator to the

department under section 247(a)(3) indicate that [termination

of the status of] the financial condition of the municipality

has improved significantly since the declaration of municipal

financial distress [is appropriate].

(2)  Accrued deficits in the municipality have been

eliminated or significantly reduced since the declaration of

municipal financial distress.

(3)  Obligations issued to finance all or part of the

municipality's deficit have been retired or significantly

reduced since the declaration of municipal financial

distress.

(4)  The municipality has operated, for a period of at

least one year, under a positive current operating fund

balance or equity, as evidenced by the municipality's audited

financial statements prepared in accordance with generally

accepted accounting principles.

(d)  Determination.--Within 30 days after the hearing, the

secretary shall issue a determination of whether the

municipality remains financially distressed under subsection (c)

and reasons for the determination. If any of the criteria listed

in subsection (c) are present and constitute a reasonable

indication of municipal financial recovery, then the secretary

shall rescind the status of municipal financial distress and the

secretary's determination shall include a statement of facts as

part of the final order.

(e)  Appeal.--A determination by the secretary under this act

is appealable under 2 Pa.C.S. Ch. 7 Subch. A (relating to

judicial review of Commonwealth agency action).

Section 3.  This act shall take effect in 60 days.