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| PRIOR PRINTER'S NOS. 1733, 1750 | PRINTER'S NO. 2204 |
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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| SENATE BILL |
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| INTRODUCED BY EARLL, SCHWANK, EICHELBERGER, YAW, VANCE, SMUCKER, BLAKE, FOLMER, PICCOLA, ROBBINS AND FONTANA, OCTOBER 31, 2011 |
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| SENATOR CORMAN, APPROPRIATIONS, RE-REPORTED AS AMENDED, MAY 22, 2012 |
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| AN ACT |
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1 | Amending the act of July 10, 1987 (P.L.246, No.47), entitled "An | <-- |
2 | act empowering the Department of Community Affairs to declare |
3 | certain municipalities as financially distressed; providing |
4 | for the restructuring of debt of financially distressed |
5 | municipalities; limiting the ability of financially |
6 | distressed municipalities to obtain government funding; |
7 | authorizing municipalities to participate in Federal debt |
8 | adjustment actions and bankruptcy actions under certain |
9 | circumstances; and providing for consolidation or merger of |
10 | contiguous municipalities to relieve financial distress," in |
11 | coordination plans, further providing for collective |
12 | bargaining; in consolidation and merger, further providing |
13 | for collective bargaining; in financial distress for third |
14 | class cities, further providing for consent decrees; and, in |
15 | receivership for third class cities, further providing for |
16 | confirmation. |
17 | Amending the act of July 10, 1987 (P.L.246, No.47), entitled "An | <-- |
18 | act empowering the Department of Community Affairs to declare |
19 | certain municipalities as financially distressed; providing |
20 | for the restructuring of debt of financially distressed |
21 | municipalities; limiting the ability of financially |
22 | distressed municipalities to obtain government funding; |
23 | authorizing municipalities to participate in Federal debt |
24 | adjustment actions and bankruptcy actions under certain |
25 | circumstances; and providing for consolidation or merger of |
26 | contiguous municipalities to relieve financial distress," |
27 | further providing for definitions, for contents, for plan not |
28 | affected by certain collective bargaining agreements or |
29 | settlements, for filing municipal debt adjustment under |
30 | Federal law and for collective bargaining agreements, |
31 | furlough of employees and disputes. |
32 | The General Assembly of the Commonwealth of Pennsylvania |
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1 | hereby enacts as follows: |
2 | Section 1. Sections 252 and 408 of the act of July 10, 1987 | <-- |
3 | (P.L.246, No.47), known as the Municipalities Financial Recovery |
4 | Act, are amended to read: |
5 | Section 252. Plan not affected by certain collective bargaining |
6 | [agreements or settlements] matters. |
7 | A collective bargaining agreement, contract or [arbitration] |
8 | settlement executed, and a collective bargaining arbitration |
9 | award rendered, after the adoption of a plan shall not in any |
10 | manner violate, expand or diminish its provisions. |
11 | Section 408. Collective bargaining [agreements] matters; |
12 | furlough of employees; disputes. |
13 | (a) Collective bargaining agreements, contracts, |
14 | [agreements] settlements or arbitration awards.--A collective |
15 | bargaining agreement [or], contract or settlement in existence |
16 | in a municipality or an arbitration award in effect in a |
17 | municipality prior to a consolidation or merger shall remain |
18 | effective after consolidation or merger until [the contract, |
19 | agreements or awards expire. After the expiration of the |
20 | contracts, agreements or awards, a] it expires. A subsequent |
21 | collective bargaining agreement, settlement, contract or |
22 | arbitration award shall not [impair the implementation] in any |
23 | manner violate, expand or diminish the provisions of a plan |
24 | adopted pursuant to this act. |
25 | (b) Reduction in existing work force.--Subsequent to |
26 | consolidation or merger, the consolidated or merged municipality |
27 | may, in accordance with existing collective bargaining |
28 | agreements, contracts, settlements or arbitration award |
29 | provisions, and consistent with applicable laws, reduce the |
30 | number of uniformed and nonuniformed employees to avoid |
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1 | overstaffing and duplication of positions in the consolidated or |
2 | merged municipality. If a consolidated or merged municipality |
3 | determines in its discretion that it is necessary to increase |
4 | the number of uniformed or nonuniformed employees, employees of |
5 | the constituent municipalities shall be reinstated in the order |
6 | of their seniority if they had been previously furloughed. |
7 | (c) Disputes.--The Pennsylvania Labor Relations Board shall |
8 | have jurisdiction to determine labor disputes or controversies, |
9 | except those arising out of interpretation or construction of a |
10 | collective bargaining agreement containing provision for binding |
11 | arbitration, between the consolidated or merged municipality and |
12 | its employees. |
13 | (d) Effect on existing law.--Nothing in this section shall |
14 | prohibit a consolidated or merged municipality from exercising |
15 | its powers and responsibilities pursuant to provisions of law |
16 | related to collective bargaining, including, but not limited to, |
17 | the act of June 24, 1968 (P.L.237, No.111), referred to as the |
18 | Policemen and Firemen Collective Bargaining Act, and the act of |
19 | July 23, 1970 (P.L.563, No.195), known as the Public Employe |
20 | Relations Act. |
21 | Section 2. Sections 607(f) and 704 of the act, added October |
22 | 20, 2011 (P.L.318, No.79), are amended to read: |
23 | Section 607. Consent agreement. |
24 | * * * |
25 | (f) Collective bargaining.--A collective bargaining |
26 | agreement, contract or [arbitration] settlement executed, and a |
27 | collective bargaining arbitration award rendered, following |
28 | enactment of an ordinance under this section may not in any |
29 | manner violate, expand or diminish the provisions of the consent |
30 | agreement. |
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1 | Section 704. Confirmation. |
2 | (a) Effect of confirmation.--The confirmation of the |
3 | recovery plan and any modification to the receiver's plan under |
4 | section 703 shall have the effect of: |
5 | (1) imposing on the elected and appointed officials of |
6 | the distressed city or an authority a mandatory duty to |
7 | undertake the acts set forth in the recovery plan; |
8 | (2) suspending the authority of the elected and |
9 | appointed officials of the distressed city or an authority to |
10 | exercise power on behalf of the distressed city or authority |
11 | pursuant to law, charter, ordinance, rule or regulation to |
12 | the extent that the power would interfere with the powers |
13 | granted to the receiver or the goals of the recovery plan; |
14 | and |
15 | (3) superseding the emergency action plan developed by |
16 | the secretary under section 602. |
17 | (b) Form of government.--Confirmation of the recovery plan |
18 | and any modification to the plan under section 703 shall not be |
19 | construed to: |
20 | (1) change the form of government of the distressed city |
21 | or an authority; or |
22 | (2) except as set forth in subsection (a), affect powers |
23 | and duties of elected and appointed officials of the |
24 | distressed city or an authority. |
25 | (c) Collective bargaining.--A collective bargaining |
26 | agreement, contract or [arbitration] settlement executed, and a |
27 | collective bargaining arbitration award rendered, after |
28 | confirmation of a recovery plan may not in any manner violate, |
29 | expand or diminish the provisions of the recovery plan. |
30 | Section 3. This act shall take effect in 60 days. |
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1 | Section 1. Section 103 of the act of July 10, 1987 (P.L.246, | <-- |
2 | No.47), known as the Municipalities Financial Recovery Act, is |
3 | amended by adding definitions to read: |
4 | Section 103. Definitions. |
5 | The following words and phrases when used in this act shall |
6 | have the meanings given to them in this section unless the |
7 | context clearly indicates otherwise: |
8 | "Arbitration settlement." An adjustment or settlement of a |
9 | collective bargaining agreement or dispute. The term includes a |
10 | final or binding arbitration award or other determination. |
11 | * * * |
12 | "Plan" or "recovery plan." A recovery plan developed under |
13 | this act. |
14 | * * * |
15 | Section 2. Section 241(1) of the act, amended June 30, 1992 |
16 | (P.L.336, No.69), is amended and the section is amended by |
17 | adding a paragraph to read: |
18 | Section 241. Contents. |
19 | A plan formulated by the appointed coordinator shall be |
20 | consistent with applicable law and shall include any of the |
21 | following factors which are relevant to alleviating the |
22 | financially distressed status of the municipality: |
23 | (1) Projections of revenues and expenditures for the |
24 | current year and the next [two] three years, both assuming |
25 | the continuation of present operations and as impacted by the |
26 | measures in the plan. The projections must include an |
27 | itemization of the following: |
28 | (i) Projected revenues, including: |
29 | (A) Local taxes. |
30 | (B) Licenses, permits and fines. |
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1 | (C) Sales and rentals. |
2 | (D) Federal, State and county grants and loans. |
3 | (E) Any other sources of projected revenue. |
4 | (ii) Projected expenditures, including: |
5 | (A) Debt service. |
6 | (B) Workforce. |
7 | (C) Elected and executive officials. |
8 | (D) Financial management. |
9 | (E) Infrastructure costs including highways, |
10 | roads and wastewater systems. |
11 | (F) Maintenance costs, including recycling and |
12 | trash collection, disposal and removal. |
13 | (G) Other professional services. |
14 | (H) Public safety. |
15 | (I) Community and economic development. |
16 | (J) Any other applicable expenditures. |
17 | * * * |
18 | (11) Notwithstanding any other provision of law, limits |
19 | on projected expenditures for individual collective |
20 | bargaining units that may not be exceeded by the distressed |
21 | municipality, giving due consideration to the projection of |
22 | revenue and expenses under paragraph (1). |
23 | Section 3. Sections 252, 261 and 408(a) and (b) of the act |
24 | are amended to read: |
25 | Section 252. Plan not affected by certain collective bargaining |
26 | agreements or settlements. |
27 | [A] (a) General rule.--Except as provided in subsection (b), |
28 | a collective bargaining agreement or arbitration settlement |
29 | executed after the adoption of a plan shall not in any manner |
30 | violate, expand or diminish its provisions. |
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1 | (b) Arbitration settlements for policemen and firemen.--An |
2 | arbitration settlement rendered under the act of June 24, 1968 |
3 | (P.L.237, No.111), referred to as the Policemen and Firemen |
4 | Collective Bargaining Act, may deviate from the plan, but only |
5 | if the arbitration settlement: |
6 | (1) except as set forth in subsection (b.1), will not |
7 | cause the distressed municipality to exceed any limits on |
8 | expenditures for individual collective bargaining units |
9 | imposed under the plan; |
10 | (2) will not further jeopardize the financial stability |
11 | of the distressed municipality, as measured by the criteria |
12 | set forth in section 201; and |
13 | (3) is not inconsistent with the policy objectives set |
14 | forth in section 102(a) to relieve the financial distress of |
15 | the distressed municipality. |
16 | (b.1) Exception.--Subsection (b)(1) shall not apply to a |
17 | limit on expenditures for an individual bargaining unit that is |
18 | determined to be arbitrary, capricious or established in bad |
19 | faith. |
20 | (c) Hearing before board of arbitration and expert |
21 | testimony.--The issue of whether an arbitration settlement |
22 | deviating from the plan satisfies the criteria under subsection |
23 | (b) and any exception under subsection (b.1) must be determined |
24 | by a board of arbitration appointed under the Policemen and |
25 | Firemen Collective Bargaining Act and reflected in findings of |
26 | fact that are supported by substantial evidence and consistent |
27 | with this section. During the hearing, the testimony of experts |
28 | in municipal finance, called by the distressed municipality or |
29 | the collective bargaining organization, is admissible as |
30 | evidence before the board. An arbitration settlement deviating |
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1 | from the plan must be supported by the credible testimony of an |
2 | expert in municipal finance that the arbitration settlement |
3 | satisfies the criteria in subsection (b) and any exception under |
4 | subsection (b.1). For purposes of this subsection, the term |
5 | "expert in municipal finance" means an individual holding an |
6 | advanced degree who has at least eight years of experience in |
7 | issues relating to municipal finance. |
8 | (d) Review by coordinator.--An arbitration settlement |
9 | deviating from the plan under subsection (b) must be provided to |
10 | the coordinator by the chairman of the board of arbitration |
11 | within 48 hours of issuance. The coordinator shall review the |
12 | arbitration settlement to determine whether it violates this |
13 | section. |
14 | (e) Appeal.--The distressed municipality, collective |
15 | bargaining organization and the coordinator or secretary have |
16 | the right to appeal to Commonwealth Court from an arbitration |
17 | settlement which deviates from the plan under subsection (b). |
18 | (1) An appeal must be commenced not later than 30 days |
19 | after issuance of the arbitration settlement. |
20 | (2) The record of the arbitration settlement becomes |
21 | part of the record on appeal. The court may also supplement |
22 | the record. |
23 | (3) To the extent an appeal alleges that an arbitration |
24 | settlement violates this section, the standard of review |
25 | governing an appeal from an arbitration settlement governed |
26 | by this section shall be de novo. The court shall not be |
27 | bound by the factual or legal conclusions of the board of |
28 | arbitration. Nothing in this subsection shall be construed to |
29 | otherwise affect the scope or standard of review applicable |
30 | to certiorari review of arbitration awards. |
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1 | (4) The coordinator's decision setting a limit on |
2 | expenditures for an individual collective bargaining unit |
3 | under section 241(11) shall not be disturbed on appeal unless |
4 | the limit is determined to be arbitrary, capricious or |
5 | established in bad faith. |
6 | Section 261. Filing municipal debt adjustment under Federal |
7 | law. |
8 | (a) Authorization.--In the event one of the following |
9 | conditions is present, a municipality [is hereby authorized] |
10 | must apply to the department to file a municipal debt |
11 | adjustment action pursuant to the Bankruptcy Code (11 U.S.C. § |
12 | 101 et seq.): |
13 | (1) After recommendation by the plan coordinator |
14 | pursuant to section 241(6). |
15 | (2) Imminent jeopardy of an action by a creditor, |
16 | claimant or supplier of goods or services which is likely to |
17 | substantially interrupt or restrict the continued ability of |
18 | the municipality to provide health or safety services to its |
19 | citizens. |
20 | (3) One or more creditors of the municipality have |
21 | rejected the proposed or adopted plan, and efforts to |
22 | negotiate resolution of their claims have been unsuccessful |
23 | for a ten-day period. |
24 | (4) A condition substantially affecting the |
25 | municipality's financial distress is potentially solvable |
26 | only by utilizing a remedy exclusively available to the |
27 | municipality through the Federal Municipal Debt Readjustment |
28 | Act (48 Stat. 798). |
29 | (5) A majority of the current or immediately preceding |
30 | governing body of a municipality determined to be financially |
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1 | distressed has failed to adopt a plan or to carry out the |
2 | recommendations of the coordinator pursuant to this act. |
3 | (b) Majority vote.--This authority may be exercised only |
4 | upon the vote by a majority of the municipality's governing |
5 | body. |
6 | (c) Secretary.--Upon application under subsection (a), the |
7 | secretary shall, within 30 days, determine whether to approve |
8 | the application on the basis that one of the criteria under |
9 | subsection (a) has been met. Failure to act within the time |
10 | period under this subsection shall be deemed an approval of the |
11 | application. |
12 | Section 408. Collective bargaining agreements; furlough of |
13 | employees; disputes. |
14 | (a) Collective bargaining contracts, agreements or |
15 | arbitration [awards] settlements.--A collective bargaining |
16 | agreement or contract in existence in a municipality or an |
17 | arbitration [award] settlement in effect in a municipality prior |
18 | to a consolidation or merger shall remain effective after |
19 | consolidation or merger until the contract, agreements or |
20 | [awards] settlements expire. After the expiration of the |
21 | contracts, agreements or [awards] settlements, a subsequent |
22 | collective bargaining agreement, contract or [award] settlement |
23 | shall not impair the implementation of a plan adopted pursuant |
24 | to this act. |
25 | (b) Reduction in existing work force.--Subsequent to |
26 | consolidation or merger, the consolidated or merged municipality |
27 | may, in accordance with existing contracts or arbitration |
28 | [award] settlement provisions and consistent with applicable |
29 | laws, reduce the number of uniformed and nonuniformed employees |
30 | to avoid overstaffing and duplication of positions in the |
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1 | consolidated or merged municipality. If a consolidated or merged |
2 | municipality determines in its discretion that it is necessary |
3 | to increase the number of uniformed or nonuniformed employees, |
4 | employees of the constituent municipalities shall be reinstated |
5 | in the order of their seniority if they had been previously |
6 | furloughed. |
7 | * * * |
8 | Section 4. This act shall take effect in 60 days. |
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