The Municipal Securities Rulemaking Board (MSRB), the regulatory body that oversees the municipal securities market in the United States, recently released its annual report on the status of the market. The report, which can be reviewed here, offers some fascinating insights into what was a tumultuous year for the market. Our highlights follow:

  • Spring Market Dislocation:  For about two weeks in March, the market simply stopped functioning. During this period, benchmark yields in 3-, 10- and 30-year bonds increased by 213, 193 and 182 basis points, respectively. However, the recovery was similarly swift, with yields substantially returning to their pre-pandemic levels by the end of March.

Continue Reading MSRB Releases 2020 Review of Municipal Bond Market

Recent legislation passed by the Pennsylvania General Assembly offers a new short short-term borrowing option to local governments and school districts dealing with budget uncertainties related to the ongoing COVID-19 Pandemic. House Bill 2536 was signed into law by Governor Tom Wolf on November 23, 2020, as Act 114 of 2020. Among other things, Act 114 created a special, limited emergency tax and revenue anticipation note program for the 2021 calendar year. The new program will provide greater financial flexibility to local governments and school districts as they await the results of tax collections in the coming months. Continue Reading Short-Term Borrowing for Local Governments, School Districts in COVID Uncertainty

Many Pennsylvania municipalities in recent years have struggled to rein in their Other Post Employment Benefits (OPEB) liabilities. OPEB benefits are retirement benefits a public employer has promised to provide its retired employees, other than pension payments. Benefits might include life insurance premiums, post-retirement healthcare, dental and vision benefits and other types of benefits.

OPEB benefits are typically funded using one of two methods: (i) the pay-as-you-go method, which is generally paid each year from the municipality’s general fund; or (2) or an OPEB trust. A trust is typically established through an initial and then subsequent transfers of funds.   The trust funds are invested and the principal and interest are used to pay for the promised OPEB benefits. Continue Reading Budgeting for OPEB Liabilities with an OPEB Trust

McNees Wallace & Nurick LLC today announced the launch of Keystone Municipal Solutions, a new subsidiary aimed at providing municipalities with interim management and professional consulting services.

Keystone Municipal Solutions is headquartered in Harrisburg and will serve municipalities across Pennsylvania, Delaware and New Jersey. Continue Reading McNees Launches Keystone Municipal Solutions

On January 8, 2021, the Pennsylvania Department of Health (“DOH”) announced its COVID-19 Interim Vaccination Plan, Version 4.0 (the “Plan”).  The Plan follows guidance from the Centers for Disease Control and Prevention (the “CDC”).  Categorized as “interim,” DOH intends to continuously make updates to the Plan to reflect the latest recommendations from the Advisory Committee on Immunization Practices and other guidance available, as well as any feedback received. Continue Reading Pennsylvania’s Latest COVID-19 Vaccination Plan Recognizes Local Governments

McNees Wallace & Nurick LLC has launched a new public relations agency to provide strategic communications services to its clients and the regional business community.

Apollo Communications is headquartered in Harrisburg and will serve clients across Pennsylvania, Ohio and Maryland. McNees has selected veteran public relations professional and former journalist Brett Marcy to serve as president of Apollo Communications.

The company is just the latest initiative by McNees to provide enhanced value to clients and the community, said McNees Chair Brian Jackson. In recent years, the firm has added full-service government affairs, grassroots advocacy and nonprofit consulting to its professional services portfolio. Continue Reading McNees Launches Apollo Communications

The author thanks the assistance of Matthew Hoke in writing this post.  Matt was a law clerk with McNees in 2020, and is expected to graduate from the University of Virginia law school in May of 2021. 

The Pennsylvania Public Official and Employee Ethics Act (Act) has been in effect since 1979 and must be carefully followed by state and local officials and employees. The Act is enforced by the State Ethics Commission (Commission), which is comprised of seven appointed commissioners assisted by a staff of investigators and prosecutors.

Among other things, the Act prohibits public officials and employees from engaging in conduct that constitutes a conflict of interest. Section 1102 of the Act defines “conflict of interest” as:

Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated.

Public officials and employees who violate the Act may face administrative penalties, fines, and criminal prosecution. Under Section 1107(13) of the Act, the Commission is authorized to order violators to pay restitution plus interest. However, in its recent opinion in Sivick v. State Ethics Commission, the Pennsylvania Supreme Court significantly curtailed the Commission’s ability to impose restitution.

From 2004 to 2017, John Sivick was Chairman of the Board of Supervisors for Lehman Township, Pike County. During this time, Sivick also served as Roadmaster and Public Works Director and was responsible for hiring the Township’s employees. In 2009, a fellow supervisor decided to update the Township’s employee handbook to include a nepotism policy. Sivick voted for this policy change. But in 2012, he told his fellow supervisors that he wanted the Township to hire his son. After Sivick’s lobbying, the other two supervisors agreed to remove the nepotism policy. Sivick’s son was then hired by the Township in the position of Public Works Maintenance.

Sivick’s conduct was reported to the Commission. The Commission determined that Sivick had engaged in a conflict of interest by “using the authority of his public positions for the private pecuniary benefit of his son.” Specifically, the Commission found that Sivick illegally used his authority:

[1] when he participated in discussions and actions of the Board to eliminate the Township’s Nepotism Policy with the intent and for the purpose of having Son hired as a Township road crew employee; [2] when he discussed, recommended, lobbied, influenced, or sought the support of the Board to effectuate the hiring of Son as a Township employee; and [3] when he verified Township records enabling and/or otherwise directing the payment of salary/wage to Son from public monies.

The Commission ordered Sivick to pay $30,000 in restitution. Sivick appealed to the Commonwealth Court, which affirmed the Commission’s adjudication. Sivick then appealed to the Pennsylvania Supreme Court, which granted allowance of appeal on two issues:

  • First, did the Commission err in finding that Sivick committed a conflict of interest by approving and verifying his son’s payroll records?
  • Second, did the Commission have the authority to impose restitution on Sivick?

On the first issue, the Court held that the Commission had improperly found a conflict of interest. A public officer or employee performing an administrative or ministerial act that entails little or no discretion but “that benefits a subclass that includes an immediate family member does not, without more, constitute a conflict of interest violation.” Sivick verified the hours and approved the compensation for all Public Works employees, not just for his son. Under the subclass exception, the Supreme Court found there was no conflict of interest.

On the second issue, the Court found that the Commission did not have the authority under the Act to require Sivick to pay restitution. Specifically, the Court concluded that the plain language of the Act does not allow the Commission to impose restitution on a violator for an alleged monetary benefit that flows to an immediate family member. The Commission can only impose restitution on a public official or public employee who personally benefitted from violating the statute.

The Supreme Court admitted that this interpretation creates a risk of inconsistent application: a public employee or official can be required to pay restitution for illegally obtained personal financial gain but not for financial gain illegally obtained for his immediate relatives. The Court maintained that it was not its job to re-write the words of the Act. The General Assembly decided to not apply the restitution provision to close relatives. And, importantly for the Court, the General Assembly may have rationally concluded that restitution was not warranted when a family member reaps the financial benefit of the conflict of interest. In any case, the Court observed that “the Commission has other arrows in its quiver for sanctioning and deterring Conflicts of Interest.”

Finally, while the Court found that Sivick did not violate the Act when he verified the hours and approved the compensation for his son, it did not address the other actions that the Commission found to be a conflict of interest. The Supreme Court remanded the case to the Commission to determine the appropriate sanction and whether a new adjudication was warranted.

For public employees and officials, Sivick confirms that completing an administrative act for a subclass that includes a close relative who benefits from that act does not constitute a conflict of interest. More importantly, however, the Commission cannot require a public official or employee to pay restitution where the alleged financial benefit accrues to a close relative and not the public official himself. Of course, as the Court remarked, the Commission still has several other “arrows in its quiver” to sanction and deter conflicts of interest, so compliance remains top of mind.

A municipality or school district that is issuing debt (referred to herein as an “issuer”) needs to employ legal counsel to assist it with the debt issuance process. There are several legal roles in a bond issuance, two of which involve representing the issuer.  To begin with, the issuer already has its regular solicitor who serves as the issuer’s general counsel on a wide range of legal issues, such as labor matters, bidding and contracts, land development, and litigation.  When an issuer decides to issue debt to finance or refinance a capital project, it should also retain a special counsel, known as bond counsel, to assist both the issuer and its solicitor with the debt issuance process.  Bond counsel firms specialize in the legal aspects of debt issuance, including tax law, securities law, and state statutory law. Continue Reading The Relationship of Bond Counsel and Solicitor in a Bond Issue

On May 26, 2020 Representative Rob Freeman (Democrat – Northampton County) introduced House Bill 2548 in the Pennsylvania General Assembly, to provide a temporary reprieve to municipalities enrolled in Pennsylvania’s Municipal Financial Recovery Program. Mr. Freeman is the minority chair of the House Local Government Committee, the committee to which the bill was referred for consideration. Continue Reading COVID-19 Related Extension Proposed for Pennsylvania Municipal Financial Recovery Program

Attending public meetings is a big part of any municipal law practitioner’s routine, and, if I’m being honest, one of my favorite parts of my job. Before the COVID-19 pandemic, members of my group, myself included, frequently attended County, township and borough meetings. While I understand that a township board of supervisors meeting might not be everyone’s idea of a fun Thursday night, I like watching government at work. In today’s world, how many spaces exist where citizens can engage directly with their elected officials? Continue Reading Public Meetings in Pajama Pants