CLEARFIELD – The Clearfield County Commissioners adopted county public official bonding changes when enacting Act 106 and authorizing the county to obtain individual bonds, blanket bonds or crime insurance covering county officers and employees at their regular meeting Tuesday.
The act, immediately effective Nov. 23, revised the county code provisions concerning public official bonds. The changes apply to all counties, which will no longer need to purchase many of the separate bonds payable to the commonwealth.
In addition, there are new provisions requiring counties to establish the amount of financial security coverage for public officials and county employees. Counties were not required to approve a resolution; however, a sample resolution was provided online so that counties could document their actions, according to the County Commissioners Association of Pennsylvania’s Web site.
As the county’s governing body, the commissioners were directed by the resolution to establish a procedure by which it will annually determine the form and required amount of required security that will be reasonably sufficient to protect against the risks of loss.
The commissioners were also directed to appoint a risk manager to compile and submit information relevant to the determination of an amount of required security. County Solicitor Kim Kesner indicated the county didn’t have a risk manager, a position that could be filled by a commissioner.
Commissioner Chairperson Joan Robinson-McMillen suggested that the board’s sitting chairperson serve as the county’s risk manager. The board later approved her suggestion, 3-0, in a separate motion after first passing the resolution for Act 106.
The act requires the form and contents of a bonds and insurance obtained in compliance be approved by the county governing body after review by the county’s solicitor and consultation with the county risk manager, according to the resolution.
Further, the risk manager is designated to submit information to the commissioners prior to the close of every calendar year as to the amount of security that the risk manager recommends that the county maintain during the succeeding year and otherwise to provide the information to enable the board to enact the bond and insurance required by the act for the succeeding year.
In the course of performing the aforementioned duties, the risk manager and the solicitor must confer to determine the form and content of the bond and insurance would comply with the provisions of Act 106. At least two weeks prior to the close of every calendar year, the risk manager must present the form and amount of required security, together with a recommendation as to the bond and policy satisfying the act’s criteria.
In a memo dated Nov. 28 but updated Dec. 21, John R. Sallade, CRM, managing director, insurance programs, stated Gov. Tom Corbett had signed SB 834 into law, and the new Act 106 made significant changes to the way counties provide security to protect themselves, their taxpayers and other entities for which they collect money from embezzlement or other loss of monies at the county level.
Sallade explained the changes and outlined steps counties should take in the near future to comply with this law and to provide the appropriate proof of compliance for newly elected officials to be sworn into office in January 2012.
In general, he stated that Act 106 “simplifies the process” by providing bonding or crime insurance coverage for newly elected county officials. He stated that “outdated provisions and coverage requirements,” which were scattered throughout the county codes, are repealed and provisions are consolidated.
Instead of setting fixed amounts for bond or crime coverage in the law, Act 106 allows each county to determine the security needed to meet its obligations based on its liability exposure for losses.
According to Sallade, Act 106 specifies official security must be provided for county officials and employees. The act allows counties to choose individual bonds, blanket bonds or crime insurance to provide security for public officials who are required to obtain official security.
Sallade stated that the CCAP advises counties to consider that bonds will reimburse the county for loss due to embezzlement, but the amounts paid by the bond will need to be repaid to the bonding company. He reminded that bonds are not insurance, and crime insurance will pay a covered loss, up to the limit of liability in the crime insurance policy, without requiring reimbursement of the payment.
Act 106 lists the following county officers and their home rule equivalents for which official security must be provided: each county commissioner, chief clerk, controller, treasurer, prothonotary, sheriff, coroner, clerk of courts of the court of common pleas, clerk of courts of the orphans’ court division of the court of common pleas, recorder of deeds, register of wills, probation and parole officers (if required by order of the court), fire marshal and deputy fire marshals (if required by law), and secretary of the board of health and the health officer (if required by law). The act also requires the county to obtain official security coverage for all county officers and employees who are not listed specifically within the act, including deputies and other appointees in each county office, “who are required to receive, account for or hold any money and other property by virtue of their office or employment.”
Sallade noted three exceptions.
- The act does not apply to bonds for magisterial district judges, so the process and need to have them in place for MDJ’s remains the same as in prior years.
- The act does not apply to tax collector bonds as they are required by a separate law, not the county code.
- The Act does not apply to county treasurers acting as tax collectors as provided in section 4 of the Local Tax Collection Law. They will still need a separate bond payable to the commonwealth.
According to Sallade, Act 106 specifies the crime insurance bought by the county must be “endorsed with faithful performance of duty coverage which insures, as a minimum, against events of loss of money or other property, resulting from one or more fraudulent or dishonest acts, including but not limited to, embezzlement, theft, forgery, similar acts of dishonesty or fraud by a county officer or employee acting alone or in collusion with others, or from a breach of fiduciary duty or a failure of a county officer or employee to perform faithfully the officer’s or employee’s duties or to account properly for all money and property received or held by virtue of the officer’s or employee’s office or employment.”
“Counties should make sure their crime coverage includes this or very similar wording,” he wrote. He stated that as with the prior requirements in the county code, the coverage had to be in place before the officials began their official duties.