Section 12720.209 - Financial plan of an assisted city(a)Requirement of a financial plan.--Until such time as the authority's existence is terminated as provided in section 204, an assisted city shall develop, implement and periodically revise a financial plan as described in this section. The authority shall not provide the net proceeds of the initial bond issue described in section 317 and any subsequent bond issue, other than any amounts necessary to enable such city to pay principal of or interest on its outstanding bonds, or lease payments securing bonds of other government agencies, which payments, in the authority's discretion, may be made directly to the paying agents for such bonds, until the authority and the city have agreed upon such a plan.(b)Elements of plan.--The financial plan shall include: (1) Projected revenues and expenditures of the principal operating fund or funds of the city for five fiscal years consisting of the current fiscal year and the next four fiscal years.(2) Plan components that will: (i) eliminate any projected deficit for the current fiscal year and for subsequent fiscal years;(ii) restore to special fund accounts money from those accounts used for purposes other than those specifically authorized;(iii) balance the current fiscal year budget and subsequent budgets in the financial plan through sound budgetary practices, including, but not limited to, reductions in expenditures, improvements in productivity, increases in revenues or a combination of these steps;(iv) provide procedures to avoid a fiscal emergency condition in the future; and(v) enhance the ability of the city to regain, improve or maximize access to the short-term and long-term credit markets.(c)Standards for formulation of plan.--(1) All projections of revenues and expenditures in a financial plan shall be based on reasonable and appropriate assumptions and methods of estimation, all such assumptions and methods to be consistently applied.(2) All revenue and appropriation estimates shall be on a modified accrual basis in accordance with generally accepted standards. Revenue estimates shall recognize revenues in the accounting period in which they become both measurable and available. Estimates of city-generated revenues shall be based on current or proposed tax rates, historical collection patterns and generally recognized econometric models. Estimates of revenues to be received from the State government shall be based on historical patterns, currently available levels or on levels proposed in a budget by the Governor. Estimates of revenues to be received from the Federal Government shall be based on historical patterns, currently available levels or on levels proposed in a budget by the President or in a congressional budget resolution. Nontax revenues shall be based on current or proposed rates, charges or fees, historical patterns and generally recognized econometric models. Appropriation estimates shall include, at a minimum, all obligations incurred during the fiscal year and estimated to be payable during the fiscal year or in the 24-month period following the close of the current fiscal year and all obligations of prior fiscal years not covered by encumbered funds from prior fiscal years. Any deviations from these standards of estimating revenues and appropriations proposed to be used by a city shall be specifically disclosed and shall be approved by a qualified majority of the board.(3) All cash flow projections shall be based upon reasonable and appropriate assumptions as to sources and uses of cash, including, but not limited to, reasonable and appropriate assumptions as to the timing of receipt and expenditure thereof, and shall provide for operations of the assisted city to be conducted within the resources so projected. All estimates shall take due account of the past and anticipated collection, expenditure and service demand experience of the assisted city and of current and projected economic conditions.(d)Form of plan.--Each financial plan shall, consistent with the requirements of an assisted city's home rule charter or optional plan of government: (1) be in such form and shall contain: (i) for each of the first two fiscal years covered by the financial plan, such information as shall reflect an assisted city's total expenditures by fund and by lump sum amount for each board, commission, department or office of an assisted city; and(ii) for the remaining three fiscal years of the financial plan, such information as shall reflect an assisted city's total expenditures by fund and by lump sum amount for major object classification;(2) include projections of all revenues and expenditures for five fiscal years, including, but not limited to, projected capital expenditures and short-term and long-term debt incurrence and cash flow forecasts by fund for the first year of the financial plan;(3) include a schedule of projected capital commitments of the assisted city and proposed sources of funding for such commitments; and(4) be accompanied by a statement describing, in reasonable detail, the significant assumptions and methods of estimation used in arriving at the projections contained in such plan.(e)Annual submission of plan.--An assisted city shall develop, and the authority shall review and act upon, an initial five-year financial plan for the city as soon as practicable after the effective date of this act. During each subsequent fiscal year while the requirements of subsection (a) are applicable, the mayor or chief executive officer of each assisted city shall, at least 100 days prior to the beginning of its fiscal year or on such other date as the authority may approve upon the request of the assisted city, prepare and submit its proposed five-year plan. At the same time the plan is submitted, the mayor or chief executive officer shall also submit to the authority: (1) the mayor's or chief executive officer's proposed annual operating budget and capital budget which shall be consistent with the first year of the financial plan and which shall be prepared in accordance with the assisted city's home rule charter or other optional plan of government; and(2) a statement by the mayor or chief executive officer that such budget: (i) is consistent with the financial plan;(ii) contains funding adequate for debt service payments, legally mandated services and lease payments securing bonds of other government agencies; and(iii) is based upon reasonable and appropriate assumptions and methods of estimation.(f)Authority review and approval of plan.--(1) The authority shall promptly review each financial plan, proposed operating budget and capital budget submitted by the assisted city. In conducting such review, the authority shall request from the city controller of the assisted city an opinion or certification prepared in accordance with generally accepted auditing standards, with respect to the reasonableness of the assumptions and estimates in the financial plan. The city controller and other elected officials shall comply with any such request from the authority. Not more than 30 days after submission of a financial plan and proposed operating budget, the authority shall determine whether:(i) the financial plan projects balanced budgets, based upon reasonable assumptions as described in this section, for each year of the plan; and(ii) the proposed operating budget and capital budget are consistent with the proposed financial plan. If the authority determines that these criteria are satisfied, the authority shall approve such financial plan by a qualified majority vote.(2) The authority shall not be bound by any opinions or certifications of the city controller of the assisted city issued pursuant to this subsection.(3) If the authority fails to take any action within 30 days on a financial plan, the financial plan as submitted shall be deemed approved. However, if during the 30 days a written request by two members of the authority board for a meeting and vote on the question of approval of the financial plan has been submitted to the chairperson and a meeting and vote does not take place, the financial plan shall be deemed disapproved.(g)Authority disapproval of plan.--(1) If the authority disapproves the proposed financial plan, the authority shall, when it notifies an assisted city of its decision, state in writing in reasonable detail the reasons for such disapproval, including the amount of any estimated budget imbalance.(2) The assisted city shall submit a revised financial plan to the authority within 15 days of such disapproval, which revised plan eliminates the budget imbalance. Not more than 15 days after the submission of such revised financial plan, the authority shall determine whether the revised plan satisfies the criteria set forth in subsection (f)(1). If the authority determines that these criteria are satisfied, the authority shall approve such financial plan by a qualified majority vote. If the authority shall not so approve the financial plan, then the authority shall, subject to the occurrence of the events described in section 210(e), certify the assisted city's noncompliance with the financial plan to the Secretary of the Budget.(h)Revisions to plan.--(1) While the requirements of subsection (a) remain applicable, the plan shall be revised on an annual basis to include the operating budget for the next fiscal year and to extend the plan for an additional fiscal year. In addition, the mayor or chief executive officer of an assisted city shall, within 90 days of assuming office, propose revisions to the financial plan or certify to the authority that he or she adopts the existing plan. A city may, during the course of a fiscal year, submit proposed revisions to the financial plan and shall submit a proposed revision for any amendment to the city's operating or capital budget.(2) The authority shall review each proposed revision within 20 days of its submission. The authority shall approve the revision if it will not, based on reasonable assumptions, cause the plan to become imbalanced. Proposed revisions shall become part of the financial plan upon the approval of a qualified majority of the authority board, unless some other method of approval is permitted by authority rules and regulations approved by a qualified majority or pursuant to an agreement with the city contained in an intergovernmental cooperation agreement. If the authority fails to take action within 20 days on a proposed revision, such submission shall be deemed approved unless a written request for a meeting and vote has been made in accordance with subsection (f)(3) in which event, if a meeting and vote does not take place, the proposed revision shall be deemed disapproved.(3) If the governing body of an assisted city adopts a budget inconsistent with an approved financial plan, that city shall submit the enacted budget to the authority as a proposed revision to the plan. The authority shall review the proposed revision within 30 days of its submission, in accordance with the criteria set forth in subsection (f) and the approval process set forth in paragraph (2).(i)Supplemental reports.--Within 45 days of the end of each fiscal quarter, or monthly if a variation from the financial plan has been determined in accordance with section 210(c), the mayor or chief executive officer of an assisted city shall provide the authority with reports describing actual or current estimates of revenues and expenditures compared to budgeted revenues and expenditures for such period reflected in its cash flow forecast. Each report required under this section shall indicate any variance between actual or current estimates and budgeted revenues, expenditures and cash for the period covered by such report. An assisted city shall also provide periodic reports on debt service requirements in conformity with section 210(b).(j)Effect of plan upon contracts and collective bargaining agreements.--(1) A contract or collective bargaining agreement in existence in an assisted city prior to the approval by the authority of a financial plan submitted pursuant to this section shall remain effective after approval of such plan until such contract or agreement expires.(2) After the approval by the authority of a financial plan submitted pursuant to this section, an assisted city shall execute contracts and collective bargaining agreements in compliance with such plan. If a city executes a contract or a collective bargaining agreement which is not in compliance with the plan, the contract or agreement shall not be void or voidable solely by reason of such noncompliance, but the city shall submit to the authority a proposed revision to the plan which demonstrates that revenues sufficient to pay the costs of the contract or collective bargaining agreement will be available in the affected fiscal years of the plan.(k)Effect of plan upon certain arbitration awards.--(1) After the approval by the authority of a financial plan submitted pursuant to this section, any determination of a board of arbitration established pursuant to the provisions of the act of June 24, 1968 (P.L. 237, No. 111), referred to as the Policemen and Firemen Collective Bargaining Act, providing for an increase in wages or fringe benefits of any employee of an assisted city under the plan, in addition to considering any standard or factor required to be considered by applicable law, shall take into consideration and accord substantial weight to: (i) the approved financial plan; and(ii) the financial ability of the assisted city to pay the cost of such increase in wages or fringe benefits without adversely affecting levels of service.(2) Such determination shall be in writing, and a copy thereof shall be forwarded to each party to the dispute and the authority. Any determination of the board of arbitration which provides for an increase in wages or fringe benefits of any employee of an assisted city shall state with specificity in writing all factors which the board of arbitration took into account in considering and giving substantial weight to: (i) the approved financial plan of the assisted city; and(ii) the assisted city's financial ability to pay the cost of such increase.(3)(i) Any party to a proceeding before a board of arbitration may appeal to the court of common pleas to review: (A) the consideration of the assisted city's financial plan;(B) the determination as to the assisted city's financial ability to pay; or(C) the failure of the board of arbitration to issue a determination, including a detailed writing of all factors which the board of arbitration took into account in considering and giving substantial weight to the assisted city's financial ability to pay and the assisted city's financial plan.(ii) The decision of the board of arbitration shall be vacated and remanded to the board of arbitration if the court finds:(A) that the board of arbitration failed to take into consideration and accord substantial weight to the approved financial plan;(B) that the board of arbitration's determination as to the assisted city's financial ability to pay is not supported by substantial evidence as produced by the parties to the proceedings before the board of arbitration; or(C) that the board of arbitration has failed to state with specificity in writing the factors which it took into account in considering and giving substantial weight to the assisted city's financial ability to pay or the assisted city's approved financial plan.(iii) Such appeal shall be commenced not later than 30 days after the issuance of a final determination by the board of arbitration.(iv) If, after the exhaustion of all appeals, the final arbitration award is not in compliance with the approved financial plan, the award shall not be void or voidable solely by reason of such noncompliance, but the assisted city shall submit to the authority a proposed revision to the plan which demonstrates that revenues sufficient to pay the costs of the award will be available in the affected fiscal years of the plan. 1991, June 5, P.L. 9, No. 6, § 209, imd. effective. Affected by 2002, Dec. 30, P.L. 2001, No. 230, § 8(2)(ii), imd. effective. Amended 2022, July 7, P.L. 440, No. 36, § 4, effective in 60 days [Sept. 6, 2022].