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IPPFA Recent Legal Developments

October 11th, 2009

ANNUAL TRAINING CONFERENCE
October 8, 2009
Lake Geneva, Wisconsin

 

1. Illinois Supreme Court Holds Surviving Spouses of Police Officers
Not Entitled to Cost of Living Increases

On March 19, 2009, the Supreme Court of Illinois issued its Opinion in
Roselle Police Pension Board v. Village of Roselle, 232 Ill.2d 546, 905
N.E.2d 831 (Ill.Sup.Ct.2009). Unfortunately, the court ruled that a pension
board lacks the statutory authority to award surviving spouses of police officers
cost of living increases.

A number of pension boards have granted cost of living increase
benefits under the theory that the Statute was ambiguous and that principles of
liberal construction permitted the pension board to award surviving spouses of
police officers cost of living increases. The Illinois Department of Professional
Regulation, Division of Insurance rendered an opinion that the Board lacked
the statutory authority to grant such increases and the Village of Roselle and
its attorneys, embarked on a crusade to have the court declare such cost of
living increases impermissible under Article III of the Illinois Pension Code.
Unfortunately, they prevailed.

The following organizations and attorneys filed briefs amicus curiae in
support of our position: Illinois Public Pension Fund Association (Richard and
Laura Puchalski), Metropolitan Alliance of Police (Joseph Mazzone), and
Fraternal Order of Police Labor Council (Heidi Parker). These organizations
stood together when it mattered. They should be applauded for doing so. The
Roselle Police Pension Board and this Firm fought and lost the battle, but in
our opinion, it was a battle worth fighting.

Despite the Supreme Court’s decision, Sola v Roselle Police Pension
Board, 342 Ill. App.3d 227 (2d Dist. 2003), stands for the proposition that those
previously granted increases should continue, as the board lacks the statutory
authority to amend or modify a previous decision to grant cost of living
increases. However, based on the Illinois Supreme Court’s Decision, no
further surviving spouses are eligible for cost of living increases.

2. Public Safety Employee Benefits Act Case


DeRose v City of Highland Park, 386 Ill. App.3d 658, 898 N.E.2d 1115 (2nd Dist. 2008).
Police officer with the Highland Park Police Department with eight (8)
years of service responded to an activated residential burglary alarm that had
been triggered, apparently during a severe storm. While on the call, the
Applicant slipped and fell and sustained a disabling injury to his shoulder,
resulting in the Pension Board awarding a line of duty disability benefit.
Thereafter, the officer applied to the City for benefits under the Public Safety
Employee Benefits Act (PSEBA), requiring the City to pay the officer’s health
insurance premiums.

The Parties proceeded to a bench trial. At the trial, the Plaintiff testified
that once he received the call he responded as quickly as he could in a safe
manner; that he did not activate the siren or overhead lights on his police
vehicle because doing so might have alerted any intruders to the residence
that he was approaching. Plaintiff acknowledged that there was a
thunderstorm, and there was very little lightning when he parked the squad car
near the front of the residence. Plaintiff further testified that there was no
backup officer because the Department was understaffed that evening. He
testified that he proceeded to the back of the house after checking the front,
and noticed a wooden deck which led to a sliding glass door. As Plaintiff
approached the sliding glass door looking for movement in the house, he
slipped and fell injuring his shoulder. The Plaintiff continued his investigation
determining that the alarm was a false alarm. On cross examination he did not
un-holster his firearm during his investigation. The City entered evidence that
the City of Highland Park Police Department received numerous calls in the
preceding years and that less than 1% of the calls were “bona fide”. Further
testimony was introduced that on the night of the incident, the Department
received more than twenty (20) alarm calls which was not an unusual number
during a power outage or a strong storm. The Plaintiff’s Commander testified
that he did not consider panic alarms to always constitute emergencies
because they were overwhelmingly false. The trial court ruled that the Plaintiff
reasonably believed he was responding to an emergency at the time he was
injured, because the alarm required “immediate action”. The City filed an
appeal.

On appeal the court was tasked with determining the meaning of
“emergency” as used in PSEBA, which was not defined by the Legislature.
The City argued that emergency means “the urgent need for assistance or
relief” or “an unforeseen combination of circumstances that calls for immediate
action”. The officer proffered a dictionary definition of the term as “a sudden
condition or state of affairs that calls for immediate action”. The court relied
upon yet another dictionary definition which defines emergency as “an
unforeseen combination of circumstances or the resulting state that calls for
immediate action”. Thus the court reasoned that, for purposes of PSEBA an
emergency is where it is “urgent and calls for immediate action”.
Applying the facts to that definition, the court soundly rejected the
City’s argument that the officer was not responding to an emergency because
he did not use his overhead lights and did not call for a backup officer. The
court concluded that to accept the City’s approach, even if the call was
eventually determined not to be bona fide, the officer investigating the call
cannot know whether it is bona fide until he has completed his investigation.
Until the officer is able to eliminate the possibility of danger, even if remote, he
must conclude the call requires his immediate attention and thus the call
presents an emergency. The court further reasoned that to accept the City’s
approach, officers would have to delay their responses to potentially
dangerous situations based on the notion that many similar situations were not
bona fide. Secondly, the City would have the statistically likely outcome of a
call control whether the call is an emergency regardless of what actually
happens on the call. The court held that a call requires an officer’s immediate
response as an emergency, until the officer eliminates the possibility that the
call is bona fide.

3. QILDRO – Division of Benefits Case

In Re Marriage of Winter, 387 Ill. App.3d 21, 899 N.E.2d 1080 (1st Dist. 2008).
Winter was a retired member of the Public Teacher’s Retirement Fund
of Chicago (pension fund) involved in a bitter divorce dispute which resulted in
him fleeing to England with the parties’ child. Mr. Winters refused to sign a
Consent to Issuance of a Qualified Illinois Domestic Relations Order (QILDRO)
or a Qualified Domestic Relations Order (QDRO). Given the fact that the entry
of a QILDRO was not possible without Mr. Winter’s consent and the court’s
contempt powers could not reach Winter in England, the court concluded that
the spouse had no adequate remedy at law and entered a preliminary
injunction, compelling the Pension Fund to freeze Winter’s retirement benefits
and hold those benefits in trust until the benefits could be apportioned by the
court, and thus preventing Winter from dissipating the assets previously
adjudicated to be marital property (i.e., pension benefits). The Pension Fund
was not made a party to the suit and did not receive notice and upon learning
of the entry of the preliminary injunction freezing Pension Fund assets, filed a
petition to intervene.

In a lengthy opinion, the Appellate court reviewed the action of the trial
court entering the preliminary injunction. Among the numerous arguments
made by Mr. Winter and the Pension Fund, the most significant was the two
arguments that were raised that the preliminary injunction deviated from the
Pension Code and case law and that issuance of the preliminary injunction
violated Mr. Winter’s rights. First the court rejected Winter’s contention that his
rights were impaired or diminished under the Illinois Constitution because the
total amount of his pension was unaffected. Winter’s full pension payments
were sent to a trustee, who was required to remain in possession of the funds
until further order of the court. Reasoning that the order curtails Winter’s
access to his pension, it was temporary in nature, and it prevented his
wrongful receipt of his share of pension benefits to the determent of his wife.
Finally, the court rejected the argument raised by Winter and the Pension
Board that the anti-alienation provisions contained in Article 17 of the Pension
Code prohibited the court from entering a preliminary injunction against the
Board. Drawing upon the equitable powers of the court, the court affirmed the
trial court, holding that the court had the power to correct an ongoing
wrongdoing by Mr. Winter to do justice between the parties, as Winter was not
free to turn to the protection afforded by Section 17-151 of the Pension Code
into a sword to keep his wife at bay from that portion of Winter’s pension
payments to which she is entitled to under the judgment of Dissolution of
Marriage. Accordingly, the court found that there was no deviation from the
Pension Code or case law.

In Re Marriage of Rafferty – Plunkett, 392 Ill. App.3d 100, 910 N.E.2d 670 (3rd Dist. 2009).

Marie and Patrick Plunkett became yet another unhappily divorced
couple destined to make case law suitable for inclusion in this portion of the
training seminar. Patrick was a member of the State University’s Retirement
System (SURS). The trial court entered a judgment order dissolving the
marriage and as part of the dissolution order approved as fair, just, and
equitable an oral agreement incorporating a provision that Marie was to be
awarded 50% of Patrick’s pension plan benefits acquired during the marriage,
which provided that Patrick had been receiving. Patrick apparently moved to
Ireland and failed to sign a Consent to Issuance of a Qualified Illinois Domestic
Relations Order and failed to live up to his end of the bargain, by not paying
Marie pursuant to the Dissolution Judgment Order.

The trial court entered a Rule to Show Cause against Patrick for his
failure to pay benefits and entered judgment in the amount of $68,374.00 and
ordered Patrick to execute a Consent to Issuance of a QILDRO. Marie than
issued citations to discover assets to various banks and brokerage firms and
SURS, and requested the court issue a turnover order to SURS to turnover
certain assets. The Trial court granted SURS Motion to Dismiss the citation to
discover assets and denied Marie’s Motion for a turnover order directed at
SURS. The trial court found that Patrick had not executed a Consent to
Issuance of a QILDRO and that the trial court was without statutory authority to
otherwise override the exemption provision of the Pension Code and the
Illinois Code of Civil Procedure. Marie appealed.

On appeal the court embarked on a detailed analysis of case law
involving public pensions and dissolutions of marriage similar to the approach
in Winter, cited supra. Once again relying on the equitable powers of the
court, the court reversed the decision of the trial court and held that the trial
court had the authority to enforce the voluntary fair, just, and equitable oral
settlement agreement, acknowledging that Patrick signed the written
Settlement Agreement, in which he consented to an award to Marie of 50%
of his pension plan benefits acquired during the marriage. Patrick’s written
and oral consent, even though not reduced to an actual consent and
QILDRO, was sufficient to constitute substantial compliance with the directive
of §1-119m-1 of the QILDRO Legislation. Therefore the court had the
authority to direct SURS to make pension payments directly to Marie.

 

4. Jurisdiction to Modify Pension Board Decision

Board of Education of the City of Chicago v. Board of Trustees of
the Public Schools’ Teachers’ Pension and Retirement Fund of Chicago,
(Retired Teachers Association of Chicago Intervening Plaintiff-Appellee).
No. 1-08-1517. Slip Op. Aug. 20, 2009 (1stDist. 2009)

January 24, 2005, the Board of Education (Board) filed a complaint
against the Trustees. The Board alleged that from July 1999 to July 2004, the
Trustees paid pensions to certain newly retired teachers on a basis not
authorized by the Illinois Pension Code (Pension Code) (40 ILCS 5/1-101 et
seq. (West 2006), resulting in overpayments from the Public Schools
Teachers’ Pension and Retirement Fund of Chicago (Fund) to the affected
retirees. The Board alleged that the Pension Code requires the Board to make
up shortfalls when the Fund’s assets drop below 90% of its total actuarial
liabilities. This Complaint was filed more than 35 days after the awards were
made.

Here, the Board sought leave to amend its Complaint to show that, in
awarding teachers pension credit, the Trustees essentially “rubber-stamped”
the recommendations of its staff, without conducting hearings or analysis of
the staff’s calculations. Thus, the Board argues that this case does not involve
“administrative decisions” as defined by the statute, but challenges a general
policy that went unchallenged in the underlying pension proceedings.
Count I of the complaint sought a declaration that the Trustees had
violated the Pension Code by using an unauthorized method of calculating
average salaries for teachers receiving 22 paychecks per year, as opposed to
those receiving 26 paychecks per year. Count II sought an accounting. Count
III sought an injunction ordering the Trustees to discontinue and remedy past
overpayments.

On October 12, 2006, the Board filed a motion for summary judgment on
counts I and II of its complaint. On June 15, 2007, following briefing and a
hearing, the circuit court granted the Board’s motion, ruling that the Trustees
had overpaid teachers receiving 22 paychecks per year, in violation of the
Pension Code. The case was set for further proceedings regarding an
accounting and remedy.

On July 18, 2007, the Retired Teachers sought leave to intervene in the
case, which the trial court granted on July 31, 2007. The Retired Teachers
filed a complaint for declaratory relief on September 4, 2007. The Retired
Teachers filed a supporting brief, arguing in part that the Board was barred
from seeking relief for failure to seek timely administrative review of the
pension awards at issue.

On December 20, 2007, following briefing and oral argument from the
parties, the circuit court entered an order treating the Retired Teachers’ brief
as a motion to dismiss and dismissing the Board’s complaint. The order also
set the case for status on the Board’s motion for leave to file a second
amended complaint. On May 9, 2008, the circuit court denied the Board leave
to file a second amended complaint, ruling that no new facts or law was
presented that would remedy the defect in the dismissed complaint. On June
6, 2008, the Board filed a timely notice of appeal to this court.
The Appellate Court quoted from a firefighters pension fund case, Karfs v.
City of Belleville, 329 Ill.App.3d 1198, 770 N.E.2d 256 (2002), at length
because it was relevant on certain points that favored the Board. Unlike the
other cases cited by the parties, Karfs centers on the unusual situation in
which a case is brought by a third-party governmental entity whose finances
are affected by the actions of a pension board. Karfs recognizes that a third
party-like the Board in this appeal-may challenge a method of calculation as
being prohibited by the Pension Code. Karfs also recognizes that such a third
party will not have an interest in and standing to seek the review of each
individual case that comes before the pension board, but will have standing to
challenge the decision regarding the calculation at issue.

Quoting from Karfs, “If, for example, in deciding a firefighter’s pension
benefit, the pension board uses or approves a method of calculation that is
prohibited by the Code or violates the labor contract, that decision may be
deemed to have a direct impact on a municipality’s duty to levy taxes in
sufficient proportions to enable the pension system to function, because it is
reasonably likely that the pension board would continue to use an improper
method to calculate other pensions, resulting in a depletion of the fund. Under
those facts, the municipality could seek a review of the agency’s decision
because the decision potentially impacts the municipality’s duty to provide a
sufficient sum to meet the requirements of the pension fund. We caution that
the pension board’s decision must impact a duty or interest of the municipality.
A municipality will not have an interest in and standing to seek the review of
each individual case that comes before the pension board. Furthermore, a
municipality has no authority to review or modify adjudicative decisions made
by an administrative agency. See Board of Trustees of Police Pension Fund v.
Washburn, 153 Ill.App.3d 482, 486-87, 505 N.E.2d 1209, 1212-13 (1987)”
Nevertheless, Karfs is distinguishable from the instant facts in one key
aspect. Karfs suggests that a third party must seek review of the calculation
decision within the 35-day period permitted in the Administrative Review Law.
However, Karfs involved an individualized miscalculation, whereas the
alleged miscalculation in this case was systemic.
The Appellate Court held that systemic miscalculation falls outside the
definition of an “administrative decision” under the review law. It is not a
“decision, order or determination of any administrative agency rendered in a
particular case,” but a “rule [ ], regulation[ ], standard[ ] or statement[ ] of
policy.” 735 ILCS 5/3-101 (West 2006). Moreover, even assuming arguendo that the
internal procedures producing the alleged miscalculation here were sufficiently
quasi-judicial to constitute an “administrative decision,” the review
law’s 35-day clock starts when the decision sought to be reviewed is served
upon the party affected by the decision, and no such notification appears to
have been given to the Board in this case. The Trustees and the Retired
Teachers note that members of the Board also are also members of the
Trustees, but there does not appear to be any evidence that even those
members were notified of the decision to calculate the underlying pensions at
issue in this appeal in a particular manner.

Kosakowski v Calumet City Police Pension Fund, 389 Ill. App.3d 381, 906 N.E.2d 689 (1st Dist. 2009).
Calumet City Police Pension Board awarded a police officer a line of
duty disability injury as a result of a back injury he sustained while making an
arrest. The Plaintiff received full salary and benefits for up to one year or until
January 5, 2003 under the Public Employee Disability Act (PEDA). During this
time pension calculations were deducted. From the period of January 6, 2003
through April 19, 2004 the Plaintiff received temporary total disability benefits
(TTD) under the Workers’ Compensation Act, for which no pension
contributions were deducted. The Pension Board awarded a line of duty
disability and issued a written decision awarding the Plaintiff line of duty
disability benefits based upon 65% of his salary attached to his rank as of
January 4, 2003, the day before his PEDA benefits ran. No judicial review was
sought by either party of the Board’s written decision.

The Pension Board requested an advisory opinion from the
Department of Insurance (DOI) as to the appropriate salary to be use. The
Department responded stating that the salary to be used for pension purposes
should be the last day the officer was on the payrolls. According to the DOI, if
an officer receives PEDA, the salary to be used for pension purposes is the
salary the officer was receiving on the last day that contributions were withheld
and creditable service was earned. Without affording the Officer a hearing, the
Board issued a letter to the Officer advising him that it had miscalculated the
benefits, and notified him that his benefits would be reduced from the next
twelve (12) monthly pension payments due to an alleged overpayment of
$4,840.56. The Plaintiff sought Administrative Review seeking reversal of the
Board’s reduction of his benefits and a demand of repayment of the alleged
overpayment and reinstatement of his monthly benefit. The trial court
reversed the Pension Board’s recalculation of the Officer’s benefit finding that
the Board lacked jurisdiction to make such a modification, since the thirty-five
(35) day time requirement for Administrative Review had passed. The Board
appealed.

On appeal the Board argued that it made an “error” in the initial
calculation of the disability pension to which the Officer was entitled.
According to the Board, it calculated the benefit on the last day that the Officer
received workers compensation benefits, where as it should have calculated
the Plaintiff’s benefits based upon his salary as of January 5, 2003, the last
day he received PEDA benefits, from which pension contributions were
deducted. The Board relied on §3-144.2 of the Pension Code which permits
the deduction of any amounts of benefits paid due to overpayment, fraud,
misrepresentation, or error. No claim was made that the error was a product
of fraud or misrepresentation. Interestingly, the court declined to adopt the
Rossler court’s limited interpretation of error which is quoted in §3-144.2 of the
Code, the court was still required to interpret whether an error was made
within the meaning of that Statute. The court noted that although the
Department of Insurance is authorized to render advisory opinions, the Statute
does not mandate that a Pension Board follow or adopt those
recommendations. In computing the Officer’s disability benefits, the Board
interpreted the phrase “at the date of suspension of duty” to mean the last date
the Plaintiff worked. However, after the DOI opinion, the Board interpreted §3-
144.2 that the Officer’s benefits should have been calculated based upon his
salary as of the day he received PEDA benefits from which pension
contributions were deducted. The court held that the Pension Board’s error
did not qualify as an error, which should be quoted within the meaning of §3-
144.2 of the Act. The Board made no mathematical error in its calculation,
rather the Board’s claim of error was premised on its reinterpretation of §3-
114.2 following the DOI advisory opinion.

The court held that the Board’s changes in interpretation of the Code
based upon the DOI recommendation did not constitute error which was
quoted within the meaning of §3-114.2 of the Act. The court also commented
that the Pension Board should have afforded the Officer procedural due
process before attempting to modify the Officer’s disability pension, meaning
that he should have received notice and afforded a hearing. The judgment of
the trial court was affirmed.

Harrisburg Police Pension Board et. al. v Harper, No. 5-08-0352,
SlipOp.Sept. 8, 2009 (5th Dist. 2009)

The Illinois Department of Insurance (DOI) conducted an audit on the
Harrisburg Police Pension Board. In its audit summary of findings, the audit
concluded that certain original pension determinations were made which
mistakenly included in beneficiaries salaries a $6,000.00 retirement incentive
and in one case, a clothing allowance, which according to the DOI resulted in
greater payments to those beneficiaries than their actual salaries justified.
Following receipt of the audit, the treasurer wrote to the Pension Board,
recommending that the trustees change the beneficiaries’ benefits to comply
with the DOI audit and requested direction from the Board. When the
treasurer received no response to his letter, he unilaterally adjusted the
pension payments to reflect the figures as calculated by the DOI. The Pension
Board then filed for a writ of mandamus, seeking to compel the treasurer to
reinstate the beneficiaries’ retirement amounts. The trial court entered an
order for mandamus, the treasurer appealed.

A writ of mandamus commands a public officer to perform an official,
non-discretionary duty that the petitioner is entitled to have performed and that
officer has failed or refused to perform (citation omitted). Here, it was
undisputed that the treasurer was a public officer and that the duty is
ministerial (i.e., no exercise of discretion is involved). The court reviewed
various provision of Article III of the Illinois Pension Code, which reflected that
it was the pension board, not the treasurer that had the exclusive authority to
administer the pension fund and to pay benefits (40 ILCS §5/3-128). Further,
the trustees have a duty to order pension payments and other benefits (40
ILCS §5/3-133). The treasurer is only authorized to hold or pay out money
following the direction of the pension board trustees (40 ILCS §5/3-132).

The treasurer attempted to defend his actions by relying upon §5/3-
144.2 of the Pension Code, allowing deductions from future payments due to
overpayment, due to fraud, misrepresentation, or error. The court noted that
to the extent that the Pension Code authorizes corrections for overpayments,
etc., it gives authority to the trustees not the treasurer. The court rejected the
treasurer’s argument that §5/3-144.2 justified the actions of the treasurer or
should that provision defeat the pension board’s action for mandamus.
Parenthetically, the court noted that the treasurer could have filed a counterclaim seeking affirmative relief, but declined to decide that issue as it was not
properly pled. Would the decision have been different?

5. Pension Spike Cases

Kocek v Board of Trustees of the Tinley Park Police Pension
Fund, Cook County Case No.: 07 CH 7152; First District Appellate Court
No.: 09-0806

On November 11, 2005, the Plaintiff informed the Pension Board that
he intended to retire. The Plaintiff retired on January 14, 2006 and received a
retirement pension. On May 17, 2006, the Plaintiff and the Village Treasurer
attended a Pension Board meeting to discuss a retroactive salary increase that
would increase the Plaintiff’s pension. On that date, the Pension Board
granted the Plaintiff an increase in his pension and the Plaintiff received his
increased pension on May 25, 2006. On November 10, 2006, the Pension
Board notified the Plaintiff that his pension amount was incorrect and that the
Pension Board intended to hold a hearing to reduce the Plaintiff’s pension
benefit. On August 1, 2007, the Circuit Court granted the Plaintiff’s motion for
a preliminary injunction enjoining the Pension Board from holding a hearing to
reduce the Plaintiff’s pension benefit.

The Court held the Pension Board lacked jurisdiction to review or
modify its May 17, 2006 decision to increase the Plaintiff’s pension because
the 35-day administrative review period had expired. The Pension Board
argued however, that Section 3-114.2 of the Pension Code permitted the
Pension Board to hold a hearing. Section 3-144.2 permits the “…amount of
any overpayment, due to fraud, misrepresentation or error, of any pension or
benefit granted under this Article may be deducted from future payments to the
recipient of such pension or benefit.”

The Court held that the Pension Board failed to establish fraud or
misrepresentation on the part of the Village. The Court also held that even if
the Pension Board established fraud on the part of the Village, Section 3-
114.2, as interpreted by the Rossler case, did not apply because that section
has been interpreted to require a showing of fraud or misrepresentation by the
claimant (ie. Plaintiff). The Court held the Pension Board did not show fraud
by any party. Therefore, the Court granted the Plaintiff’s motion for a
permanent injunction enjoining the Pension Board from holding a hearing to
determine whether to reduce the Plaintiff’s pension. The Court denied the
Pension Board’s motion to dissolve the preliminary injunction. The Plaintiff
filed a motion for sanctions against the Pension Board and its attorneys. The
Court denied that motion.

The Pension Board appealed the denial of its motion to dissolve the
preliminary injunction. The Plaintiff cross-appealed the denial of his motion for
sanctions. The parties are currently briefing the issues and a decision is not
anticipated until next year.

 

Principe v Board of Trustees of the Melrose Park Police Pension
Fund, Cook County Case No.: 08 CH 30957.

Prior to November 1, 2006, the Plaintiff was a lieutenant with the
Melrose Park Police Department. On November 1, 2006, the Mayor made
Plaintiff the “Administrative Aide to the Chief of Police” (“AACP”). As AACP,
the Plaintiff performed the same job duties he had performed as a lieutenant.
On November 16, 2006, the Plaintiff received a $13,223.42 pay raise to reflect
his new role as AACP. In December 2006, the Plaintiff asked the Pension
Board for a computation of his retirement pension. The Pension Board based
the Plaintiff’s retirement pension on the Plaintiff’s salary as a lieutenant.
Sometime in January 2007, the Village passed an ordinance creating the
AACP position. The Plaintiff retired in April 2007 and requested a pension
based on his salary as AACP. The Pension Board granted the Plaintiff a
retirement pension based on his salary as a lieutenant. The Plaintiff filed a
timely complaint for administrative review.

The Pension Board determined that the AACP is not a “rank” for
purposes of calculating the Plaintiff’s pension based on “salary attached to
rank.” The Pension Board argued that Melrose Park, as a non-home-rule
municipality, lacked authority to create an AACP rank. The Pension Board
noted that all promotions in Melrose Park are governed by the Board of Fire
and Police Commissioners’ (“BOFPC”) Act. The BOFPC Act allowed the
municipality to create only three exempt positions – Police Chief and two
Deputy Chiefs. Melrose Park already had one Police Chief and two Deputy
Chiefs when the Mayor created the AACP position. Therefore the Pension
Board argued that the Mayor lacked legal authority to create an exempt
position called AACP to which he unilaterally promoted the Plaintiff.

The Pension Board also argued that the Mayor violated the collective
bargaining agreement (“CBA”) by creating the AACP position. The exclusive
bargaining unit negotiated all wages for non-exempt positions, including
lieutenants. The Pension Board argued the municipality never bargained over
the wages for the AACP and therefore the municipality violated the CBA.

The Circuit Court affirmed the Pension Board’s decision. The Court
held that AACP was not a “rank” recognized by the CBA and it was not an
exempt position recognized by the BOFPC Act. Therefore, the municipality
lacked authority to unilaterally create the position and establish a
corresponding salary. The Pension Board properly based the Plaintiff’s
pension on his salary attached to rank as a lieutenant.

The Circuit Court currently has this case under advisement and the
parties are waiting for the Court to enter its final order.

 

Schultz v Board of Trustees of the Willow Springs Police Pension
Fund, et al., Cook County Case No.: 07 CH 2168; First District Appellate
Court No.: 08-2770

Sometime in May 2002, the Plaintiff, former Police Chief, wrote a letter
to the Village indicating that he intended to retire. The Village granted the
Plaintiff a pay increase of approximately $20,000.00 on November 24, 2002.
The Plaintiff retired on December 6, 2002. The Plaintiff received two
retroactive pay checks after he retired, reflecting the increased salary.

The Plaintiff contacted the Pension Board’s accountant and provided
the accountant with his salary information for purposes of calculating his
retirement pension. The Pension Board’s accountant prepared two separate
pension checks based on the increased salary amount. At the time, a former
pension board trustee and the Village treasurer signed the two pension
checks. The Plaintiff received both pension checks in January 2003. The
Pension Board never held a hearing to determine the Plaintiff’s salary attached
to rank or voted prior to issuing the two checks. The trustee who signed the
pension checks later contacted the Pension Board’s accountant and asked her
to recalculate the Plaintiff’s pension based on a the lower salary amount.

In March 2003 the Pension Board notified the Plaintiff that it intended to
hold a hearing to formally authorize his retirement pension benefit. In April
2003 the Plaintiff requested an advisory opinion from the DOI. The DOI wrote,
“From the information you provided, Mr. Schultz received at least two (2)
paychecks based on a salary of $80,000.00 and received retirement checks
based on that salary. If this information is correct, the Pension Division
opinion is that Mr. Schultz pension should be based on his salary of
$80,000.00.”

The Pension Board held hearings in 2005 and 2006 and issued a
Decision and Order finding that the $20,000.00 increase constituted a bonus
that could not be included in salary for purposes of calculating the Plaintiff’s
pension. The Plaintiff filed a timely complaint for administrative review. The
Circuit Court reversed and held that the Pension Board rendered a “final
administrative decision” after it issued a check based on the $80,000.00 salary
amount and the Plaintiff received the check. Therefore, the Pension Board
lacked jurisdiction to hold a hearing because more than 35 days had passed
since it rendered the final administrative decision sometime in January 2003.

The Pension Board appealed to the First District Appellate Court. The
Appellate Court has taken the case on the Pension Board’s brief only because
the Plaintiff did not file a response brief.

 

Smith v. Board of Trustees of the Westchester Police Pension
Fund, Cook County Case No.: 08 CH 43592, First District Appellate Court
No.: 09-0917


On March 23, 2007, the Plaintiff, former Police Chief, wrote a letter to
the Village indicating that he intended to retire and requesting a salary
increase of approximately $8,224.00 (Step increase from level 4 to level 6).
The Plaintiff believed that he was entitled to the increase because the former
Fire Chief had received the same increase upon notification of his intent to
retire. On May 1, 2007, the Village granted the Plaintiff his requested pay
increase, a 4% increase (3% raise + 1% merit pay) granted to all non-union
Village employees, and holiday pay of $6,177.00. The Plaintiff retired on July
13, 2007. The Plaintiff contended that his salary attached to rank should have
been $113,261.62.

The Pension Board calculated the Plaintiff’s salary attached to rank
based on his salary (Step level 4) prior to the requested May 1, 2007 increase,
the 3% increase given to all employees on May 1, 2007 (the Pension Board
did not include the 1% merit pay), and the holiday pay the Plaintiff had
received on December 1, 2006. The Pension Board excluded the May 1, 2007
holiday pay amount because the Village always paid holiday pay in December,
not May as was done for the Plaintiff. The Pension Board contended that the
Plaintiff’s salary attached to rank should have been $103,324.45.

The Illinois Department of Financial and Professional Regulation,
Division of Insurance (“DOI”) issued two separate advisory opinions regarding
this issue. The DOI concluded: “This is clearly a retirement incentive and
would not be added to the salary attached to rank for pension calculation
purposes.” The DOI also wrote that the step increase was “…either a pay
spike or a retirement enhancement. No matter how it is labeled, this would not
be considered salary for pension purposes.”

The Pension Board held a hearing to determine the Plaintiff’s salary
attached to rank for purposes of calculating his pension. The Plaintiff filed a
timely complaint for administrative review. The Circuit Court affirmed the
Pension Board’s decision. The Circuit Court held that the Pension Board’s
decision was not clearly erroneous based on “…all of the circumstances of this
particular transaction” in the administrative record. The Circuit Court also
relied heavily on the DOI’s advisory opinions and the fact that the Plaintiff
himself requested the increase in anticipation of his retirement.

The Plaintiff appealed to the First District Appellate Court. The parties
are currently briefing the issues and a decision is not anticipated until next
year.

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