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Appellate Defines Requirements for Approving Pensions

January 14th, 2016

Balderman v. Board of Trustees of Police Pension Fund of the Vil. Of Chicago Ridge, 2015 IL App (1st) 140482

In a recent opinion, the First District Appellate Court issued a decision, which makes clear the requirements for pension board to properly approve a retirement or disability pension.  The Appellate Court affirmed the trial court’s finding that the pension board had not rendered a final administrative decision regarding a pension application and, therefore, retained jurisdiction to convene a hearing to consider the salary of the applicant.

Both Balderman, the chief of police, and Kapelinski, the deputy chief of police, had a “buyout” provision in their contract that included a 20% raise in salary on their last day of employment.  Kapelinski also served as a trustee on the pension board.


On April 28, 2010, Balderman submitted a line-of-duty disability pension application.  The same day, without conducting any investigation, the pension board considered Balderman’s disability pension application.  Over the pension board president’s reservations, the pension board voted 5-0 on Kapelinski’s motion to approve Balderman’s disability pension.  The same day of the hearing, Kapelinski, acting as pension board secretary, signed a document acknowledging Balderman’s salary to include the 20% raise, for purposes of determining the monthly pension amount.  The Board did not consider or vote to approve Balderman’s pension or salary.  Following the hearing, a written “Finding and Decision” was distributed to and then signed by all of the pension board members.  The Finding and Decision was never presented at an open meeting of the pension board and did not include any determination regarding Balderman’s salary attached to rank for purposes of his pension.


On May 6, 2010, Kapelinski applied to the pension board for a regular retirement pension, effective May 29, 2010.  Even though he had been awarded a disability pension on April 28, 2010, Balderman signed Kapelinski’s retirement application on May 6, certifying creditable service.  The pension board never voted to approve Kapelinski’s retirement pension application, pensionable salary, or the total amount of pension.  Nevertheless, the necessary Village representatives approved the calculations for both Kapelinski’s and Balderman’s pensions.  The Illinois Department of Insurance issued an advisory opinion that the 20% increases in salary should be included in the pension calculations.


On October 21, 2010, the pension board served notice to Balderman and Kapelinski of a hearing to investigate and/or determine final salary amounts for pension purposes.  Both Balderman and Kapelinski filed a complaint for declaratory and injunctive relief seeking to prevent the pension board from taking any action to alter their pensions.  The pension board maintained no final order for payment was ever approved by a majority vote.


In finding the pension board retained jurisdiction, because it had not issued a final administrative decision, the Appellate Court noted, “It is elementary that a final decision of an administrative agency must be in writing…the written decision must be prepared and provided to each board member at or before the time the board votes to take final action on the application.”  Balderman, 2015 IL App (1st) 140482 ¶31.  The Appellate Court found the pension board had taken “no action whatsoever with respect to Kapelinski’s application.”


The Appellate Court further found the irregularities in the handling of Balderman’s application indicated there had been no valid final administrative decision.  Specifically, the Appellate Court noted it was a violation of the Open Meetings Act to consider Balderman’s disability pension application on the same day it was first presented to the pension board.  In addition, the pension board never voted to approve the amount of Balderman’s pension.  The Appellate Court rejected all of the plaintiffs’ arguments, which attempted to find validity in improper determinations regarding their pensions.  The Appellate Court affirmed the circuit court’s judgment dismissing Balderman and Kapelinski’s complaint for declaratory relief.


This case provides both a cautionary tale and outlines the steps necessary for pension boards to properly and fully consider, vote, and issue decisions regarding both disability and retirement pension applications.