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Longevity Buyout Not Part of Pensionable Salary

April 6th, 2016

Village of Chicago Ridge v. Chicago Ridge Firefighters’ Pension Bd. of Trustees, 2016 IL App (1st) 152089

In a recent holding, the First District Appellate Court found that, when not included as part of a municipal appropriations ordinance, a longevity bonus granted by the terms of a CBA should not be included as part of pensionable salary.

The case arose out of the retirement application of Chicago Ridge firefighter David Bricker.  Pursuant to the terms of the CBA, Bricker was entitled to a 20% increase in his salary on his last day worked if he retired on his 25th anniversary and was 50 years old or over.  The Pension Board included this bonus as longevity pay based in part on a DOI advisory opinion.  As a result, the Pension Board found Bricker’s salary for pension purposes was $110,277.61 as opposed to $95,155.78.

The Village took administrative review of the Pension Board’s decision arguing the 20% longevity bonus should not have been included as part of Bricker’s salary.  In analyzing this claim, the Appellate Court noted Section 4-118.1 of the Pension Code defines salary as “the annual salary, including longevity, as established by the municipality appropriation ordinance”.  Section 4402.30 of the Administrative Code also makes reference to the municipal appropriations ordinance in defining salary for pension purposes.  Based on the statutory language, the Appellate Court found the calculation of salary used to determine pensionable salary must be approved or established through an appropriation ordinance of the municipality.  In this case, that did not happen with respect to Bricker’s 20% longevity increase.

The Pension Board agreed the 20% buyout was not approved through a municipal appropriations ordinance however, it argued the CBA which included the 20% buyout was approved by resolution of the village board thereby making the 20% increase pensionable.  The Court found that Village approval of the CBA was insufficient to constitute salary as approved through an appropriations ordinance.  Specifically, the Court found, “An appropriation involves the setting apart from public revenue a certain sum of money for a specific object….Where an act is required to be done by appropriations ordinance, anything less, such as a resolution or referendum, is not sufficient.”

Because the Court found the specific language of the Pension Code and Administrative Code to be clear and unambiguous in defining pensionable salary as that which is approved through an appropriations ordinance, the Court reversed the decision of the Pension Board and remanded the case to make a determination of pensionable salary without the 20% buyout.