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06/20/96 BOARD TRUSTEES POLICE PENSION FUND CITY

June 20, 1996

BOARD OF TRUSTEES OF THE POLICE PENSION FUND OF THE CITY OF EVANSTON, TIMOTHY SCHOOLMASTER, AND WILLIAM LABBE, PLAINTIFFS-APPELLANTS,
v.
CITY OF EVANSTON, AN ILLINOIS MUNICIPAL CORPORATION, JOAN BARR, AS MAYOR OF THE CITY OF EVANSTON; JOEL ASPROOTH, AS CITY MANAGER OF THE CITY OF EVANSTON; ROBERT SHONK, AS FINANCIAL DIRECTOR AND COMPTROLLER OF THE CITY OF EVANSTON; AND MARVIN JULIAR, JOHN T. RUDY, JR., DENNIS R. DRUMMER, BETTY BURNS PADEN, BETH BOOSALIS DAVIS, SUE BRADY, JACK KORSHAK, EVELYN SHERMAN RADEN, MIKE SUMMERS, LORRAINE H. MORTON, JON O. NELSON, MARGARET W. WOLD, JOHN BLEVEANS, MARJORIE COLLENS, ANN RAINEY, NORRIS LARSON, ROBERTA S. WARSHAW, AND GENE FELDMAN, AS MEMBERS OF THE CITY COUNCIL OF THE CITY OF EVANSTON, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County. 87 CH 8084. Honorable Aaron Jaffe, Judge Presiding.

The Honorable Justice Cahill delivered the opinion of the court: Hoffman, P.j., concurs. S.m. O'brien, J., specially concurs.

The opinion of the court was delivered by: Cahill

The Honorable Justice CAHILL delivered the opinion of the court:

We review the authority, if any, of elected city councils to ignore the recommendations of a police pension board on the level of funding for police pensions under Illinois law. We conclude that a city council need not accept the dollar amount recommended to it by a police pension board, but that it must follow Illinois law in calculating the amount it selects as an alternative.

The Board of Trustees of the Police Pension Fund for the city of Evanston filed a lawsuit against the city and its elected council to enforce compliance with the Illinois Pension Code (Ill. Rev. Stat. 1987, ch. 108 1/2, par. 1-101 et seq. (now 40 ILCS 5/1-101 et seq. (West 1994)). The suit alleges the tax levied by the Evanston city council to fund police pensions for fiscal year 1987-88 yielded an amount below the amount certified by the Board as necessary to comply with Pension Code requirements. The city council responded to the Board's six count second amended complaint with a motion to dismiss under section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 1994)). The trial court granted the motion, and the Board appealed. We affirm in part and reverse and remand in part.

The Pension Code governs pension systems for state and municipal employees. Article 3 of the Pension Code governs police pension funds created by municipalities of 500,000 and under, which includes Evanston. 40 ILCS 5/3-101 et seq. (West 1994).

Section 3-125 of the Code requires a city council to levy a tax that will meet the "annual requirement" of the police pension fund. The annual requirement is defined as the money expended in the current year and the amount necessary to amortize the fund's unfunded accrued liabilities as provided in section 3-127. 40 ILCS 5/3-125 (West 1994).

Section 3-127 directs the Board to maintain a reserve to amortize the fund's unfunded accrued liabilities. In an annual report to the city council, the Board must designate an amount needed that year to insure that the reserve will reach the level of the fund's accrued liabilities over a period of years, currently 40. 40 ILCS 5/3-127 (West 1994).

Section 3-143 of the Code directs the Board to "certify" in its report the estimated amount needed in the calendar year to "meet the annual requirement of the fund as provided in section 3-125." 40 ILCS 5/3-143 (West 1994).

The Board held a public hearing on January 27, 1987, to decide the amount it would certify to the city council to fund police pensions for fiscal year 1987-88. The Board considered a report from the Illinois Department of Insurance that calculated the amount needed to be $2,215,561. The Board passed a resolution adopting this amount and certified it in a report to the city council. The city council subsequently levied a tax for the police pension fund that would yield $1,390,263 -- $825,298 less than the amount certified by the Board.

The Board, as fiduciary for participants in the police pension fund, filed the complaint before us to require the city council to levy a tax that would yield the amount it had certified.

Counts I, II, and III, for mandamus, mandatory injunction, and declaratory judgment, respectively, are based on the theory that the city council must levy a tax for the police pension fund that will produce an amount the Board has certified as the annual requirement. Counts IV and V, for mandamus and declaratory judgment, respectively, seek relief on an alternative theory that the city council must levy a tax that will yield an amount that has been calculated in a way that complies with the Pension Code. Count VI, for breach of fiduciary duty, alleges that even if the city council has discretion to determine the amount of the annual requirement, it has a fiduciary duty to levy a tax consistent with the requirements of the Pension Code.

The trial court dismissed all counts of the Board's second amended complaint. For the reasons that follow we affirm the dismissal of counts I, II, III, IV, and VI, but reverse the dismissal of count V and remand.

A motion to dismiss admits all well pled facts and reasonable inferences which could be drawn from those facts. Horwath v. Parker, 72 Ill. App. 3d 128, 134, 390 N.E.2d 72, 28 Ill. Dec. 90 (1979). We review the dismissal of the Board's second amended complaint de novo. Toombs v. City of Champaign, 245 Ill. App. 3d 580, 615 N.E.2d 50, 185 Ill. Dec. 755 (1993).

Count I alleges that the city council levied a tax that "does not conform to the determination of the Board" and "violated the Board's exclusive power to control and manage the Evanston Police Pension Fund and the Board's clear legal right to require a tax levy in conformity with its determination of the amount necessary to meet the annual requirements of the Evanston Police Pension Fund." The court is asked ...


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