Appeal from the Circuit Court of Cook County. Honorable Sophia H. Hall, Judge Presiding.
The opinion of the court was delivered by: Justice Howse
JUSTICE HOWSE delivered the opinion of the court: Robert J. Smith, plaintiff-appellant, appeals from an order of the circuit court that affirmed a decision of the Board of Trustees of the Westchester Police Pension Board (pension board). The pension board determined that a salary increase Smith received before his retirement as a result of a pay grade increase, a merit pay increase, and holiday pay for the year 2007, cannot be considered as salary for purposes of calculating Smith's pension.
For the reasons set forth below, we affirm the decision of the pension board and the circuit court.
Smith retired as the police chief of the Village of Westchester on July 13, 2007, after serving as a police officer for more than 32 years. At the time of his retirement, Smith was 59 years old. Since Smith had served as a police officer for more than 30 years and was over the age of 50 at the time of retirement, Smith was entitled to receive a pension in the amount of 75% of the salary attached to the rank held on his last day of service or for one year prior to the last day, whichever is greater. 40 ILCS 5/3-111 (West 2008).
In a letter dated March 23, 2007, Smith informed the Village of Westchester of his intent to retire in July 2007. Smith also requested a salary increase before his retirement. In the letter, Smith stated:
"As you are aware, prior to Chief Rafferty's retirement from the fire department, he received a raise from pay level 4 to level 6. It is my understanding, at that same time, it was agreed that this same consideration would be afforded to me upon my retirement.
I ask you, with Board concurrence, to grant me the same increase, with an effective date of May 1, 2007."
Smith's salary increase
Village manager Goldsmith sent a memo to the village
director of finance on May 7, 2007, which stated:
"Pursuant to the direction of the Village President and Board of Trustees, the benefits outlined on the attached page should be bestowed upon Chief Smith."
Attached to Goldsmith's memo was a chart that compared the salary and deductions of Smith's 2006 grade 4 pay compared with the grade 6 salary. The attached chart stated Smith would have a grade 6 salary beginning May 2007.
The 2006 appropriation ordinance and budget had set Smith's grade 4 annual base salary at $94,742.*fn1 The increase to grade 6 boosted Smith's annual base salary to $102,966. The village board also implemented an employee evaluation system for all village employees and created an additional 1% merit pool. Employees were eligible to receive a share of the 1% merit pool based upon the results of an evaluation which was to take place within 60 to 90 days.
Pension Board Proceedings
On June 21, 2007, Smith submitted an application for retirement
benefits to the pension board that was certified by
the deputy village manager. The application alleged Smith's
total pensionable salary was $113,262, which included the pay raise
from level 4 to level 6, the 1% merit pay raise and 2007 holiday pay.
On July 11, 2007, the pension board sent Smith a letter stating the pension board would consider the issue of Smith's salary at an administrative hearing. To prepare for the hearing, the pension board requested an advisory opinion from the Illinois Department of Insurance concerning the question of whether Smith's salary increase that resulted from the step increase from grade 4 to grade 6, is pensionable. This procedure is authorized under section 1A-106 of the Illinois Pension Code. 40 ILCS 5/1A-106 (West 2008).
Michael Langenfeld, administrative compliance officer for the Illinois Department of Insurance, submitted his advisory opinion on September 25, 2007, where he opined:
"A retirement incentive can be given by the city, but it is not considered salary for pension calculation purposes. The letter sent by Chief Robert J. Smith dated March 23, 2007, would indicate the change from level 4 to level 6 was an incentive for submitting his intention to retire. This is clearly a retirement incentive and would not be added to the salary attached to rank for pension calculation purposes."
Smith was represented by counsel at the administrative hearing. The parties agreed to send Langenfeld another memo, written by Smith's counsel and containing additional information in reply to the advisory opinion. The parties requested an updated advisory opinion. The parties agreed to ...