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Sharp v. Board of Trustees of the State Employees Retirement System

Court of Appeals of Illinois, Fourth District

January 13, 2014

DAVID M. SHARP, Plaintiff-Appellee and Cross-Appellant,
v.
THE BOARD OF TRUSTEES OF THE STATE EMPLOYEES' RETIREMENT SYSTEM, JUDY BARR TOPINKA, Chairperson; and MICHAEL NOSER, DANNY SILVERTHORN, HAROLD W. SULLIVAN, JR., RENEE FRIEDMAN, THOMAS ALLISON, PATRICIA OUSLEY, LORI LAIDLAW, PATRICIA RENSING, DAVID MORRIS, SHIRLEY BYRD, and VIRGINIA YATES, as Trustees of the State Employees' Retirement System, Defendants-Appellants and Cross-Appellees

Appeal from Circuit Court of Sangamon County. No. 12MR725. Honorable John Schmidt, Judge Presiding.

SYLLABUS

In an administrative review action arising from the Board of Trustees of the State Employees' Retirement System's reconsideration and reduction of its calculation of plaintiff's monthly pension benefits upon his retirement from his position as a Secretary of State investigator, the trial court's finding that the Board lacked the statutory authority to reduce plaintiff's pension was upheld on appeal, since the Board reduced the pension when it discovered, several months after the original calculation, that the wrong formula was used and the statute only allows such a modification within the 35-day period following the Board's initial approval of the pension.

Lisa Madigan, Attorney General, of Chicago (Michael A. Scodro, Solicitor General, and Clifford W. Berlow (argued), Assistant Attorney General, of counsel), for appellants.

Carl R. Draper (argued), of Feldman, Wasser, Draper & Cox, of Springfield, for appellee.

JUSTICE KNECHT delivered the judgment of the court, with opinion. Justices Turner and Steigmann concurred in the judgment and opinion.

OPINION

Page 189

KNECHT, JUSTICE.

[¶1] In March 2011, plaintiff, David M. Sharp, retired from his position as a Secretary of State investigator with the State of Illinois. In April 2011, defendants, the Board of Trustees of the State Employee's Retirement System (SERS), Judy Barr Topinka, chairperson; and Michael Noser, Danny Silverthorn, Harold W. Sullivan, Jr., Renee Friedmand, Thomas Allison, Patricia Ousley, Lori Laidlaw, Patricia Rensing, David Morris, Shirley Byrd, and Virginia Yates, as trustees of SERS (collectively, the Board), approved Sharp's monthly pension of $3,171.24. In February 2012, the Board notified Sharp it had computed his monthly pension using the wrong formula (3% rather than 2.2%) resulting in an overpayment of $5,874.21. The Board informed Sharp his monthly pension would decrease to $2,496.16 and arrangements to collect the overpayment would be forthcoming.

[¶2] Sharp appealed to the SERS executive committee (Committee). Following an April 2012 hearing, the Committee recommended the appeal be denied. In July 2012, the Board ratified the Committee's recommendation. Sharp filed an action for administrative review in the circuit court of Sangamon County. Following a January 2013 hearing, the circuit court reversed the Board, finding it lacked authority

Page 190

to reconsider its earlier pension calculation.

[¶3] Defendants appeal. Plaintiff cross-appeals seeking attorney fees. We affirm.

[¶4] I. BACKGROUND

[¶5] On March 31, 2011, Sharp retired from his position as a Secretary of State investigator with the State of Illinois. Prior to his retirement, Sharp--on at least two occasions--requested pension estimates from SERS. In a July 9, 2010, letter, SERS informed plaintiff his estimated monthly pension assuming a July 31, 2010, retirement (effective date of pension being August 1, 2010) would be $2,897.86 ($2,371.57 from SERS and $526.19 from the Illinois Municipal Retirement Fund (IMRF)). In a February 23, 2009, letter, SERS informed Sharp his estimated monthly pension assuming a December 31, 2010, retirement (effective date of pension being January 1, 2011) would be $2,970.53 ($2,439.72 from SERS and $530.81 from IMRF). On April 28, 2011, SERS approved Sharp's application for pension benefits filed in November 2010 and noted his monthly checks would be in the amount of $3,171.24 minus any state insurance or federal tax deductions Sharp authorized, if any. The letter further noted the pension was computed using 23 years, 9 months of service (which included total time served as both a Secretary of State investigator and a Department of Children and Family Services employee), but did not list the formula used to compute the amount of his pension or the breakdown between SERS and IMRF.

[¶6] In letters dated May 19 and May 20, 2011, SERS notified Sharp it had overstated his combined SERS and IMRF pension benefits resulting in an overpayment from SERS of $44.78. The letters noted Sharp's future monthly gross would be $3,148.85, and the $44.78 overpayment would be recovered by deducting this amount from Sharp's June 2011 pension check. Sharp did not appeal.

[¶7] Nearly nine months later, on February 1, 2012, SERS notified Sharp by letter it had incorrectly computed his pension using the 3% alternative formula (40 ILCS 5/14-110(a)(i) (West 2010)) instead of the 2.2% regular formula (40 ILCS 5/14-108(a) (West 2010)) to which his 15.8 years of employment as a Secretary of State investigator entitled him. As a result of the error in the computation, SERS informed Sharp he was overpaid $5,874.21 between April and December 2011, and SERS would contact him at a future date to discuss recovery of the overpayment. Using the correct formula of 2.2%, Sharp's monthly pension would be decreased from $3,148.85 to $2,496.16. Additionally, SERS stated it would be refunding Sharp $21,798.05 for contributions he made at the higher rate from July 2000 through March 2011. (The record is unclear why Sharp was making contributions at a higher rate and does not cite authority for the rate of contributions.) Sharp appealed to the Committee.

[¶8] Following an April 2012 hearing before the Committee, during which Sharp testified and his attorney argued, the Committee recommended Sharp's appeal be denied. The Committee concluded as follows: (1) SERS and the Board have authority to correct errors in the calculation of individual contributions and pension payments and may (a) modify benefits to comport with the proper formula, (b) collect overpayments, and (c) refund any excess payments in contributions; (2) equitable estoppel does not apply to the correction of overpayments in pension benefit administration; and (3) ...


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