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Village of North Riverside v. Boron

Court of Appeals of Illinois, First District, First Division

December 19, 2016

THE VILLAGE OF NORTH RIVERSIDE, Plaintiff-Appellant,
v.
ANDREW BORON, in His Official Capacity as Director of Insurance, and THE ILLINOIS DEPARTMENT OF INSURANCE, Defendants-Appellees.

         Appeal from the Circuit Court of Cook County, No. 14 CH 17951 Honorable Sophia H. Hall Judge Presiding

          JUSTICE SIMON delivered the judgment of the court, with opinion. Presiding Justice Connors and Justice Mikva concurred in the judgment and opinion.

          OPINION

          SIMON JUSTICE

         ¶ 1 This case concerns the Village of North Riverside's failure to meet its statutory contribution obligations to its police and firefighter pension funds. At an administrative hearing, the Village argued that its noncompliance should be excused because it had good and sufficient cause for failing to meet its obligations. The administrative hearing officer rejected the Village's arguments, and the hearing officer's recommendation was accepted by the Director of the Public Pension Division. The Village sought administrative review in the circuit court which affirmed the decision. The Village now seeks review here, and we confirm the administrative ruling and affirm the circuit court's decision.

         ¶ 2 BACKGROUND

         ¶ 3 The Illinois Pension Code (40 ILCS 5/1-101 et seq. (West 2012)) requires municipalities to contribute to the police and firefighter pension funds. See 40 ILCS 5/3-125 (West 2012) (police); 40 ILCS 5/4-118 (West 2012) (firefighters). The municipalities are required to pay the amount to cover the "normal cost" that remains after the employees' contributions are factored in. Id.

         ¶ 4 The General Assembly enacted legislation to create the Public Pension Division which is charged with administering and enforcing the provisions of the Pension Code. 40 ILCS 5/1A-101 (West 2012). Whenever the Division determines that a government unit has failed to comply with the law, the Director of the Division may hold a hearing where the government must show cause for its noncompliance. 40 ILCS 5/1A-113(d)(3) (West 2012). If, at the conclusion of the hearing, the Director determines that "good and sufficient cause" for noncompliance has not been shown, the Director is entitled to order compliance and assess penalties. 40 ILCS 5/1A-113(d)(4)-(5) (West 2012). The General Assembly mandated that the Director develop standards and criteria to be used to administer the penalty provision set forth in section 1A-113. 40 ILCS 5/1A-113 (West 2012).

         ¶ 5 The Public Pension Division used its rulemaking authority by issuing certain regulations. See 50 Ill. Adm. Code 4435.10 (1998). The relevant regulation in this case states that, at the hearing, in determining whether the government has met its burden of showing "good and sufficient cause" for noncompliance,

"the Director may consider, but is not limited to, the following:
1) Evidence that, due to no fault of the pension fund, governmental unit or elected or appointed official of a governmental unit, there was an unforeseeable or unexpected delay or occurrence;
2) Evidence of an uncontrollable circumstance; and
3) Evidence pertaining to Acts of God." 50 Ill. Adm. Code 4435.80(c) (1998).

         ¶ 6 Defendant Illinois Department of Insurance determined that plaintiff Village of North Riverside violated the Illinois Pension Code when it failed to make full, actuarially designated annual contributions to its police pension fund from 2008 to 2012 and its firefighter pension fund from 2009 to 2012. The Village acknowledged that it had not met its contribution obligations but asserted that there were mitigating circumstances and that it intended to take remedial action in the coming years. The Director of the Public Pension Division called a hearing to give the Village an opportunity to show "good and sufficient cause" for its violations.

         ¶ 7 At the hearing, the Village offered evidence through its finance director, Sue Scarpiniti. Scarpiniti testified that North Riverside is a village with a small residential community, but that it has a relatively large commercial base. As a result, the Village has a larger police and firefighter force than most communities of similar population. Scarpiniti explained that the Village's inability to meet its contribution obligations was a result of the recession occurring ...


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