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Wednesday, May 1, 2024

Appellate court says cops can't count holiday pay toward their pensions

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Illinois Second District Appellate Justice Joseph Birkett | Youtube screenshot

An Illinois appeals panel has ruled a suburban police pension board cannot include officers' holiday pay when calculating pension benefits, because only "fixed" pay — and holiday pay is not "fixed" — may be used to figure pensions.

The decision, which was issued May 28, was penned by Justice Joseph Birkett, with concurrence from justices Kathryn Zenoff and George Bridges of the Illinois Second District Appellate Court in Elgin. The ruling was a rare legal defeat for Illinois public employees when it comes to pension sweeteners.

The Board of Trustees of the Village of Hanover Park Police Pension Fund decided to consider holiday pay received by officers, under the 2013-2016 collective bargaining agreement, was salary that could be included to raise pensions. The board's decision was the result of an arbitrator's ruling the village should retroactively withhold pension contributions from holiday pay. In light of this ruling, several retired officers asked the board to increase their pension payments.


Robert Smith Jr. | Clark Baird Smith

The Metropolitan Alliance of Police Chapter 102 union represents about 50 patrol officers below sergeant rank, in the 38,000-resident village. Hanover Park is in Chicago's northwest suburbs.

The village told the board holiday pay is not pensionable and noted the board itself had held the same view in the past. However, in 2019, the board, in a 4-1 vote, found the holiday pay was pensionable.

The village took the question to DuPage County Circuit Court, where Judge Bonnie Wheaton backed up the board. 

On appeal, Justice Birkett laid out the nub of the case, before overturning Wheaton.

"The crux of the issue on appeal is whether holiday pay under article 6 of the collective bargaining agreement is 'fixed' compensation. This threshold question is paramount because" if compensation "is not 'fixed,' it is not 'salary' for pension purposes," Birkett said.

Birkett then pointed out the board's decision was "clearly erroneous," given the language of the Illinois Pension Code, which excludes holiday pay, as well as bonus and merit pay, from pension benefits. The Code defined "fixed" as payment of a predetermined amount, which can be found in an appropriation ordinance or other document establishing salaries, Birkett said.

According to Birkett, holiday pay for Hanover Park police officers varied, based on the officer's attendance record and other factors, so was not predetermined.

Between 2015 and 2018, there were 12 patrol officers who did not collect holiday pay for certain holidays, because they were not eligible, Birkett pointed out.

Birkett added that the police union offered "scant" argument holiday pay is fixed, and what arguments the union put forth, supported the opposite position.

As an example, the union said an officer's holiday pay over time can be determined by reviewing attendance history and other personnel records, but Birkett noted this very statement "reinforces the conclusion that such pay is not in a predetermined amount."

Hanover Park was represented by Robert J. Smith Jr. and Paul Denham, of the Rosemont firm of Clark Baird Smith.

The police pension fund board was represented by Park Ridge lawyer Robert M. Zelek.

The police union was represented by Richard J. Reimer, of Reimer, Dobrovolny & Labardi, of Hinsdale.

In Illinois, pension benefits, once determined, cannot be "diminished or impaired" by state and local governments, under the Illinois state constitution. 

According to some independent analyses, pension costs account for more than a quarter of government spending in Illinois, and they continue to grow, placing pressure on local and state governments to find new revenues to offset the mounting costs and provide services.

Jonathan Bilyk contributed to this report. 

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