NO. 5-00-0643

IN THE

APPELLATE COURT OF ILLINOIS

FIFTH DISTRICT

PRESIDING JUSTICE MAAG delivered the opinion of the court:

The defendant, the City of Belleville (the City), appeals from an order of the St. ClairCounty circuit court finding that the City was bound by the finality of the decision made bythe codefendant, the Board of Trustees of the Firefighters' Pension Fund of the City ofBelleville (Board), to award a monthly disability benefit of $2,481.02 to Craig Karfs(plaintiff). On appeal, the City claims that the trial court erred in determining that the Citywas bound by the Board's award. The City claims that because it was not a proper party tothe proceeding before the administrative agency, it could not have sought administrativereview of that decision and, therefore, it was not bound by the 35-day limitation period forseeking a review of administrative decisions.

The pertinent facts are not in dispute. Plaintiff was employed as a firefighter for theCity from November 1, 1973, until November 26, 1996. On November 27, 1996, plaintiffretired. He applied for a duty-related disability pension. In his application, plaintiffrequested that five weeks of his unused vacation pay and 1,000 hours of unused sick pay beadded to his base salary for the purpose of calculating his pension. At the time of plaintiff'spension application, there was in effect a labor contract between the City and the firefighters'union that permitted a retiring firefighter with sufficient service time to request that unusedvacation and sick pay be added to his base salary for pension purposes.

Michael J. Lundy, the treasurer of the Board and the treasurer of the City, calculatedplaintiff's pension. He included plaintiff's unused vacation and sick pay in calculating thetotal base salary. According to Lundy's calculation, plaintiff was entitled to receive amonthly pension of $2,481.02. Lundy's pension computations were recorded on theletterhead stationery of the treasurer of the City. In December 1996, the Board met andvoted to award plaintiff a duty-related disability pension of $2,481.02 per month. Theminutes of that meeting are not a part of this record. However, members of the Board didsign the bottom of the letterhead stationery containing Lundy's computations. The Board'sdecision was not appealed.

In a letter dated June 30, 1997, Lundy notified plaintiff that errors were made whenhis pension was originally calculated. The letter was written on letterhead of the treasurerof the City and was signed "Michael J. Lundy, City Treasurer." Lundy indicated that theunused vacation and sick pay should not have been added to plaintiff's base salary for thepurpose of calculating his total base pay. Lundy stated that the City should have paidplaintiff a lump sum of $4,900.30 as compensation for his unused sick hours and vacationhours. Lundy wrote that plaintiff should have received $2,215.59 per month in pensionbenefits and that his monthly pension would be reduced to that sum beginning in July 1997. Lundy advised plaintiff that he would be required to reimburse the pension fund a total of$1,858.01, a sum that represented monthly overpayments to plaintiff since December 1996. Plaintiff contacted the Board's attorneys after receiving the letter. On July 3, 1997, JimMendillo, an attorney who represented the Board, wrote to "Michael Lundy, City Treasurer,"and questioned the claim of error, referencing specific provisions (sections 14.6 and 15.5)of the labor contract. There is no document or record suggesting that any action was takenby the City or the Board regarding plaintiff's pension following the July 3, 1997, letter ofinquiry. Plaintiff continued to receive $2,481.02 per month in pension benefits.

On December 8, 1999, plaintiff received a letter from Michael P. Murphy, an attorneyof the law firm representing the Board. In the letter, Murphy stated that the Board had votedin May 1997 to reduce the amount of plaintiff's pension, due to an error in the calculationof the total base pay. However, other than the statement in this letter, there is no indicationthat the Board took any action to alter plaintiff's pension at any time prior to 1999. In theletter, Murphy advised plaintiff that the error would be "corrected" and that, once corrected,plaintiff would receive $2,215.59 in monthly pension benefits. He also indicated thatplaintiff had received overpayments of more than $6,000. Murphy asked plaintiff to appearat the December 1999 meeting of the Board to establish a repayment plan.

According to the minutes of the January 25, 2000, meeting, the Board adopted itsattorney's recalculation of plaintiff's pension and voted to reduce the pension to $2,215.59per month. The Board also discussed the repayment of the overpayments made to plaintiff,but there is no indication that a vote was taken on that issue. Beginning in February 2000,plaintiff's monthly pension was reduced to $2,215.59.

On February 18, 2000, plaintiff filed suit against the Board and the City. Count I ofthe first amended complaint was directed against the Board. In count I, plaintiff sought anorder prohibiting the Board from recalculating or attempting to recalculate his originalpension award and prohibiting the Board from paying a lesser sum than that which wasinitially awarded. Count II was filed against the City and the Board. In count II, plaintiffasked the court to enter a judgment declaring that the City and the Board were prohibitedfrom recalculating his pension benefit and from paying a reduced sum, on the ground thatneither the Board nor the City sought a review of the Board's decision within 35 days afterthe decision was issued. Plaintiff also asked the court to declare that the City and the Boardare responsible to pay plaintiff a sum representing the difference between the reducedbenefit and the original benefit for each month the reduced benefit was paid, statutoryinterest on that sum, and court costs.

In a written judgment, the circuit court pointed out that the Administrative ReviewLaw (735 ILCS 5/3-101 et seq. (West 1994)) was the exclusive means of reviewingdecisions of the Board, according to section 4-139 of the Illinois Pension Code (40 ILCS5/4-139 (West 1994)). The court found that the Board had no jurisdiction to reduceplaintiff's pension award, because it did not seek a review of the decision within the 35-daylimitation period provided in section 3-103 of the Administrative Review Law (735 ILCS5/3-103 (West 1994)). The court also found that the City was bound by the original pensiondecision, because it had not sought a review of that decision within the 35-day limitationperiod in the Administrative Review Law (735 ILCS 5/3-103 (West 1994)). The courtentered an order prohibiting the Board and the City from reducing plaintiff's initial pensionaward. The court also declared the Board and the City liable to pay plaintiff a sumrepresenting the difference between the reduced benefit and the original benefit, a sum of$265.43 per month, for each month the reduced benefit was paid, statutory interest on thatamount, and plaintiff's court costs. The Board did not appeal.

The firefighters' pension fund is a statutory creation and is governed by the provisionsof the Illinois Pension Code (Code) (40 ILCS 5/4-101 et seq. (West 1994)). The Codeprovides that a board of trustees of the firefighters' pension fund shall be created in eachmunicipality. 40 ILCS 5/4-121 (West 1994). In cities, the board of trustees is to be madeup of the city treasurer, the city clerk, the fire marshal, and the comptroller or mayor, as wellas three active firefighters and one retired firefighter. 40 ILCS 5/4-121 (West 1994). Section 4-130 of the Code directs that the city treasurer shall be the treasurer of the boardand the custodian of the pension fund and shall secure and safely keep the fund's assets,subject to the direction and control of the board. 40 ILCS 5/4-130 (West 1994). Section 4-130 also provides that the treasurer shall keep the books and accounts concerning the fundin such a manner as prescribed by the board and shall make those books available forinspection by the board. 40 ILCS 5/4-130 (West 1994).

The board of trustees of the firefighters' pension fund has several duties, includingthe duty to control and manage the pension fund and all the money donated, paid, assessed,or provided by law for the pensioning of disabled and retired firefighters and theirdependents (40 ILCS 5/4-123 (West 1994)), the duty to assess the contributions eachfirefighter is required to make and to ensure that the contributions are placed by the citytreasurer, as ex officio treasurer of the pension board, to the credit of the pension fund (40ILCS 5/4-124 (West 1994)), the duty to hear and determine applications for pensions andto order and direct the payment of pensions and other benefits (40 ILCS 5/4-125 (West1994)), and the duty to keep a record of all of its meetings and proceedings (40 ILCS 5/4-129 (West 1994)). The pension board is also charged with the duty to establish and maintaina reserve, equal to the estimated total actuarial requirements of the fund, to ensure thepayment of all obligations incurred (40 ILCS 5/4-120 (West 1994)).

The city council also has obligations under the Code. Section 4-101 of the Codeimposes upon the city council in each municipality a duty to establish and administer afirefighters' pension fund. 40 ILCS 5/4-101 (West 1994). The city council is directed tolevy a tax upon the taxable property of the municipality at a rate which will produce anamount that, when added to the firefighters' contributions and other revenues, will equal asum sufficient to meet the annual actuarial requirements of the pension fund. 40 ILCS 5/4-118(a) (West 1994). The annual actuarial requirements include the normal costs of thepension fund and an amount to amortize the fund's unfunded accrued liabilities. 40 ILCS5/4-118(a) (West 1994). The annual actuarial requirements of the pension fund can becalculated by an actuary employed by the Illinois Department of Insurance or retained by thepension board or the municipality. 40 ILCS 5/4-118(a) (West 1994). Prior to the meetingin which decisions are made in regard to the tax levy, the pension board is required to reportto the city council on the condition of the pension fund and to certify the assets in itscustody, the estimated receipts for the coming year based upon calculations of thecontributions of firefighters and other sources, and the estimated amount necessary to meetthe annual actuarial requirements of the pension fund. 40 ILCS 5/4-134 (West 1994).

Section 4-139 of the Code specifically provides that all final administrative decisionsof the pension boards are governed by provisions of the Administrative Review Law (735ILCS 5/3-101 et seq. (West 1994)). 40 ILCS 5/4-139 (West 1994). An administrativedecision is any decision, order, or determination of any administrative agency rendered ina particular case that affects the legal rights, duties, or privileges of the parties and thatterminates the proceedings before the administrative agency. 735 ILCS 5/3-101 (West1994). Every action to review a final administrative decision must be commenced by thefiling of a complaint and the issuance of a summons within 35 days from the date that a copyof the decision sought to be reviewed was served upon the party affected by the decision. 735 ILCS 5/3-103 (West 1994).

The City claims that it was not a party to the administrative proceeding and thereforecould not have sought administrative review of the Board's decision. The City thereforeconcludes that it is not bound by the Board's determination and may challenge outside thereview period the pension benefit awarded to plaintiff.

Only those parties to an administrative proceeding whose rights, privileges, or dutiesare affected by the decision of the administrative agency may seek the review of its decision. Peterson v. Board of Trustees of Firemen's Pension Fund of City of Des Plaines, 5 Ill. App.3d 180, 183, 281 N.E.2d 368, 370 (1971), aff'd on other grounds, 54 Ill. 2d 260, 296 N.E.2d721 (1973). Under the Code, the City is charged with the obligation to administer thefirefighters' pension fund (40 ILCS 5/4-101 (West 1994)) and is required to levy a taxsufficient to meet the annual actuarial requirements of the pension fund (40 ILCS 5/4-118(a)(West 1994)). The City has some discretion in determining the dollar amount to be leviedin order to ensure a sufficient reserve. See Board of Trustees of Police Pension Fund of Cityof Rockford v. City of Rockford, 96 Ill. App. 3d 102, 107-08, 420 N.E.2d 1126, 1130-31(1981). Thus, the City has some interest in certain decisions of the pension board in thecontext of its duty to levy sufficient taxes for the benefit of all firefighters. See Peterson,5 Ill. App. 3d at 183, 281 N.E.2d at 370.

If, for example, in deciding a firefighter's pension benefit, the pension board uses orapproves a method of calculation that is prohibited by the Code or violates the laborcontract, that decision may be deemed to have a direct impact on a municipality's duty tolevy taxes in sufficient proportions to enable the pension system to function, because it isreasonably likely that the pension board would continue to use an improper method tocalculate other pensions, resulting in a depletion of the fund. Under those facts, themunicipality could seek a review of the agency's decision because the decision potentiallyimpacts the municipality's duty to provide a sufficient sum to meet the requirements of thepension fund. We caution that the pension board's decision must impact a duty or interestof the municipality. A municipality will not have an interest in and standing to seek thereview of each individual case that comes before the pension board. Furthermore, amunicipality has no authority to review or modify adjudicative decisions made by anadministrative agency. See Board of Trustees of Police Pension Fund of Village of ParkForest v. Washburn, 153 Ill. App. 3d 482, 486-87, 505 N.E.2d 1209, 1212-13 (1987).

In this case, the City has alleged that the Board's original calculation of total base paywas illegal and would result in a diminution of the pension fund because each eligiblefirefighter was permitted to increase his total base pay by including unused sick and vacationpay, without making any additional individual contribution to the pension fund. Based uponthe allegations, the Board's decision to award pensions based upon an illegal method ofcalculation could have an adverse impact on the City's duty to levy sufficient taxes to enablethe pension system to function. Under these circumstances, the City could have sought areview of that decision within the 35-day period permitted in the Administrative ReviewLaw (735 ILCS 5/3-103 (West 1994)). It did not do so. The City has not claimed that it wasunaware of the Board's decision.

Where a statute provides that the administrative decisions of an agency are subjectto the Administrative Review Law, that statute is the exclusive method for the review of anadministrative agency's final decision. Section 4-139 of the Code expressly adopts theAdministrative Review Law. 40 ILCS 5/4-139 (West 1994). In this case, the City failed toseek review within 35 days of the Board's decision and could not seek a modification of theaward thereafter, because the statutory review period had expired.

Accordingly, the judgment of the circuit court is affirmed.

Affirmed.

HOPKINS and GOLDENHERSH, JJ., concur.

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Opinion Filed:

Justices: Honorable Gordon E. Maag, P.J.

Honorable Terrence J. Hopkins, J., and

Honorable Richard P. Goldenhersh, J.,

Concur

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Attorney Robert J. Sprague, Sprague & Urban, 26 East Washington Street,

for Belleville, IL 62220

Appellant

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Attorney Jack Carey, 23 South First Street, Belleville, IL 62220

for

Appellee

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