                                               FIFTH DIVISION
                                               November 24, 2010




No. 1-09-0917

ROBERT J. SMITH,                           )   Appeal from the
                                           )   Circuit Court of
          Plaintiff-Appellant,             )   Cook County.
                                           )
     v.                                    )
                                           )
                                           )
                                           )
THE BOARD OF TRUSTEES OF THE               )
WESTCHESTER POLICE PENSION BOARD,          )   Honorable
                                           )   Sophia H. Hall,
          Defendant-Appellee.              )   Judge Presiding.



     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.

                           BACKGROUND

     Smith retired as the police chief of the Village of

Westchester on July 13, 2007, after serving as a police officer
1-09-0917

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



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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 $94,742.1   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


     1
     The village board authorized a 3% salary increase to all
nonunion personnel effective May 1, 2007. The pension board
included this 3% increase in Smith’s pensionable salary and it is
not at issue in this appeal.


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1-09-0917

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



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1-09-0917

            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 continue the

hearing to a later date after receipt of the updated advisory

opinion.

     Langenfeld responded by letter on March 6, 2008, where he

opined:

                 “After review [of] the additional

            information provided and the original

            information provided earlier, my opinion has

            not changed.   The letter dated March 23, 2007

            sent by Chief Robert J. Smith, requesting a

            change from level four to level six as it was

            previously granted to a retiring fire chief,

            indicates this is either a pay spike or a

            retirement enhancement.     No matter how it is

            labeled, this would not be considered salary

            for pension purposes.”



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     Langenfeld acknowledged that the pension law made no

specific mention of pension spikes but alleged the increase of

Smith’s salary qualified as a bonus.

     On June 5, 2008, the pension board reconvened and heard

testimony from Smith.    In a written order dated October 20, 2008,

the pension board set Smith’s salary for pension purposes at

$103,324, retroactive to the date of his retirement.       The salary

was based upon: (1) Smith’s 2006 salary of $94,742 as provided in

the municipal appropriation ordinance and budget, (2) his 2006

holiday pay of $5,573, and (3) a 3% cost of living adjustment

amounting to $3,009.    The pension board made a finding that the

approximate $10,000 in salary increase resulting from Smith being

awarded a pay grade increase from level 4 to level 6, along with

the 1% merit pay increase, was a pension spike and is not salary

under section 3-125.1 of the Pension Code (40 ILCS 5/3-125.1

(West 2008)) and section 4402.40 of Title 50 of the Illinois

Administrative Code (50 Ill. Adm. Code §4402.40 (1996)).

     The pension board found:

                 “Under this directly relevant case law,

            that the Applicant’s pay grade increase could

            be classified as a bonus, award or merit pay

            under the relevant statutes and not part of

            Applicant’s regular ‘salary’ defined by the



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1-09-0917

            relevant Pension Code and Administrative Code

            statutes.”

     On November 18, 2008, Smith filed a complaint for

administrative review in the circuit court of Cook County.    In

his complaint, Smith alleged the decision of the pension board to

exclude the pay upgrade and merit pay from his salary in

calculating his pension is “contrary to law and contrary to the

actual facts of the case, that it is against the manifest weight

of the evidence, and also arbitrary, capricious and

unreasonable.”

     The trial court conducted a hearing on March 20, 2009.

After noting the 2007 appropriation ordinance was not passed

until 11 days after Smith’s retirement, the trial court affirmed

the decision of the pension board, finding its decision was not

clearly erroneous.       Smith filed this appeal.

                                 ANALYSIS

     The issue presented for review is whether the Board of

Trustees of the Westchester Police Pension Board erred in finding

that the salary upgrade, the merit pay increase awarded to Smith

and the 2007 holiday pay cannot be included in the calculation of

his pension.

     The parties agree the issues presented for review in this

case involve a mixed question of law and fact and that an



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 1-09-0917

administrative agency’s determination involving a mixed question

of law and fact should not be disturbed unless it is clearly

erroneous.   City of Belvidere v. Illinois State Labor Relations

Board, 181 Ill. 2d 191, 205, 692 N.E.2d 295, 302 (1998).   “[T]he

agency decision will be deemed ‘clearly erroneous’ only where the

reviewing court, on the entire record, is ‘left with the definite

and firm conviction that a mistake has been committed.’”   AFM

Messenger Service, Inc. v. Department of Employment Security, 198

Ill. 2d 380, 395, 763 N.E. 2d 272, 282 (2001), quoting United

States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct.

525, 542, 92 L.Ed. 746, 766 (1948).   We will review the issues in

this case accordingly.

      In administrative review proceedings, our role is to review

the decision of the administrative agency, rather than that of

the circuit court.   Roselle Police Pension Board v. Village of

Roselle, 232 Ill. 2d 546, 551-52, 905 N.E.2d 831, 834 (2009).

      I. Smith’s Base Salary for Calculating Smith’s Pension

     The pension board set Smith’s salary for pension purposes

based upon Smith’s 2006 salary of $94,742 as provided in the

municipal appropriation ordinance and budget. Smith claims his

salary for pension purposes should include the pay raise from

level 4 to level 6, the 1% merit pay and his 2007 holiday pay.

     The amount of a retired police officer’s pension is


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 1-09-0917
determined by his age, length of service and his salary at the

time of retirement.    40 ILCS 5/3-111 (West 2008).   The Pension

Code provides a police officer:

          “shall receive a pension of 1/2 of the salary

          attached to the rank held by the officer on

          the police force for one year immediately

          prior to retirement or, beginning July 1, 1987

          for persons terminating service on or after

          that date, the salary attached to the rank

          held on the last day of service or for one

          year prior to the last day, whichever is

          greater. The pension shall be increased by

          2.5% of such salary for each additional year

          of service over 20 years of service through 30

          years of service, to a maximum of 75% of such

          salary.”    40 ILCS 5/3-111 (West 2008).

     It is undisputed that under these guidelines Smith was

entitled to a pension in the amount of 75% of the salary attached

to the rank of police chief on the last day of service or for one

year prior to the last day, whichever is greater.

     The Pension Code also provides a definition of salary for the

purpose of calculating a pension:

          “‘Salary,’ for purposes of this Part, means

          any fixed compensation received by an employee

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          of a municipality that participates in one of

          the pension funds established under Article 3

          or 4 of the Illinois Pension Code, which has

          been approved through an appropriations

          ordinance of the municipality ***.”     (Emphasis

          added.) 50 Ill. Adm. Code §4402.30 (1996).

     The requirement that the pensionable salary be determined by

the salary attached to the rank and approved in an appropriation

ordinance is further emphasized in the pension statutes:

          “‘Salary’ means the annual salary, including

          longevity, attached to the police officer's

          rank, as established by the municipality's

          appropriation ordinance, including any

          compensation for overtime which is included in

          the salary so established ***.”   (Emphasis

          added.) 40 ILCS 5/3-111 (West 2008).

     The cardinal rule of statutory construction is to ascertain

and give effect to the legislature’s intent.     Moore v. Green, 219

Ill. 2d 470, 479, 848 N.E.2d 1015, 1020 (2006).    Like any other

exercise in statutory construction, the court’s analysis begins

with the specific language contained in the statute because the

words used provide the best indication of legislative intent.

Hernandez v. Kirksey, 306 Ill. App. 3d 912, 914, 715 N.E.2d 669,



                               -10-
 1-09-0917
672 (1999).   Where an enactment is clear and unambiguous, we are

not at liberty to depart from the plain language and meaning of

the statute by reading into it exceptions, limitations or

conditions that the legislature did not express.     DeSmet v. County

of Rock Island, 219 Ill. 2d 497, 510, 848 N.E.2d 1030, 1039

(2006).

     The plain language of the Pension Code reveals that reference

must be made to the salary attached to Smith’s rank as

established in the municipality’s appropriation ordinance when

determining Smith’s pensionable salary.     50 Ill. Adm. Code

§4402.30 (1996); 40 ILCS 5/3-125.1 (West 2008); Board of Trustees

of the Policemen’s Pension Fund v. Department of Insurance, 42

Ill. App. 3d 155, 157-58, 356 N.E.2d 171, 173 (1976).

     A police officer with Smith’s age and length of service is

eligible for a pension in the amount of 75% of the salary attached

to the rank of police chief in the village appropriation

ordinance.    The pension board was authorized to calculate Smith’s

pension based on the salary in the village appropriation ordinance

on Smith’s last day of service or for one year prior, whichever is

greater.   40 ILCS 5/3-125.1 (West 2008); 50 Ill. Adm. Code

§4402.30 (1996).

     Here, the Village of Westchester’s 2006 appropriation

ordinance lapsed on April 30, 2007.     The Village of Westchester

did not pass its 2007 appropriation ordinance until July 24, 2007,

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11 days after Smith had retired.    The 2007 appropriation ordinance

is part of the record.   We have examined the 2007 appropriation

ordinance and note that it does not contain a line item for the

salary of the chief of police, in contrast to the 2006

appropriation ordinance that did contain a line item for the

salary of the chief of police.   Based on the record before us we

have no evidence that when Smith retired on July 13, 2007, an

appropriation ordinance existed which increased his salary over

the 2006 grade 4 levels provided for in the 2006 appropriation and

budget.

     When it calculated Smith’s pension, the pension board used

the salary provided for Smith in the 2006 appropriation ordinance

and budget.   This calculation reflected Smith’s salary for one

year prior to his retirement as required by law.   We cannot say

the decision was clearly erroneous because the 2007 appropriation

ordinance was not passed until after Smith retired and the copy of

the appropriation ordinance contained in the record does not

contain a line item for Smith’s salary to substantiate a salary

increase for police chief.

     Smith argues he is entitled to grade 6 pay because the

village manager sent a May 7, 2007, memorandum to the municipal

finance officer which stated the village board and village

president authorized a pay grade increase for Smith.   The record

contains a copy of the village manager’s memo.


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     A pay grade increase approved by the trustees and the village

president cannot be a part of Smith’s pension calculation unless

that increase was also reflected in the village’s formally adopted

appropriations ordinance.    40 ILCS 5/3-125.1 (West 2008); 50 Ill.

Adm. Code §4402.30 (1996), Department of Insurance, 42 Ill. App.

3d at 157-58, 356 N.E.2d at 173; Holland v. City of Chicago, 289

Ill. App. 3d 682, 687-90, 682 N.E.2d 323, 326 (1997).    We have

examined the record and there is no evidence the village undertook

the formal act of amending the 2006 appropriation ordinance or

that it passed an appropriation ordinance to change Smith’s salary

from grade 4 to grade 6.    The instructions the trustees and the

village president gave to the village manager do not satisfy the

requirements that a pension be based on an appropriation ordinance

because obviously the instructions they gave to the village

manager were not an appropriation ordinance.    Therefore, we cannot

say the pension board’s decision to use the grade 4 salary

provided for Smith in the 2006 appropriation ordinance and budget

to calculate Smith’s pension was clearly erroneous.    40 ILCS 5/3-

125.1 (West 2008).

     Smith argues the village board’s new personnel code and pay

plan resolution passed on June 12, 2007, authorized the pay

increase for Smith for purposes of the calculation of his pension.

The pay plan resolution recited that it had the goal of paying all

village employees a salary on a pay scale that established a range

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of pay for all employees.   The resolution listed a pay range for

all village employees.   The job title of police chief was assigned

grade 6 salary with a pay range of $88,187 for a minimum, $103,749

for a midpoint and $119,312 as a maximum salary.     The pay plan

stated that no employee should be paid less than the minimum pay

for a position or more than the maximum.

     The pay plan resolution however cannot be fairly construed to

be an appropriation ordinance.   An appropriation involves the

“setting apart from public revenue a certain sum of money for a

specific object ***.”    Schwartz v. City of Chicago, 223 Ill. App.

184, 192 (1921), citing 4 Corpus Juris, 1460.     The pay plan

resolution approved by the village did not authorize a specific

salary for Smith or the other village employees, and did not set

apart any funds to pay for the salaries.     The pay plan merely

recited that it was the goal of the village to pay the employees

within the range of pay contained in the resolution.     The

resolution makes no mention of amending the 2006 appropriation

ordinance.   Smith’s pay grade increase from grade 4 to grade 6,

therefore, was not legislated in an appropriation ordinance when

the pay plan resolution was passed.     40 ILCS 5/3-125.1 (West

2008).

                 II. Merit Pay and 2007 Holiday Pay

     Smith also claims he is entitled to the 1% merit pay increase

because the merit pay was to be considered permanent pay.      Merit

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pay has been allowed as part of a pension calculation when the

merit pay was included in the appropriation ordinance and attached

to the rank.   Policemen’s Pension Fund v. Department of Insurance,

42 Ill. App. 3d 155, 159, 356 N.E.2d 171, 174 (1976).    Here, the

merit pay was not included in an appropriation ordinance and the

pension board’s decision to exclude it was not clearly erroneous.

       Smith also claims he is entitled to holiday pay for 2007

based on the grade 6 salary increase.    It is undisputed that

Village of Westchester police officers are entitled to holiday

pay.   The pension board included the 2006 holiday pay based on

Smith’s grade 4 salary in the calculation of Smith’s pension.      If

the pension board included the 2006 holiday pay and the 2007

holiday pay in the calculation of Smith’s annual salary, it would

be a double payment.   Furthermore, we have determined the rate of

pay for Smith’s claimed 2007 holiday pay was not appropriated in

an ordinance as required by law.   The pension board’s decision to

exclude the 2007 holiday pay was not clearly erroneous.

       Based upon the entire record, we do not have a definite and

firm conviction that the pension board made a mistake when it

based Smith’s pension on the grade 4 salary, excluded the merit

pay from Smith’s pension calculation and excluded the 2007 holiday

pay.   Therefore, the pension board’s decision was not clearly

erroneous and should not be disturbed.    AFM Messenger Service,

Inc. v. Department of Employment Security, 198 Ill. 2d at 395, 763

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N.E.2d at 282.

                            CONCLUSION

     We affirm the decision of the pension board and the circuit

court.

     AFFIRMED.

     FITZGERALD SMITH, P.J., and TOOMIN, J., concur.




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                  REPORTER OF DECISIONS - ILLINOIS APPELLATE COURT
                     (Front Sheet to be Attached to Each Case)

  Please use              ROBERT J. SMITH,
following form:
                                       Plaintiff-Appellant,

  Complete                      v.
    TITLE
   of Case                THE BOARD OF TRUSTEES OF THE WESTCHESTER POLICE
                          PENSION BOARD,

                                       Defendant-Appellee.


  Docket Nos.                           No. 1-09-0917

    COURT                            Appellate Court of Illinois
                                     First District, 5th Division
   Opinion
    Filed                                November 24, 2010

                                     (Give month, day and year)

  JUSTICES                JUSTICE HOWSE delivered the opinion of the court:

                          FITZGERALD SMITH, P.J., and TOOMIN, J., concur.



APPEAL from the     Lower Court and Trial Judge(s) in form indicated in margin:
Circuit Court of
Cook County; the          Appeal from the Circuit Court of Cook County.
Hon.___________,
Judge Presiding.           The Hon. Sophia H. Hall, Judge Presiding.


For APPELLANTS,     Indicate if attorney represents APPELLANTS or APPELLEES and
John Doe, of        include attorneys of counsel. Indicate the word NONE if
Chicago.            not represented.

For APPELLEES,            For Appellant, Stanley H. Jakala and Barbara J. Bell,
Smith and Smith,          of Berwyn, Illinois.
of Chicago.
                          For Appellee, Richard J. Reimer and Jeffrey A. Goodloe,
Joseph Brown,             RICHARD J. REIMER & ASSOCIATES LLC, of Hinsdale, Illinois.
of Counsel).
Also add attor-
neys for third-
party appellants
and/or appellees.




                            (USE REVERSE SIDE IF NEEDED)




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