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Illinois appellate court decision deals with pension situation similar to Island Lake

Published: Monday, July 21, 2014 4:55 p.m. CDT • Updated: Friday, Aug. 1, 2014 2:51 p.m. CDT

ISLAND LAKE – The village of Island Lake isn’t the only municipality that has used pension funds to pay its bills.

The Illinois First District Appellate Court recently handed down a decision involving the village of Riverdale in the southern suburbs of Chicago. Riverdale, like Island Lake, used money originally levied for the police pension fund to pay its bills.

Island Lake officials have agreed to pay back the nearly $400,000 owed to its police pension and have earmarked $150,000 for this fiscal year.

Village President Charles Amrich wasn’t familiar the recently decided Illinois First District Appellate Court case and couldn’t comment on how or whether it would affect how Island Lake moves forward.

Village attorney David McArdle did not return a call for comment. Neither did Sgt. David Walz, who serves as president of the five-member Island Lake Police Pension Fund Board.

The village of Riverdale had been sued by the Board of Trustees for the Riverdale police pension fund in August 2010, according to the Illinois First District Appellate Court decision.

The trustees requested a declaratory judgment that said the village breached its statutory funding obligation when it failed to levy the amount recommended by the Illinois Department of Insurance from 2000 to 2010 and required the village to turn over the funds owed to the pension fund.

The village acknowledged it did not levy the amount recommended and some of the property taxes it received were put in the village’s general fund instead of the pension fund, according to court records.

In an appeal, the Illinois First District Appellate Court decided the state statute does not create “an entitlement or other contractual right to the annual funding of a police pension” by a municipality, according to an analysis of the decision written by attorney Brad Stewart. The village is still responsible for those dollars but does not have to deposit them on an annual basis.

The village is responsible, however, for depositing the money that was actually levied and collected for the fund, according to the decision.

Stewart works for the same firm as Island Lake’s attorney, which is Zukowski, Rogers, Flood & McArdle in Crystal Lake.

The village also can be sued by a pensioner who does not receive his or her benefits due to mismanagement of the pension fund, the analysis said. The village can also be sued for underfunding that results in the insolvency or near insolvency of the fund.

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