Board of Trustees of The Riverdale Police Pension Fund v. Village of Riverdale

2014 IL App (1st) 130416

No. 1-13-0416

SIXTH DIVISION
June 27, 2014

IN THE APPELLATE COURT OF ILLINOIS
FIRST JUDICIAL DISTRICT

BOARD OF TRUSTEES OF THE RIVERDALE ) Appeal from the
POLICE PENSION FUND, ) Circuit Court of
) Cook County.
Plaintiff-Appellant, )
)
v. ) No. 11 CH 35736
)
VILLAGE OF RIVERDALE, ) The Honorable
) Franklin Valderrama,
Defendant-Appellee. ) Judge Presiding.

JUSTICE LAMPKIN delivered the judgment of the court, with opinion.
Presiding Justice Rochford and Justice Hall concurred in the judgment and opinion.

OPINION

&1 Plaintiff, the Board of Trustees of the Riverdale Police Pension Fund (Pension Board)1,

appeals the order of the circuit court granting summary judgment in favor of defendant, the

Village of Riverdale (Village)2, and denying partial summary judgment in favor of plaintiff.

Plaintiff contends the circuit court erred in finding sections 3-125 and 3-127 of the Illinois

Pension Code (Pension Code) (40 ILCS 5/3-125 (West 2008); 40 ILCS 5/3-127 (West 2010)) did

not provide plaintiff with a contractual right to a specified level of funding of the Riverdale

1
The Illinois Public Pension Fund Association filed a brief in support of plaintiff as an amicus curiae.
2
The Illinois Municipal League filed a brief in support of defendant as an amicus curiae.
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Police Pension Fund (Pension Fund). Plaintiff additionally contends the circuit court erred in

failing to find defendant liable for underfunding the Pension Fund. Based on the following, we

affirm in part and reverse in part and remand for additional proceedings.

&2 FACTS

&3 Defendant Village is a municipality as defined by section 3-103 of the Pension Code. 40

ILCS 5/3-103 (West 2010). In accordance with section 3-101 of the Pension Code, the Village

established the Pension Fund for the benefit of the municipality's police officers, participants,

and beneficiaries. See 40 ILCS 5/3-101 (West 2010). Plaintiff Pension Board is an

administrative agency created by the Pension Code (40 ILCS 5/3-128 (West 2010)) with the

exclusive authority to control and manage the Pension Fund (40 ILCS 5/3-132 (West 2010)). In

addition, the Pension Board has the authority to order the payment of pensions and other benefits

to beneficiaries. 40 ILCS 5/3-132 (West 2010). Section 3-143 of the Pension Code directs the

Pension Board to "certify" in an annual report the estimated amount necessary in the calendar

year to "meet the annual requirements of the fund as provided in Section 3-125 and 3-127." 40

ILCS 5/3-143 (West 2010).

&4 Section 3-125 of the Pension Code provided3:

"The city council or the board of trustees of the municipality shall annually levy a

tax upon all the taxable property of the municipality at the rate on the dollar

which will produce an amount which, when added to the deductions from the

salaries or wages of police officers, and revenues available from other sources,

will equal a sum sufficient to meet the annual requirements of the police pension

fund. The annual requirements to be provided by such tax levy are equal to (1)

the normal cost of the pension fund for the year involved, plus (2) the amount
3
The statute has since been amended.

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necessary to amortize the fund's unfunded accrued liabilities as provided in

Section 3-127. The tax shall be levied and collected in the same manner as the

general taxes of the municipality, and in addition to all other taxes now or

hereafter authorized to be levied upon all property within the municipality, and

shall be in addition to the amount authorized to be levied for general purposes as

provided by Section 8-3-1 of the Illinois Municipal Code, approved May 29,

1961, as amended. The tax shall be forwarded directly to the treasurer of the

board within 30 business days after receipt by the county.

The police pension fund shall consist of the following moneys which shall

be set apart by the treasurer of the municipality:

(1) All moneys derived from the taxes levied hereunder;

(2) Contributions by police officers under Section 3-125.1;

(3) All moneys accumulated by the municipality under any previous

legislation establishing a fund for the benefit of disabled or retired police officers;

(4) Donations, gifts or other transfers authorized by this Article." 40 ILCS

5/3-125 (West 2008).

&5 Section 3-127 of the Pension Code provides:

"The board shall establish and maintain a reserve to insure the payment of all

obligations incurred under this Article excluding retirement annuities established

under Section 3-109.3. The reserve to be accumulated shall be equal to the

estimated total actuarial requirements of the fund.

If the pension fund has a reserve of less than the accrued liabilities of the

fund, the board of the pension fund, in making its annual report to the city council

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or board of trustees of the municipality, shall designate the amount, calculated as

a level percentage of payroll, needed annually to insure the accumulation of the

reserve to the level of the fund's accrued liabilities over a period of 40 years from

July 1, 1993 for pension funds then in operation, or from the date of establishment

in the case of a fund created thereafter, so that the necessary reserves will be

attained over such a period." 40 ILCS 5/3-127 (West 2010).

&6 Moreover, pursuant to section 22-403 of the Pension Code, the pension funds may only

be expended for public purposes and not for any corporate purposes. 40 ILCS 5/22-403 (West

2010).

&7 On August 19, 2010, the Pension Board filed the underlying case seeking a declaratory

judgment where it alleged the Village breached its statutory funding obligations under sections

3-125 and 3-127 of the Pension Code (40 ILCS 5/3-125 (West 2008); 40 ILCS 5/3-127 (West

2010)) by failing to levy the appropriate taxes for pension contributions from 2000 through 2010.

Plaintiff requested a judgment declaring that the Village's tax levies and amounts contributed to

the Pension Fund were insufficient and requiring the Village to annually assess taxes in concert

with sections 3-125 and 3-127 of the Pension Code. Plaintiff further requested an order requiring

the Village to turn over all pension contributions in its possession.

&8 According to the Pension Board's complaint, the Illinois Department of Insurance

regulates public pension funds, such as the one at issue here. In that capacity, the Illinois

Department of Insurance issues an annual report to the Pension Board indicating the tax amount,

as determined by an actuary, necessary to meet the municipal contribution requirements provided

by the Pension Code. The actuarial report then is forwarded by the Pension Board to the Village.

According to the Pension Board's complaint, the Village did not follow the recommendations of

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the Illinois Department of Insurance during certain fiscal years and, as a result, as of the end of

the 2005 fiscal year, the Village owed the Pension Fund a sum of approximately $615,408.

&9 On January 12, 2011, the Village filed its initial answer, and discovery ensued. In an

interrogatory sent by the Pension Board to the Village, the Pension Board inquired:

"As of this date, is there any amount of money owed to the Riverdale

Police Pension Fund, for annual pension fund contributions by Defendant from its

General Fund, or any other Village Fund to the Pension Fund, and if so state:

(a) the exact amount owed to the Pension Fund;

(b) the specific reason why the defendant filed, refused or neglected to

deposit property taxes levied, collected and received by the defendant on behalf of

the plaintiff, with the Pension Fund;

(c) If the defendant admits that it failed, refused or neglected to deposit

property taxes levied, collected and received by it, on behalf of the Pension Fund,

state what the defendant did with those property taxes and if these funds were

used by the Village, what the defendant used those funds for."

The Village responded that there was money owed to the Pension Fund due to an "accounting

practices" oversight. The Village stated that the funds owed to the Pension Fund were deposited

into the "Village pooled account" and used "for general operations." Then, in response to the

Pension Board's request to admit facts, the Village stated that, from 2003 to 2010, it did not

follow the tax levy recommendations issued by the Illinois Department of Insurance and did not

retain its own actuary to determine the appropriate tax levy amounts pursuant to section 3-125 of

the Pension Code. In addition, the Village revealed the taxes levied in comparison to those

recommended by the Illinois Department of Insurance, such that: (1) for 2003, the

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recommendation was $432,261 and the Village levied $420,000; (2) for 2004, the

recommendation was $473,860 and the Village levied $262,940; (3) for 2005, the

recommendation was $486,673 and the Village levied $262,940; (4) for 2006, the

recommendation was $603,772 and the Village levied $280,000; (5) for 2007, the

recommendation was $651,990 and the Village levied $440,000; (6) in 2008, the

recommendation was $754,607 and the Village levied $440,000; (7) in 2009, the

recommendation was $849,300 and the Village levied $440,000; and (8) in 2010, the

recommendation was $1,018,396 and the Village levied $866,168.

&10 In August 2011, the Pension Board filed a motion for partial summary judgment as to

liability, arguing that it was entitled to summary judgment where it was undisputed that money

was owed to the Pension Fund due to the Village's failure to remit those property taxes received

by the Village but not transferred to the Pension Fund and its failure to comply with the tax levy

recommendations issued by the Illinois Department of Insurance. The Village responded that

summary judgment was not proper because the Pension Code did not yet require the Pension

Fund to be fully funded and such a finding was not proper pursuant to McNamee v. State of

Illinois, 173 Ill. 2d 433 (1996). On February 17, 2012, the circuit court denied the Pension

Board's motion for partial summary judgment without expressing its basis for doing so and

provided the Village with the opportunity to file affirmative defenses. In response, the Village

filed the affirmative defense that the Pension Code did not require the Pension Fund to be fully

funded yet.

&11 On June 22, 2012, after the close of discovery, the Village filed a motion for summary

judgment, arguing that it was not liable pursuant to McNamee because the Pension Board did not

allege any Pension Fund participant had been denied benefits due to alleged underfunding and

6
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there was no evidence the benefits had been impaired. The Village additionally cited People ex

rel. Illinois Federation of Teachers v. Lindberg, 60 Ill. 2d 266 (1975), and argued that section 5

of article XIII of the Illinois Constitution (Ill. Const. 1970, art. XIII, § 5) does not create a

contractual basis for pension fund participants to expect a particular level of funding, but instead

only provides the right to benefits upon retirement. The Village included its expert witness'

testimony that there was no measurable actuarial damage caused to the Pension Fund as a result

of the alleged underfunding and no default on payments to beneficiaries of the Pension Fund.

Additionally, the Village argued that the Pension Board failed to provide any evidence that the

Pension Fund was on the verge of default or imminent bankruptcy. Attached to the motion was

the deposition transcript of the Village's actuary expert, Arthur Tepfer, a letter from Tepfer to the

Village's counsel dated April 16, 2012,4 and a letter from the Village's counsel to Tepfer dated

May 22, 2012,5 as well as the Pension Board's complaint and the Village's affirmative defenses.

&12 The Pension Board responded that there were contested issues of material fact as to the

amount of damages in the case, which precluded the entry of summary judgment. The Pension

Board cited testimony from its witnesses establishing that the Village had a net pension

obligation of over $1 million due to the Village's failure to submit pension contributions in

satisfaction of the annual required amount and that the Pension Fund suffered resulting "financial

damage." The Pension Board further argued that McNamee was distinguishable because it did

4
This letter advises the Village's counsel as to the documents Tepfer reviewed in preparation of his

actuarial opinion, which included, inter alia, the court pleadings, the Pension Fund's actuarial reports for 1998-99

and 2007-08, the Pension Fund's balance sheet, audit reports for the Village for 2000 and 2002-10, the Illinois

Department of Insurance actuarials, and property tax levy and distribution documents.
5
The letter advises Tepfer that his deposition testimony will be used to support the Village's motion for

summary judgment.

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not involve underfunding of a municipality's police pension fund and did not include an analysis

of section 3-125 of the Pension Code. Instead, McNamee involved the constitutionality of an

amendment to section 3-127 of the Pension Code. Moreover, in response to the Village's

repeated allegation that no beneficiary had been denied pension benefits and that there was no

evidence the Pension Fund was on the verge of default or imminent bankruptcy, the Pension

Board stated, "so what!"

&13 On January 14, 2013, in a written order, the circuit court granted the Village's motion for

summary judgment. In doing so, the circuit court noted that the Village admitted it did not

follow the Illinois Department of Insurance's actuarial reports for the years 2003 through 2010.

The court determined that McNamee, as cited by the Village, was factually distinguishable from

the case at bar "because it did not address the issue in this case, to wit: whether the Pension

Board has a vested contractual right to the pension funding level in the Riverdale Police Pension

Fund." Finding this was a case of first impression wherein there was no case law determining

whether statutory funding levels may be enforced under the Pension Code, the circuit court then

relied on Illinois cases dealing with statutory funding under the Pension Protection Clause of the

Illinois Constitution (Ill. Const. 1970, art. XIII, § 5). After a thorough review of Lindberg and

People ex rel. Sklodowski v. State, 182 Ill. 2d 220 (1998), the circuit court held:

"While Sections 3-125, 2-127 and 22-403 of the Pension Code are clearly

designed to ensure the financial integrity of the pension funds, the Court notes

that none of the sections mention any right to enforce certain statutory funding

levels. Nor do any of the foregoing sections expressly give the Pension Board

final decision making authority to determine the amount needed to ensure the

police pension fund's reserve. In construing [s]ections 3-125, 3-127 and 22-403

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of the Pension Code in their entirety, based on the plain and ordinary language

therein, the Court finds that the legislature could not have intended to remove all

discretion from the municipality in determining the amount of tax levies and

contributions to the pension funds in any particular year. Consequently, the Court

finds no genuine issue of material fact precluding the entry of summary judgment

in favor of the Village."

This appeal followed.

&14 ANALYSIS

&15 The Pension Board contends the circuit court erred in granting summary judgment in

favor of the Village regarding the claim for breach of sections 3-125 and 3-127 of the Pension

Code and in denying partial summary judgment in favor of the Pension Board as to the Village's

liability for all amounts of contributions due and owing the Pension Fund.

&16 Summary judgment should be granted where the pleadings, depositions, and admissions

on file, together with the affidavits, demonstrate that there is no genuine issue of material fact

and the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West

2010). Summary judgment is a drastic measure that should only be granted if the movant’s right

thereto is clear and free from doubt. Outboard Marine Corp. v. Liberty Mutual Insurance Co.,

154 Ill. 2d 90, 102 (1992). We review a trial court’s decision granting summary judgment de

novo. Id.

&17 I. Summary Judgment Regarding Statutory Funding

&18 The Pension Board asserts that the circuit court erred in granting summary judgment on a

legal theory not presented by the Village. The Pension Board argues the circuit court sua sponte

found the Pension Board lacked standing to bring a claim against the Village where the Pension

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Code did not give the Pension Board a vested contractual right to statutory funding of the

Pension Fund. In contrast, the Village sought summary judgment on the basis of the McNamee

decision and because there were no measurable actuarial damages, proof that pension payments

were not made to beneficiaries, or evidence that the Pension Fund faced bankruptcy.

&19 In response, the Village argues that it raised the Pension Board's lack of standing as an

affirmative defense and as an argument in its motion for summary judgment where it argued that

the Pension Code did not yet require full funding of the Pension Fund, the Pension Fund had not

suffered any measurable actuarial damage and was not on the verge of default or imminent

bankruptcy, and there was no evidence that any beneficiaries had been denied benefits due to the

alleged underfunding of the Pension Fund. Consequently, the Village maintains that the Pension

Fund's injury is speculative and cannot form the basis of declaratory relief. In the alternative, the

Village argues that standing is a matter of subject matter jurisdiction and can be considered by

the court even if not raised by either party.

&20 Our review of the pleadings at issue reveals that the Village did not expressly raise a lack

of standing affirmative defense. Generally, the failure to raise standing as an affirmative defense

results in waiver. Lebron v. Gottlieb Memorial Hospital, 237 Ill. 2d 217, 252-53 (2010).

However, while not express, the pleadings demonstrate that the Village essentially raised a lack

of standing defense by asserting that the Pension Board's underfunding claim was speculative

and lacked merit. Specifically, in its affirmative defenses, the Village argued that it did not

breach its statutory duty to fund the Pension Fund where section 3-127 of the Pension Code does

not require complete funding until 2033 and where numerous variables, e.g., the interest rate and

the particulars of the participating officers in terms of length of service, number, etc., were not

within the Village's control.

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&21 Nevertheless, in its written order, the circuit court stated that it did not consider a

standing or ripeness challenge because the Village did not expressly raise either as affirmative

defenses. Notably, the cases relied upon by the circuit court to conclude that the Pension Board

raised a meritless claim did not address the issue of standing. See Sklodowski, 182 Ill. 2d 220,

McNamee, 173 Ill. 2d 433; Lindberg, 60 Ill. 2d 266 (considering whether there was a contractual

right to funding based on the pension protection clause (Ill. Const. 1970, art. XIII, § 5)).

Therefore, although the parties seemingly agree that summary judgment was granted based on

the Pension Board's lack of standing, no such finding was made by the circuit court.6

&22 As to the Pension Board's argument that the circuit court's basis for granting summary

judgment was sua sponte and, therefore, improper, we disagree. The Village's motion for

summary judgment argued that judgment was proper as a matter of law because there were no

proven injuries to beneficiaries and, pursuant to McNamee, there was no constitutional or

contractual right to a particular level of funding. Review of the circuit court's written order

demonstrates that it considered McNamee at length and found it distinguishable where it did not

deal with the "specific issue," namely, "whether statutory funding levels may be enforced under

the Pension Code." The circuit court considered the issue before the court to be one of first

impression and relied on cases dealing with the pension protection clause for guidance. Those

cases included Lindberg and Sklodowski. Sklodowski relied upon Lindberg and McNamee, both

cited by the Village as bases for granting summary judgment. Therefore, the circuit court did not

grant summary judgment sua sponte but, rather, upon the grounds submitted by the Village.

&23 We now turn to the question of whether the Village was statutorily required to provide a

particular level of funding pursuant to the Pension Code, as alleged in the Pension Board's

6
As a result, we need not address the parties' additional arguments regarding standing.

11
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complaint. Resolving the question on appeal requires our consideration of sections 3-125 and 3-

127 of the Pension Code. We are guided by the familiar principles of statutory construction.

&24 The primary goal of statutory construction is to ascertain and give effect to the intent of

the legislature. Metropolitan Life Insurance Co. v. Hamer, 2013 IL 114234, ¶ 18. The best

method for determining legislative intent is the statutory language, which must be given its plain

and ordinary meaning. Id. A court may not depart from the plain language by reading

exceptions, limitations, or conditions into the statute that conflict with the clearly expressed

legislative intent. Id. The language of the statute must be read in context and should be given a

reasonable construction without being rendered superfluous. See Prazen v. Shoop, 2013 IL

115035, ¶ 21. In ascertaining the legislature's intent, a court may also consider the reason and

necessity for the law, the evils sought to be remedied, and the purposes to be achieved. Id.

Where statutory language is clear and unambiguous, it will be given effect without resort to other

aids of construction. Kunkel v. Walton, 179 Ill. 2d 519, 533-34 (1997). However, where the

meaning of a statute is unclear from the language, the court may look to other sources such as

legislative history to determine the legislature's intent. Id. A statute is ambiguous when it is

capable of being understood by reasonably well-informed individuals in two or more different

manners. Gruszeczka v. Illinois Workers' Compensation Comm'n, 2013 IL 114212, ¶ 16.

&25 Section 3-125, at the relevant time, provided that the Village "shall annually levy a tax

upon all the taxable property of the municipality" to produce a "sum sufficient to meet the annual

requirements of the police pension fund." 40 ILCS 5/3-125 (West 2008). The "annual

requirements" included: "(1) the normal cost of the pension fund for the year involved, plus (2)

the amount necessary to amortize the fund's unfunded accrued liabilities as provided in Section

3-127." 40 ILCS 5/3-125 (West 2008). Pursuant to section 3-127, the purpose of the "reserve" is

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to insure the payment of pension obligations. See 40 ILCS 5/3-127 (West 2010). The Pension

Board must maintain a reserve to amoritize the fund’s unfunded accrued liabilities. See 40 ILCS

5/3-127 (West 2010); Board of Trustees of the Police Pension Fund v. City of Evanston, 281 Ill.

App. 3d 1047, 1050 (1996). Based on the plain language of the statutes, the Village was

required to levy taxes sufficient to cover the cost of the pension fund of the given year, as well as

the amoritized amount to cover the fund's unfunded accrued liabilities. Section 3-127, however,

advised that, in the event the pension fund has a reserve of less than the accrued liabilities of the

fund, the Pension Board must calculate the amount necessary to attain full funding over the

course of 40 years from July 1, 1993, for those funds in existence at the time or 40 years from the

creation of funds thereafter. 40 ILCS 5/3-127 (West 2010).

&26 The question before us is whether the plain language of the Pension Code created a

contractual obligation under which the Village was required to remit funds to the Pension Fund

in concert with that reported as necessary by the Pension Board. As stated, the Village moved

for summary judgment on the bases that, pursuant to McNamee, there was no right to a particular

level of funding, and the Pension Board did not provide evidence demonstrating any

beneficiaries were denied benefits due to the alleged underfunding.

&27 We first review McNamee. In McNamee, participants in police pension funds brought an

action for declaratory and injunctive relief claiming an amendment to section 3-127 of the

Pension Code violated the participants’ constitutional pension rights by making the funds less

secure. McNamee, 173 Ill. 2d at 434. The amendment at issue changed the method of

computing the annual amount necessary to amortize the unfunded accrued liability of police

pension funds. Id. at 435-36. Specifically, the amendment changed the beginning date of the 40-

year amoritization period from 1980 to 1993 and changed the method of computing the annual

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amount required to amortize the unfunded accrued liability from a level dollar amount to a

percentage of payroll. Id. at 436.

&28 In holding that section 5 of article XIII of the Illinois Constitution (the pension protection

clause) (Ill. Const. 1970, art. XIII, § 5) created a contractual right to receive benefits from a

pension fund but did not control funding, the supreme court relied on the history of the provision

and the evils it was intended to address by considering the debates from the constitutional

convention. McNamee, 173 Ill. 2d at 439-44. Additionally, the supreme court cited Lindberg,

wherein the supreme court also relied on the constitutional convention debates to conclude that

the Pension Protection Clause did not require any particular level of funding. Id. at 444. Rather,

in Lindberg, the supreme court stated that the pension protection clause “does not create a

contractual basis for participants to expect a particular level of funding, but only a contractual

right ‘that they would receive the money due them at the time of their retirement.’ ” Id. (quoting

Lindberg, 60 Ill. 2d at 271). Ultimately, where the participants did not contend the amendment

to section 3-127 diminished their right to receive pension benefits or that the new funding

method placed the fund on the verge of “default or imminent bankruptcy,” the supreme court

concluded there was no violation of the pension protection clause. (Internal quotation marks

omitted.) McNamee, 173 Ill. 2d at 446-47.

&29 The Pension Board argues that McNamee is distinguishable because the supreme court

only considered section 3-127 of the Pension Code and not section 3-125. The Pension Board is

correct that section 3-125 was not at issue in McNamee; however, the portion of section 3-125 at

issue here, namely, the funding directives for accrued liabilities, is defined by section 3-127.

Consequently, the supreme court’s analysis of the rights provided by the language of section 3-

127 is relevant to the case before us.

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&30 We further consider Sklodowski, wherein the supreme court addressed pension funding

and whether participants in various state employee retirement systems had a contractual right to a

particular level of funding. In Sklodowski, the statute relevant to that case was Public Act 86-273

(eff. Aug. 23, 1989), which, similar to section 3-127, described a method of amortizing the

unfunded retirement system liability over the course of 40 years as a level percentage of payroll.

Sklodowski, 182 Ill. 2d at 223. Based on McNamee and Lindberg, the supreme court concluded

that the pension protection clause extended protection to pension benefits only. Id. at 231.

Consequently, the supreme court similarly held that the beneficiaries did not have an enforceable

contractual right to control funding vis a vis the pension protection clause. Id.

&31 The supreme court, however, recognized that McNamee established that a beneficiary

need not wait to bring a claim under the pension protection clause until benefits were actually

diminished. Id. at 232. Rather, if a beneficiary could demonstrate that a pension fund was on the

“verge of default or imminent bankruptcy,” a group action could be taken because such evidence

would show that pension benefits were impaired. (Internal quotation marks omitted.) Id.

However, in Sklodowski, where the beneficiaries there only alleged an opinion that the funding

levels at the time were insufficient to meet future funding obligations, the allegation was

insufficient to demonstrate an impairment of benefits. Id.

&32 Finally, in Sklodowski, the supreme court dismissed the beneficiaries' argument that, even

if the pension protection clause was not intended to control pension funding, the legislature

intended to create vested contractual rights by establishing specific contribution levels. In doing

so, the supreme court relied on the presumption that "laws do not create private contractual or

vested rights, but merely declare a policy to be pursued until the legislature ordains otherwise."

Id. at 231. The beneficiaries failed to overcome that presumption. Id. at 232. Moreover, the

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supreme court stated that "[t]he funding provisions contained in the Pension Code give no

indication of a legislative intention to establish a contractual right." Id.

&33 In concluding that the beneficiaries had neither a contractual nor a constitutional right to

enforce the level of pension fund contributions mandated by the statute at issue, the supreme

court stated:

"The framers of the Illinois Constitution were careful to craft in the pension

protection clause an amendment that would create a contractual right to benefits,

while not freezing the politically sensitive area of pension financing. In addition,

the funding provisions contained in the Pension Code do not evince a legislative

intent to create vested contractual rights in favor of beneficiaries." Id. at 233.

&34 Our analysis is further guided by cases wherein this court has considered whether it is

within the city council's discretion to determine the taxes to be levied in satisfaction of sections

3-125 and 3-127. In City of Evanston, the city council levied a tax for the police pension fund

that was less than the amount certified by the pension board as necessary to fund the pension

fund. City of Evanston, 281 Ill. App. 3d at 1050. This court held that “a city council need not

accept the dollar amount recommended to it by a police pension board, but that it must follow

Illinois law in calculating the amount it selects as an alternative.” Id. at 1049. In so finding, this

court concluded that sections 3-125 and 3-127 of the Pension Code do not contain language

indicating that the city council would be bound by the pension board’s conclusion as to the

amount required to fund the pension fund. Id. at 1052; see also Village of Spring Grove v.

County of McHenry, 309 Ill. App. 3d 1010, 1015 (2000).

&35 In Board of Trustees of the Police Pension Fund v. City of Rockford, 96 Ill. App. 3d 102

(1981), the police and firemen’s pension boards petitioned for a writ of mandamus compelling

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the city council to levy taxes in conformity with their interpretations of sections 3-125 and 3-127

of the Pension Code and the similar sections applicable to firemen. The city council refused to

levy taxes for the full sum necessary to meet the obligations of the pension funds and their

reserve requirements as reported by the pension board, which, as with the case at bar, was based

on the actuarial computations of the Illinois Department of Insurance. In analyzing the language

of the statute, this court stated:

“While sections 3-125 and 3-127 *** of the Act are couched in mandatory

language in that the word ‘shall’ is used, we find no specific reference to the

actuarial findings of the Illinois Department of Insurance indicating that its

calculations are binding on the city council. Since the tax levy requested by the

pension boards is derived from the actuarial findings of the Illinois Department of

Insurance, the question at issue is whether the city council has any discretion to

depart from these findings in enacting the tax levy for the police and firemen’s

pension funds.” City of Rockford, 96 Ill. App. 3d at 106-07.

&36 While recognizing the case was factually distinguishable, the City of Rockford court

considered language found in Lindberg, wherein the supreme court held that compulsory

participants in pensions plans did not have a contractual right to funding. Id. at 107-08.

Ultimately, this court affirmed the dismissal of the petition for the writ of mandamus, holding

that:

“While the finance and reserve sections of the Illinois Pension Code

(sections 3-125 and 3-127 for police pensions and 4-118 and 4-120 for firemen’s

pensions) are clearly designed to insure the financial integrity of these pension

funds, we do not believe it was their purpose to remove all discretion from the

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city council in determining the dollar amount to be levied for these funds in any

particular year and to require the city council to accept the Police Board and the

Firemen’s Board reports as mandatory in that regard.” Id. at 108.

&37 Overall, sections 3-125 and 3-127 of the Pension Code have been interpreted as not

mandating that taxes be levied in strict concert with the funding recommended by a city council.

Moreover, the supreme court has consistently held that a beneficiary is entitled to receive his

pension benefits, but that the reserve portion of the "annual requirement" is not a fixed

entitlement. We, therefore, find the McNamee, Lindberg, and Sklodowski interpretations of

sections 3-125 and 3-127 are relevant to the Pension Code and not just the pension protection

clause.

&38 Turning to the case before us, the Pension Board has not satisfied its burden of citing

specific language in the Pension Code that demonstrates a legislative intent to establish a

contractual right to funding. See Sklodowski, 182 Ill. 2d at 231-32 (citing Fumarolo v. Chicago

Board of Education, 142 Ill. 2d 54, 104 (1990)). "A party who asserts that a State law creates

contractual rights has the burden of overcoming the presumption that a contract does not arise

out of a legislative enactment." Fumarolo, 142 Ill. 2d at 104. In fact, the Pension Board has not

presented any argument to support its allegation that the Pension Code created a contractual right

to funding. Review of sections 3-125, 3-127, and 22-403 of the Pension Code, which restricts

the use of pension funds to public purposes and not corporate purposes, demonstrates the

legislature's intent to insure that beneficiaries "receive the money due them at the time of their

retirement." Lindberg, 60 Ill. 2d at 271. There is no language in the relevant statutes using the

term "contract" in relation to funding or establishing anything more than statutory rights. See

Fumarolo, 142 Ill. 2d at 104-05. A court may not depart from the plain statutory language by

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reading exceptions, limitations, or conditions into the statute that conflict with the clearly

expressed legislative intent. Hamer, 2013 IL 114234, ¶ 18. Consequently, we conclude that the

Pension Code does not create a contractual right to funding.

&39 Our conclusion is supported by the legislature's recent enactment of Public Act 98-599,

known as the Reform Act to the Pension Code, which, as of July 1, 2014, provides the pension

boards of four of the State's pension systems with the express right to file suit if the State does

not maintain the funding levels called for by the Reform Act. See Pub. Act 98-599 (eff. July 1,

2014) (adding 40 ILCS 5/2-125(c), 14-132(c), 15-156(b), 16-158.2(a)). The legislature's action

demonstrates that, contrary to the Pension Board's argument, the Pension Code does not provide

an implied right to enforce funding levels. See People v. Ellis, 199 Ill. 2d 28, 39 (2002) ("[i]f

possible, the court must give effect to every word, clause, and sentence; it must not read a statute

so as to render any part inoperative, superfluous, or insignificant; and it must not depart from the

statute's plain language by reading into it exceptions, limitations, or conditions the legislature did

not express").

&40 We do recognize that the McNamee court established that a cause of action need not wait

until benefits are actually diminished; however, the Pension Board did not provide evidence, nor

even allege, the Pension Fund was on the "verge of default or imminent bankruptcy." (Internal

quotation marks omitted.) McNamee, 173 Ill. 2d at 446-47; Sklodowski, 182 Ill. 2d at 232.

Rather, the Pension Board has failed to establish that any beneficiary has been denied benefits.

Consequently, the right to benefits has not been impaired.

&41 In sum, where this court has found the statutes provide the Village with discretion in

implementing the funding recommendations certified by the Pension Board, where the Pension

Board failed to satisfy its burden of providing statutory language to establish a contractual right

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to specified funding, and where there is no evidence that the fund is currently at risk of denying

benefits, the Village was entitled to summary judgment as a matter of law.

&42 As a final note, it bears repeating that, because we have concluded that the circuit court

properly considered whether the Pension Board was entitled to the pension funding alleged in its

complaint or whether the Village was entitled to summary judgment on the bases submitted, it

was unnecessary for this court to consider the additional arguments regarding standing. Simply

stated, the statutes do not provide a cause of action for underfunding so long as there is no

allegation or proof the fund at issue is on the verge of default or imminent bankruptcy.

&43 II. Partial Summary Judgment Regarding Liability

&44 The Pension Board also appeals the circuit court’s denial of its motion for partial

summary judgment as to liability. The Pension Board contends that sections 3-125 and

3-127 provide the basis for filing suit and requests an order requiring the Village to levy

taxes to fully fund the Pension Fund where it is undisputed that the Village underfunded

the Pension Fund. In addition, the Pension Board argues that the Village is liable for the

Pension Fund's portion of the property taxes levied and collected.

&45 As previously determined, the Pension Code does not provide a contractual right

to funding. Consequently, the circuit court did not err in denying the Pension Board's

partial motion for summary judgment where there was no basis for a finding of liability

for underfunding.

&46 Turning to the issue of the money collected by the Village as a result of taxes that

were levied, yet not remitted to the Pension Fund, we find the Village was liable pursuant

to relevant sections of the Pension Code. In response to an interrogatory, the Village

admitted that "[b]ecause of accounting practices, there was oversight by the Village of

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Riverdale in paying the Police Pension Fund its portion of property taxes received" and

instead the money was deposited into the "Village pooled account and was used for

general operations."

&47 The language of section 3-125, in relevant part, provided that "[t]he police

pension fund shall consist of the following moneys which shall be set apart by the

treasurer of the municipality: (1) All moneys derived from the taxes levied hereunder"

and "[t]he tax shall be forwarded directly to the treasurer of the board within 30 business

days after receipt by the county." 40 ILCS 5/3-125 (West 2008). Moreover, section 3-

132 of the Pension Code adds that the Pension Board has the power and duty to control

and manage the Pension Fund, instructing that "[a]ll money received or collected shall be

credited by the treasurer of the municipality to the account of the pension fund and held

by the treasurer of the municipality subject to the order and control of the board." 40

ILCS 5/3-132 (West 2010). Finally, section 22-403 provides:

"Any tax heretofore or hereafter levied for the benefit or purposes of any such

pension fund by the tax-levying body authorized by the law creating such fund to

levy such tax, and any payment or contribution to such fund made by the State, or

by any county, city, town, municipal corporation or body politic and corporate

located in the State, is hereby declared to be so levied or so contributed for

governmental purposes under such law, and not for the corporate purposes of such

tax-levying body, or of the State, or of any county, city, town, municipal

corporation or body politic and corporate of the State, irrespective of the nature or

character of the duties performed or services rendered by any employee member

of any such pension fund." 40 ILCS 5/22-403 (West 2010).

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&48 Based on the language of these statutes, we conclude that, to the extent the

Village exercised its authority in levying taxes for the benefit of the Pension Fund, the

money collected by the Village must be forwarded to the treasurer of the Pension Board.

Accordingly, although there is no contractual right to specified funding, a Pension Board

is entitled to its portion of the monies actually received as a result of the taxes that were

levied under the statute.

&49 As stated, in the Village's response to the Pension Board's interrogatory, the

Village admitted that money was owed to the Pension Fund. The Village further

admitted that the amount was "to be determined in deposition of Maggie Britton and any

possible actuarial expert deposition for the [Village] in addition to Ms. Britton's

testimony." The record contains an excerpt of Britton's deposition testimony; however,

that excerpt does not establish the amount of tax money collected yet not remitted to the

Pension Fund by the Village. Accordingly, we reverse, in part, the circuit court's

February 17, 2012, order denying the Pension Board's motion for partial summary

judgment as to the Village's liability for the money collected on behalf of the Pension

Fund. We remand for a determination of the amount of collected tax money that is owed

to the Pension Fund.

&50 We note that the Illinois Public Pension Fund Association has expanded the

Pension Board's argument beyond that raised in its appellate brief or in its memorandum

of support for its motion for partial summary judgment. As a "friend" of the court, the

sole function of an amicus is to advise or make suggestions to the court within the

purview of the issues framed by the parties. In re J.W., 204 Ill. 2d 50, 73 (2003). We,

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therefore, need not consider whether the Village treasurer breached his fiduciary duty to

the Pension Board or whether the Village engaged in fraud.

&51 CONCLUSION

&52 We affirm the judgment of the circuit court granting summary judgment in favor

of the Village on the issue of funding the Pension Fund. We also affirm, in part, the

judgment of the circuit court denying partial summary judgment against the Pension

Board where there is no basis for a finding of liability for underfunding. We, however,

reverse, in part, the judgment of the circuit court denying partial summary judgment

against the Pension Board regarding the tax money levied and collected on the Pension

Fund's behalf. We remand for a determination of the appropriate amount owed to the

Pension Fund.

&53 Affirmed in part and reversed in part; cause remanded for additional proceedings.

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