Pension Board Has Authority To Determine Police Chief’s Pension Benefits In Light Of Last-Minute $20K Raise

Daniel Sedlock retired as Police Chief for the City of Ottowa, Illnois on September 8, 2003. Sedlock’s salary as Chief of Police was $64,000. However, the City amended his employment agreement on August 5, 2003, to increase his annual salary to $84,338.31. The increase in his salary took effect on September 1, 2003, one week before his retirement. Under Illinois law, a police officer’s pension is the equivalent of half of the salary attached to the rank held on the last day of service. Under the law, “salary” means the annual salary, including longevity attached to the police officer’s rank, as established by the employer’s appropriation ordinance, including any compensation for overtime which is included in the salary established, but excluding any bonus pay or merit pay or any other cash benefit not included in the salary.

Acting proactively, on October 5, 2004, Sedlock filed a complaint in court seeking a declaratory judgment asking that the Court enter an order finding that the City’s Police Pension Fund had no authority under the code to make a final annual salary determination in any sum other than the amount of $84,338.31. The dispute ended up in the Illinois Court of Appeals. The Court dismissed Sedlock’s lawsuit. The Court found that “the fundamental purpose of a police pension board is to determine eligibility to participate in the fund. The trustees of the fund are statutorily designated as fiduciaries. As fiduciary, each board member is required to discharge his or her duties with respect to the pension fund solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits to participants and their beneficiaries.”

In holding that the Fund’s statutory duties included determining what Sedlock’s annual salary should be, the Court was clearly concerned about opening the floodgates to future litigation. As the Court put it, “granting Sedlock’s request could result in courts being charged with making salary determinations for thousands of public employees seeking disability or retirement pensions each year. This is not what the Legislature intended. The Board is in the best position to determine whether Sedlock’s most recent salary included overtime, holiday, bonus, or merit pay.”

Sedlock v. Board of Trustees of the Police Pension Fund of the City of Ottowa, 2006 WL 2465648 (Ill.App. 2006).

This article appears in the November 2006 issue