Should An $850 Bonus = $20,000 Pension Boost? After Long Legal Battle, Courts Say No

The Illinois courts have closed the door to the creative math that allowed one western suburb’s retired police officers to use a one-time $850 bonus to boost their retirement take by as much as six figures.

The state Supreme Court allowed to stand two lower courts’ rulings that found the practice illegal in west suburban Countryside. The Supreme Court’s decision in late January led to a perfunctory order Wednesday in Cook County to officially close the case.

A handful of retirees have collected more than $100,000 each in extra pension checks — money they’ll get to keep.

The judges ruled that retirees shouldn’t have to give that money back, but that taxpayers also shouldn’t have to make up for it.

Countryside stopped setting aside cash for the spiked portion of the pensions seven years ago, when it filed a lawsuit to ask the courts officially declare them illegal. The suburb calculated that about $2 million in extra pensions were paid out since then, and it’s unclear how the pension fund will make up that hole.

The legal developments were cheered by Countryside’s current mayor, Sean McDermott. In a prepared statement, he called it a “hard won victory for Countryside taxpayers.”

The appeal was sought by a separate pension board controlled by current and retired officers. The board’s attorney did not immediately respond to questions from the Tribune.

For years, retiring police officers in Countryside had been given a one-time $850 pay bump in their last paycheck. Because its retirees’ pensions are based on the final rate of pay, the pension board said that $850 in the last paycheck really meant the final rate of pay was the equivalent of a $20,400 annual pay rate boost.

The math behind that decision? There are 24 pay periods a year. And $850 multiplied by 24 is $20,400.

The creative math was quietly adopted in some suburbs in past decades as a way for a mayor to ink a lower-wage contract with a police union while leaving the hefty pension headache to some future mayor, according experts previously interviewed by the Tribune. But state pension regulators caught wind of the practice and warned suburbs it violated state law on how pensions had to be calculated.

Countryside, however, was different. While other officers and pension boards abandoned the tactic, its pension board — controlled by current officers and retirees — refused. The refusal came as a new administration at City Hall pushed back, arguing that the practice hadn’t actually been approved by the suburb’s past leaders.

A 2010 Chicago Tribune investigation on padded pensions highlighted how Countryside’s ex-police chief, Timothy Swanson, used the tactic to boost his pension by 20 percent to start at $84,555 a year.

Before he became chief, he was among those in the police union who negotiated the creative math with the suburb’s then-labor attorney, court records show. Later on, Swanson would go to prison for theft and fraud relating to actions uncovered by the suburb’s leaders and highlighted in a 2012 Tribune investigation.

Swanson lost his pension after the conviction. But the pension board still paid out the higher pensions to others who had seen their final checks boosted. The board argued that, no matter what the suburb’s new leaders said, the suburb had agreed to the deal years earlier, and the deal was legal. Among those on the board when it decided to keep cutting fatter checks was Lou Moravecek, who collected an extra $243,926 from the practice, according to Countryside calculations.

Countryside records show Moravecek was one of seven retirees to collect more than $100,000 extra over time, until a 2017 Cook County ruling ordered the board to stop the tactic and start paying those retirees as if the $850 bonus had boosted their final annual pay rate just $850. For Moravecek, it meant a roughly $20,000 drop in his annual pension, to about $80,000, according to Countryside calculations.

That order was part of a broader Cook County ruling that deemed the practice illegal. An appeals court agreed last fall. The pension board asked the state Supreme Court to hear the case, but that court announced Jan. 31 that it wouldn’t — effectively cementing the decisions made by the lower courts.

Moravecek could not be located for questions but in the past has declined to comment and referred questions to the pension board’s attorney, Thomas Radja, who did not respond to an email or voicemail.

From The Chicago Tribune

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