Illinois Official Reports 

Appellate Court

Village of North Riverside v. Boron, 2016 IL App (1st) 152687

Appellate Court 

Caption

THE VILLAGE OF NORTH RIVERSIDE, Plaintiff-Appellant, v. 

ANDREW BORON, in His Official Capacity as Director of 

Insurance, and THE ILLINOIS DEPARTMENT OF INSURANCE,

Defendants-Appellees.

District & No. First District, First Division

Docket No. 1-15-2687

Filed December 19, 2016

Decision Under 

Review

Appeal from the Circuit Court of Cook County, No. 14-CH-17951; the 

Hon. Sophia H. Hall, Judge, presiding.

Judgment Affirmed.

Counsel on

Appeal

Burton S. Odelson and Michael J. Hayes, Jr., of Odelson & Sterk, Ltd., 

of Evergreen Park, for appellant.

Lisa Madigan, Attorney General, of Chicago (Carolyn E. Shapiro, 

Solicitor General, and Richard S. Huszagh, Assistant Attorney 

General, of counsel), for appellees.

Panel JUSTICE SIMON delivered the judgment of the court, with opinion.

Presiding Justice Connors and Justice Mikva concurred in the 

judgment and opinion.
- 2 - 

 OPINION 

¶ 1 This case concerns the Village of North Riverside’s (Village) failure to meet its statutory 

contribution obligations to its police and firefighter pension funds. At an administrative 

hearing, the Village argued that its noncompliance should be excused because it had good 

and sufficient cause for failing to meet its obligations. The administrative hearing officer 

rejected the Village’s arguments, and the hearing officer’s recommendation was accepted by 

the Director of the Public Pension Division. The Village sought administrative review in the 

circuit court which affirmed the decision. The Village now seeks review here, and we 

confirm the administrative ruling and affirm the circuit court’s decision.

¶ 2 BACKGROUND 

¶ 3 The Illinois Pension Code (40 ILCS 5/1-101 et seq. (West 2012)) requires municipalities 

to contribute to the police and firefighter pension funds. See 40 ILCS 5/3-125 (West 2012) 

(police); 40 ILCS 5/4-118 (West 2012) (firefighters). The municipalities are required to pay 

the amount to cover the “normal cost” that remains after the employees’ contributions are 

factored in. 40 ILCS 5/3-125, 4-118 (West 2012). 

¶ 4 The General Assembly enacted legislation to create the Public Pension Division 

(Division), which is charged with administering and enforcing the provisions of the Pension 

Code. 40 ILCS 5/1A-101 (West 2012). Whenever the Division determines that a government 

unit has failed to comply with the law, the Director of the Division (Director) may hold a 

hearing where the government must show cause for its noncompliance. 40 ILCS 

5/1A-113(d)(3) (West 2012). If, at the conclusion of the hearing, the Director determines that 

“good and sufficient cause” for noncompliance has not been shown, the Director is entitled to 

order compliance and assess penalties. 40 ILCS 5/1A-113(d)(4)-(5) (West 2012). The 

General Assembly mandated that the Director develop standards and criteria to be used to 

administer the penalty provision set forth in section 1A-113. 40 ILCS 5/1A-113 (West 2012). 

¶ 5 The Division used its rulemaking authority by issuing certain regulations. See 50 Ill. 

Adm. Code 4435.10 (1998). The relevant regulation in this case states that, at the hearing, in 

determining whether the government has met its burden of showing “good and sufficient 

cause” for noncompliance, 

“the Director may consider, but is not limited to, the following:

 1) Evidence that, due to no fault of the pension fund, governmental unit or 

elected or appointed official of a governmental unit, there was an unforeseeable or 

unexpected delay or occurrence; 

 2) Evidence of an uncontrollable circumstance; and 

3) Evidence pertaining to Acts of God.” 50 Ill. Adm. Code 4435.80(c) (1998). 

¶ 6 Defendant Illinois Department of Insurance determined that plaintiff Village violated the 

Illinois Pension Code when it failed to make full, actuarially designated annual contributions 

to its police pension fund from 2008 to 2012 and its firefighter pension fund from 2009 to 

2012. The Village acknowledged that it had not met its contribution obligations but asserted 

that there were mitigating circumstances and that it intended to take remedial action in the 

coming years. The Director called a hearing to give the Village an opportunity to show “good 

and sufficient cause” for its violations. 
- 3 - 

¶ 7 At the hearing, the Village offered evidence through its finance director, Sue Scarpiniti. 

Scarpiniti testified that North Riverside is a village with a small residential community, but 

that it has a relatively large commercial base. As a result, the Village has a larger police and 

firefighter force than most communities of similar population. Scarpiniti explained that the 

Village’s inability to meet its contribution obligations was a result of the recession occurring 

around 2009. The Village lost funds in sales tax receipts, property tax receipts, and shared 

revenue from the state during this period. 

¶ 8 Scarpiniti testified that, in 2012, the Village lost its largest sales tax producer, a restaurant 

supply company, to another suburb in Du Page County. That business alone accounted for 

15% of the Village’s annual sales tax collections, and sales tax collections account for 60% 

of the Village’s total annual operating revenue. The Village also received less revenue from 

the state which is derived from income taxes and other taxes and fees the State collects. 

Scarpiniti testified that property tax receipts also decreased at this time because the assessed 

property values decreased during the economic downturn. Many property owners were 

successful in lowering their property taxes through appeals. The property tax revenue 

problem was compounded, Scarpiniti stated, by the fact that the Village is a “non-home rule” 

community and is bound by the Property Tax Extension Limitation Law (35 ILCS 

200/18-185 (West 2012)). That law caps the amount that a community can increase its 

property tax levy each year, so it prohibited the Village from making any significant 

increases in property taxes to cover the deficiencies it was experiencing. 

¶ 9 The Village issued bonds in an attempt to attract new businesses, and it issued debt 

certificates to refinance a loan. The Village sold additional debt certificates to make up for 

the loss of the revenue resulting from the departed restaurant supply company. All of these 

issuances negatively affected the Village’s credit rating and it received three successive 

downgrades from 2001 to 2014. 

¶ 10 On the other hand, the hearing also revealed that from 2000 to 2011, there were actually 

six years in which the Village did not make any contributions to the police or firefighter 

pension funds. Scarpiniti acknowledged that the Village’s failure to contribute over the years 

would mean it would need to contribute more in future years. Over the same period, 

however, the Village made the full required contribution to the Illinois Municipal Retirement 

Fund covering its other employees because that fund “had an enforcement provision.” 

¶ 11 The evidence also showed that from 2000 to 2012, sales tax receipts actually increased as 

a result of two sales tax hikes, from $4,797,654 in 2000 to $8,479,401 in 2012. Scarpiniti 

testified that the Village subsidized garbage collection and water services for the residents 

even though other municipalities were passing along the cost increases for those services to 

their residents. Scarpiniti testified that whatever additional revenue streams the Village was 

able to create over the relevant period were used to fill the voids in the Village’s normal 

revenue lost as a result of the economic downturn. 

¶ 12 The hearing officer issued a lengthy recommended order detailing his findings of fact and 

conclusions of law. In it, he found that the Village’s proffered reasons for noncompliance did 

not amount to good and sufficient cause for its failures to meet its pension contribution 

obligations. The Director adopted the findings of fact and conclusions of law submitted by 

the hearing officer and ordered the Village to comply with its obligations and submit 

evidence of that compliance within 30 days. The Village sought administrative review of that 

decision in the circuit court, and following oral argument, the circuit court affirmed the 
- 4 - 

administrative decision. The Village now seeks review here. 

¶ 13 ANALYSIS 

¶ 14 There is some disparity in the parties’ arguments concerning what standard of review we 

are supposed to apply, but it does not seem that their positions necessarily conflict. On 

appeal, the Village argues that the regulation purporting to define what constitutes “good and 

sufficient cause” (50 Ill. Adm. Code § 4435.80) is unconstitutional because it is too vague. 

So, on that question of law, our review is de novo. American Federation of State, County, & 

Municipal Employees (AFSCME), Council 31 v. State, 2015 IL App (1st) 133454, ¶ 11; 

People ex rel. Madigan v. Illinois Commerce Comm’n, 231 Ill. 2d 370, 380 (2008). But its 

other argument—that the Village actually did show good and sufficient cause—presents a 

mixed question of law and fact and, therefore, we will only overturn the agency’s decision if 

it is clearly erroneous. City of Belvidere v. Illinois State Labor Relations Board, 181 Ill. 2d 

191, 205 (1998). 

¶ 15 The Village argues that “good and sufficient cause” as it is used in the Illinois Pension 

Code and derivatively in the pension subchapter of the Illinois Administrative Code is too 

vague, and therefore, the regulation is unconstitutional. The Village contends that because 

the term is so undefined, it gives the hearing officer too much discretion and allows the 

interpretation of the regulation to vary wildly from case to case based on the “whims of 

different hearing officers who are charged with enforcing the rule.” The constitutionality of 

the regulation has apparently never been challenged. 

¶ 16 The regulation states that the Director may consider: evidence of whether there was an 

unforeseeable or unexpected delay or occurrence, an uncontrollable circumstance, or any 

evidence pertaining to Acts of God. 50 Ill. Adm. Code 4435.80(c) (1998). The regulation 

also states that the Director is not limited to considering those factors and it leaves open 

ended what other considerations might be relevant. See id. The Village contends that the rule 

grants the Director unlimited discretion and is, thus, not appropriately tailored to the Illinois 

Administrative Procedure Act’s directive that “standards shall be stated as precisely and 

clearly as practicable.” 5 ILCS 100/5-20 (West 2012). 

¶ 17 Contrary to the Village’s position, the regulation provides sufficiently-tailored standards 

from which the agency can render a decision as to whether the government has met its 

burden of showing good and sufficient cause for failing to meet its contribution obligations. 

The regulation sets out broad relevancy standards but, really, that should inure to the benefit 

of the government units. If anything, the argument that the regulation is too vague should 

belong to defendants. The regulation basically gave the Village free rein to present any 

convincing reason that it was unable to comply with its statutory obligations. Even with that 

wide latitude, the hearing officer found that the Village was unable to show good cause. 

¶ 18 There are innumerable reasons why a municipality might not be able to meet a financial 

obligation at a given time. The agency cannot anticipate all of those reasons with much 

certainty. But the regulation here gives guidance to a hearing officer about the type of 

circumstances to look for to determine if a government unit’s failure to meet its obligations 

should be excused. That the regulation has broad relevancy standards makes sense and 

explains why we defer to agencies’ findings in cases like this because they are in a better 

position than the court to decide these matters because of their expertise in the given field. 

Ikpoh v. Department of Professional Regulation, 338 Ill. App. 3d 918, 924 (2003). 
- 5 - 

¶ 19 The Village does not complain that the hearing officer actually relied on irrelevant 

evidence—evidence outside the scope of the regulation’s good cause criteria. And it is not as 

if the hearing officer precluded the Village from presenting certain evidence that it suggests 

could have led to a different outcome. The Village has not said what other theory it might 

have relied upon to show good cause but could not because of the regulation. Especially in 

these circumstances, the language of the regulation did not result in an arbitrary or 

discriminatory result. In fact, even if we accepted the premise that the regulation is too 

vague, the Village could not show any prejudice at all. 

¶ 20 What transpired at the hearing also belies the Village’s position. Its strategy was to assert 

that the economic downturn around 2009 was the cause of its inability to pay. That position 

fits squarely within the unforeseeable occurrence or uncontrollable circumstance criteria that 

the regulation calls for. A statute is not unconstitutionally vague if it is explicit enough to 

serve as a guide to those who must comply with it. General Motors Corp. v. Illinois State 

Motor Vehicle Review Board, 224 Ill. 2d 1, 24 (2007). The Village relied on its unexpected 

drop in sales tax, property tax, and shared revenue from the State and on its deteriorating 

credit and financial position to justify its failures to fund the pensions. That was a reasonable 

strategy to take under the regulation and is exactly the type of “cause” the regulation calls 

for—the Village was just simply unsuccessful in meeting its burden. 

¶ 21 The Village also argues that the agency erred because it applied an overly restrictive and 

incomplete standard to the evidence, resulting in an arbitrary and erroneous decision. 

However, there is no indication that the hearing officer failed to consider certain evidence. In 

fact, the hearing officer’s detailed recommended order has 102 specific findings of fact that 

touch on all of the Village’s evidence. Again, the Village does not point to anything that 

should have been considered but was affirmatively omitted from consideration, and this 

argument is really just a corollary to its next challenge—whether “good and sufficient cause” 

was established. 

¶ 22 Whether the Village met its evidentiary burden to show good and sufficient cause for 

failing to meet its contribution obligations is a mixed question of law and fact. An 

administrative agency’s decision is a question of mixed law and fact will be found to be 

clearly erroneous only where a reviewing court is left, on the entire record, with a definite 

and firm conviction that a mistake has been committed. Id. at 18. That is not the case here. 

¶ 23 The Village presented evidence that its revenue receipts mirrored the recession. It lost 

revenue in the form of sales tax, property tax, and shared revenue from the state. But the 

hearing officer, and thereafter the Director by ratification, heard all the evidence and found 

that the Village had simply made choices to allocate funds elsewhere in derogation of its 

statutory duties. The evidence showed that there were ways in which the Village could have 

raised additional funds. The hearing also revealed that the Village in fact not only missed 

payments late in the decade as they were charged with doing, but in fact made no annual 

contribution six times between 2000 and 2011 and made less than the full contribution in 

three of the other years. Most of the violations were before the recession on which the 

Village based its whole case. 

¶ 24 Also, Scarpiniti testified that the Village fully funded the Illinois Municipal Retirement 

Fund covering its other employees because that fund had an enforcement provision. That 

admission shows a conscious choice in the Village’s allocation of resources and 

acknowledges a deliberate effort to allocate resources in places other than the police and 
- 6 - 

firefighter pension funds. Even when the Village raised the sales tax and realized an increase 

in sales tax revenue, the money was not given to the pension funds but was instead directed 

to other areas hit by the recession. Even when other similar municipalities were raising costs 

for garbage removal and water services, the Village chose to subsidize those things rather 

than collect more money. The Village, as all government units, has to make choices where to 

spend money. And here there was evidence that the Village spent its money on discretionary 

endeavors it prioritized more than contributing to the police and firefighter pensions. That is 

a violation of the Illinois Pension Code, and the Director’s decision was not clearly 

erroneous. 

¶ 25 CONCLUSION 

¶ 26 Accordingly, we confirm the administrative ruling and affirm the decision of the circuit 

court. 

¶ 27 Affirmed.