## I L L I N O I S 

## O F F I C I A L 

## RE P O R T S Appellate Court

Kildeer-Count

ryside School District No. 96 v. Board of Trustees of the Teac hers’ Retirem ent System , 2012 IL App (4th) 110843

Appellate Court Caption KI L DEER-COUNTRYSI DE SCHOOL DI STRI CT NO. 96, P laintiffAppellant, v. THE BO ARD OF TRUSTEES OF THE TEACHERS’ RETI REMENT SYSTEM OF THE S TATE OF I L L I NOI S, Def

endantAppellee

.

District & N o. Four th District Docke t No. 4-11-0843

Filed August 3, 2012

Held (N ote : This syl lab us

con s t it ute s no par t of the opi nio n of the cour t but has bee n pre

par ed by the Rep o rt er of D e c i s i o n s f

o r t h e

c o n v e n i e n c e o

f t h e

rea der

. ) Where the undisputed fac ts established that a teac her in pla intiff district retired at the end of the 2007-08 school y ear but started substitut e teac hing the following y ear , her contrib u t ions to defe ndant Tea cher ’s Retireme n t S y stem and the service cre dits she ear ned by substitut e teac hing did not chang e the conclusion t h at the substitut e teac hing was i n ac cordance with the sy stem’s rules; there fore
, the finding of th e sy stem’s board of trustees that the teac her did not retire at the end of the 2007-08 school y ear was reve rsed
, an d the order requiring the school district to make an excess-salar y contribution to the sy stem was reve rsed.

Dec ision Under Review Appea l from the Circuit Court of Sang amon County
, No. 10-MR-755; the Hon. J ohn Schmidt, J udg e, pre siding.

J udg ment J udg ment reve rsed; orde r re verse d.Counsel on

Appea l J oseph J

. Perkoski (ar gued) and Camille Cribaro-Me llo, both of Robbins, Schwar tz, Nicholas, L ifton & Ta ylor, Ltd., of Chicag o, for a ppellant.

Ralph H. L oewe nstein (ar gued), of L oewe nstein, Hag en & S mith, P.C., of Spring field, for

appellee

.

Panel PRES I DI NG J USTI CE TURNER delivere d the j u d gm ent of the court, with opinion.
J ustices Appleton and Pope c oncurr ed in the judg ment and opinion.

OP INION

¶ 1 In October 2010, defe ndant, the Boa rd of Trustee s (B oard) of the Tea cher s’ Retirement Sy stem of t he S tat e of I llinois (TRS), found pl aintiff, Kildeer-Country side School District No. 96 (District), owed TRS a $53,705.27 employer contribution under section 16-158(f ) of the I llinois Pension Code (Pension Code) (40 I L CS 5/16-158(f) (West Supp. 2007) (ef f. Aug

. 21, 2007)). I n assessing the contributi on, the Board fo u n d t h e District’s former employ ee, Ba rbar a Emde, did not retire under the terms of an exempt collective- barg aining agree ment. The Di s t ri ct soug ht administrative revie w in the Sang amon County circ uit court, which aff irmed the B oard’ s decision. ¶ 2 On appea l, the District contends it does not owe the employ er co n t ri b u t i o n beca use Emde’s pay incre ases wer e exempt under section 16-158( g ) of the Pension Code (40 I L CS 5/16-158(g ) (West Supp. 2007)). We reve rse the trial court’s judgme nt and t h e Bo ar d ’s order

.

¶ 3 I . BA CKGROUND ¶ 4 A. Collective-B arg ainingAg ree ment ¶ 5 In October 2002, the District a n d Kil d e e r E d

ucation Association enter ed into a collec tivebarg aini n g agr eement (Agree ment) for the school y ear s 2002-03, 2003-04, 2004-05, and 2005-06. Acc o rdi ng to the parties, the Ag ree ment terminated on J une 30, 2006. (The

rec ommended decision stated an expiration date of J une 30, 2008, which is clea rly incorre ct

as the last school year cover ed was 200 5 -06.) Article XI I I of the Ag ree ment addre ssed retire ment and contained sections 13.1 to 13.3. Section 13.1(b) addre ssed elig ibilit y for retire ment incentives a

nd provided the f

ollowing:
“To be elig ible for any of the benef its provided in Section 13.2 below, the teac her shall have serve d at least ten (10) full y ear s as a teac her in the District and be at least fifty -five (55) year s of ag e as of

the last day

of the school ter

m.”

-2-Subsection (b) of se ction 13.2 of the Agree ment provided, in per tinent part, the following : “Dur ing the final two (2) y ear s of employ ment as a teac her, if a teac her has submitt ed an

un q u alified notice of retire ment and completed a minimum of ten (10) y ear s of employ ment in the Dist ri ct as a member of the cer tified staff, the Boa

rd will pay an additional ten perc ent (10%) incre ase in compensation over the pri o r y ear ’s
compensation.
For eac h year of service in the District beyond ten (10) y ears, up to and including twenty (2 0 ) y ear s of service as a teac her, the Boa rd will pay an additional one perc ent (1%) to the prior year ’s compensation. *** Any elig ible teac her who wishes to retire with this benef it must submit an application in writing to the Superintendent not later than May 15 *** in the school y ea r prior to

acc essingthe District Retirement Program.” ¶ 6 W i t h t h e Ag ree ment was a letter of agree ment reg arding retire ment. The letter stated attache d to it was a reque st-of-district-long evity form and an int ent-to-r etire notice

. Whil e the letter stated documents ref lected the intent of article XI I I of the Ag ree ment, the l et t er expressly stated it was not part of the Ag ree ment and was not prec edential in n at u re

. The intent-to-re tire notice r e q

u ire d th e e mploy ee to acknow ledg e, inter alia
, the following : “I will be at least fifty-five (55) y ear s of ag e within six (6) months of th e l ast day of the curr ent school term as r eporte d to Teac hers’ Retirement Sy stem.”

¶ 7 B. Emde ’s Retirement ¶ 8 Emde beg an teac hing for the District in the 1984-85 school y ear

. On April 1 3
, 2006, Emde submitt ed her intent-to-re tire notice, stating she intended to retire at the end of 2007- 08 school y ear

. The notice stated her salary would be incre ased by 20% over the prior y ear ’s
compensation for the rema ining two y ear s. When Emde submitt ed her intent-to-re tire notice, her salary was $88,675. For the 2006-07 school y ear , Emde rec eived her first 20% incre ase under section 13.2(b), resulti ng in a salary of $107,482. The following school y ear , Emde
ag ain rec eived a 20% incre ase under section 13.2(b), which g ave her a final salary as a fulltime teache r of $129,630. ¶ 9 In April 2008, the following e-ma il exchang e took plac e b et we en E m d e an d T R S counselingservice s: E m d e: “I am turning fifty five in Dec ember and althoug h I retire from my schoo l district at the end of this year acc ording to [TRS] my retire ment is Dece mber. Should I complete the PRI [(personalized retire ment interview) ] n o w s o that the s upplementar y repor t and the sick lea

ve ce rtification ar e complete d befor e I finish the school y ear ? ”
TRS: “Your employ er will automaticall y submit your ear nings and sick leave information on their annua l report in August 2008. W e re commend you complete y our PRIapproximately

6-12 we eks prior to your 55th birthday

. I f you do any substitut e teac hing in the Fa ll semester , you would need to notify TRS during your PRI of the districts you had worke d in so those districts could be sent a supplementary

repor t and sick leave ce rtification.

-3-I f you decide to substitute teac h in the Fa ll, you will not be allowed to do anypostretire ment employ

ment in a ce rtified position until J uly 1, 2009.” Emde: “Tha

nk you for this information. J us t to clar ify
, I will be able to substitut e until my 5 5 t h b i rt hday this y ear but then no more substitut ing afte r that date until the school y ear

is over. I s that corr ect? ”
TRS: “You are corr ect. You will need to wait until J uly 1, 2009, befor e d o i n g any substitut e teac hing if you substitut e leading up to your 55th bi rt h d ay (your retire ment date)

. T h er e ar e n o restric tions for working in the private sector, university
, colleg e or private school. In addition, you may be em p l o y ed by a school district in a posi tion not

cover ed by T RS without limit ation (tea cher ’s aide, lunchroom helper
, playg round supervisor, e tc.).” ¶ 10 Emde’s full-time employ ment with the District terminated on J une 9, 2008. During the 2008-09 school year , the District employ ed Emde as a sub s t i t u t e t ea cher for a total of 52 day s. Her last day of substitut e teac hin g wa s December 4, 2008. Emde turned 55 on Dec ember

5, 2008. ¶ 11 On Fe bruar

y 3
, 2 0 0 9
, the District’s direc tor of business service s signe d a TRS form, which was a supplementary repor t for the 2008-09 sch o o l y ea r for Emde’s retire ment benef its. The repor

t listed J une 9, 2008, as (1) the last date Emde t au gh t , (2 ) t he eff ective date of Emde’s resignation, and (3) the last day of the school year

. I t also stated Emde’s last school y ear employed was 2007-08. Moreove r, the form listed a total annual salary of $129,630 and retire ment contributions of $12,185.22. On Fe bruar y 25, 2009, the District’s direc tor of business s ervic es si g ned a second supplementary repor t for the 2008-09 school
y ear for Emde. The second repor t listed Dec ember 4, 2008, as (1) the last date Emde taug ht, and (2 ) the eff

ective date of Emde’s resignation. I t also stated Emde’s last school y ear employ ed was 2008-09 and the last day of the school y ear was J une 11, 2009. L ast, the form listed a total annual sala

ry of $7,700 and r etireme nt contributions of $723.80.

¶ 12 C. Employ er Contribution Procee dings ¶ 13 I

n M arc h 2009, TRS notified the District it anticipated the District would owe $53

, 7 0 5

. 2 7 under section 16-158( f) of the Pension Code (40 I L CS 5/16-158(f ) (West Supp. 2007)) for the retire ment-ince ntive-salar y incre ases g iven to Emde. On J uly 9, 2009, Tom Gra y , TRS’s
g ener al counsel, issued a final staff dispositi on, requiring the District to make the $53,705.27 employ er contribution. Under title 80, section 1650.620, of the I llinois Administrative Code (80 I ll. Adm. Code 16 5 0

. 6 2 0 (2012))
, the District appea led TRS’s decision, asser ting the salary incre ases to Emde wer e exempt from employ er contributions under section 16-158(g ) of the Pension Code (40 I L CS 5/16-158(g ) (West Supp. 2007)). On appea l, the District and TRS filed cross-motions for summary judgme nt. To its motion, the District at t ac h ed the following : (1) the Agree ment; (2) Emde’s April 13, 2006, intent-to-re tire n o t i ce; (3) the District’s first 2008-09 supplementary repor t to TRS; (4) the Dist ri ct ’s second 2008-09 supplementary repor

t to TRS; (5) Emde’s e-ma il corr espondenc e with T RS; and (6) TRS’s J uly 2009 final staff dispositi on. TRS’s response to the District’s exemption argument was the District lost elig ibilit y for the employ er- contribution exemption beca use it continued to

-4-employ Emde as a substitut e teac her afte r its exempt Ag ree ment ex p i re d
, an d thus Emde

retire d under the succe ssor, nonexempt collective- barg aining agree ment. Acc ording to TRS, if Emde had stopped working for the District when she so stated in her intent-to-re tire notice, E m de’s salary incre ases would have been exempt under section 16-158(g ) of the P en s i o n Code. ¶ 14 I n August 2010, a claims hear ing committee (He aring Commi ttee) heard t h e cr o s s

motions for summary judgme nt. On September 27, 2010, the Hea ring Commi ttee issued its

rec ommended decision upholding TRS’s fi n al s taff dispositi on. The Hea ring Commi ttee made fac tual finding s, including the following : (1) Emde cea sed full-time employ ment with the District on J une 9, 2008; (2) the District continued to employ Emde as a substitut e teac her for 52 day s in the 2008-09 school y ear ; (3) Emde’s substitut e t ea ching is active

cre ditable service under sections 16-106 and 16-106.3 of the Pension Code (40 I L CS 5/16- 106, 16-106.3 (West 2008)); (4) Emde’s last day of active cre ditable service with TRS was De ce m b er 4, 2008; and (5) Emde’s eff ective retire ment date with TRS was Dec ember 5
, 2008, when she turned 55. The Hea ring Commi ttee found that, by allowing Emde to continue
to teac h into the next school y ear, t h e Di s t ri ct lost its exemption since Emde did not terminate her active service with the District. In October 2010, the District filed exceptions to the rec ommended dec ision. ¶ 15 On Oc t o b er 29, 2010, the Boa rd voted to uphold the rec ommended decisi o n o f t h e Hea ring Commi t tee. The District rec eived notice of the Boa rd’s decision on November 5, 2010. ¶ 16 On Dec ember 8, 2 0 1 0
, t h e District filed its complaint for administrative revie w in the Sang amon County circ uit court. After revie wing the parties’ pleading s and the rec ord of the admin i s t ra tive revie w proce eding s, the court “denie d” the District’s petition for administrative re view on August 23, 2011. ¶ 17 On September 20, 2011, plaintiff filed a timely notice o f ap p ea l i n compliance with I llinois Supreme Court Rule 303 (ef f. May 30, 2008). Acc ording ly
, this court has jurisdiction of this appea l under I llinois Supreme Court Rule 301 (e ff. F eb. 1, 1994).

¶ 18 I I . ANALYSI S ¶ 19 A. Standard of Review ¶ 20 Under section 16-200 of the Pension Code (40 I L CS 5/16-2 0 0 (W es t 2010)), judicial revie w of the Boa

rd’s decision is conducte d in acc ordanc e with the Administrative Review L aw (735 I L CS 5/art. I I I (West 2010)). Wit h ad m i n istrative case s, this court revie ws the administrative ag ency ’s decision, not the circ uit court’s. W illiams v. Board of Trustees of the Morton Grove Firefighters’ Pension Fund
, 398 I ll

. Ap p

. 3 d 680, 687, 924 N.E.2d 38, 45 (2010). Section 3-110 of the Administrative Review L aw (735 I L CS 5/3-110 (West 2010)) allows re v i ew of “all questions of law and fac t prese nted by the entire rec ord befor e the court.” On issues of law, this court revie ws the Boa rd’s finding s de novo

. Speed District 802 v. W arning , 242 I ll. 2d 92, 111, 950 N.E.2d 1069, 1080 (2011). W ith the Board’ s finding s of fac t, we deem them prima facie corr ect unless they are ag ainst the manifest weight of the evidenc e. Speed
, 242 I ll. 2d at 111-12, 950 N.E.2d at 1080. An administrative ag ency ’s

-5-finding is “ ag ainst the manifest weight of the evidenc e only wher e the opposite conclusion

is c lear ly evident.” Peac ock v. Board of Trustees of the Police Pension Fund
, 395 I ll. App. 3d 644, 652, 918 N.E.2d 243, 250 (2009). Finally
, as to mix ed questions of law and fac t, this court applies a clearly err oneous st andar d of review. Speed, 242 I ll. 2d at 112, 950 N.E.2d at 1080. Our supr eme c ourt has def ined that standar d as follows:
“An ag ency decision will be reve rsed beca use it is clea

rly err oneous only if the revie wing court, based on the entirety of the rec ord, is left with the definite and firm conviction that

a mistake has been committed. [C itation.] Whil e this standard is highly d efe rential, it does not rele g ate judicial revie w to mere blind defe renc e of an ag ency ’s order .” (Interna l quotation marks omitted.) Speed
, 242 I ll. 2d at 112, 950 N.E.2d at 1080-81 (quoting Board of Trustees of the University of Illinois v. Illinois Labor Relations Board
, 224 I ll. 2d 88, 97-98, 862 N.E.2d 944, 950- 51 (2007))

. ¶ 21 Additionally
, we n o t e t h at , gen er al l y , a p arty may not rely on matters outside the appellate rec ord to support his or her position on appea l. See Allstate Insurance Co. v. Kovar
, 363 I ll. App. 3d 4 9 3
, 4 9 9, 842 N.E.2d 1268, 1273 (2006). Thus, we will only consider
arguments supported by the record on appea l. In its reply brief, t h e Di strict asks t his court to disreg ard the Boa

rd’s statement of fac ts in its entirety beca use the statement of fac ts lacks citation to the rec ord and is in the form of an argument. We de cline to do so as the Boa rd’s
statement of fac ts does contain some citations to the rec ord and we can easily disreg ard any statements not supported by the appe llate re cord.

¶ 22 B. Employer Contributions to TRS ¶ 23 T R S wa s cr ea t ed to provide retire ment annuities and other retire ment ben ef i t s fo r teac hers. 40 I L CS 5/16-101 (West 2008). T o d et ermine the proper annuity for a retiring
teac her, retire ment s y s t em s t aff must deter mine a member’ s final aver ag e salary

. See 40 I L CS 5/16-133(a) (B ) (West 2008). “F inal aver ag e salary” is define d as the aver ag e of t h e highe st 4 consec utive y ear s of salary within the last 10 y ear s of cre ditable service
, subject to the rules of the Boa

rd. 40 I L CS 5/16-133(b) (West 2008). Howeve r, the part of a member’ s salary that “excee ds the m ember ’s annual full-time salary rate with the s ame employ er for the prec eding y ear by more than 20% shall be excluded.” 40 I L CS 5/16-133(b) (West 2008). ¶ 24 Public Act 94-4 (Pub. Act 94-4, § 5 ( eff . J une 1, 2005)) added se ction 16-158(f ) to the P en s i o n C o de (40 I L CS 5/16-158(f) (West Supp. 2005)), which require d an employ er t o make a contribution to TRS for the incre ase in retire ment benef its for an employ ee’ s salary incre ase from the prec eding y ear that was more than 6%. The leg islature later added section 16-158(g ) (Pub. Act 95-331, § 425 (ef f. Aug

. 21, 2007)), which provides, in pertinent part, the following : “This subsection (g ) applies only to pay ments made or salary incre ases g iven on or afte r J une 1, 2005 but bef

ore July 1, 2011. ***
When assessing pay

ment for any amount due under subsection (f)
, the Sy stem shall exclude salary incre ases paid to teac hers under contra cts or collective barg aining
agree ments ent er ed into, amende d, or rene wed befor e J une 1, 2005.” 40 I L CS 5/16- 158(g ) (West Supp. 2007).

-6-Title 80, section 16 5 0

. 4 8 3 (a ), of the I llinois Administrative Code (80 I ll. Adm. Code

1650.483(a) (2012)) further explains t he above exemption t o the employ er contribution by stating the following : “The exemptions from employ er contributions provided under *** 40 I L CS 5/16-158(f) for those members who notify their employ er of the intent to retire under the terms of an exempt contra ct or collective barg aining agree ment but do not re ce i v e such i ncentives until afte r the ex piration of t he contract or collective barg aining agreem en t shall cea se

no later than three s ch ool y ear s afte r the expiration of the contra ct or collective barg ainingagree ment or June 30, 2011, whichever is earlier .”

¶ 25 C. Emde’s Retirement ¶ 26 T h e Di s t ri ct as s er t s TRS must exclude all salary incre ases paid to teac hers under a collective- barg aining agree ment enter ed into befor e J une 1, 2005, and its salary incre ases to Emde wer e made pursuant to an e x empt collective- barg ainingagree ment. I t further argues (1) the District and Emde complied with the terms of the exempt Ag ree ment and (2) Emde’s substitut e teac hing in the y ear afte r she retire d from the District did not chang e her retire ment date and cause a loss of the exemption from employ er contributions. The Boa rd conce des (1) the Agree ment at issue is exempt under section 16-158(g ) of the Pension Code a nd (2) the salary incre ases paid in the 2006-07 and 2007-08 school year s did not lo s e t h eir exempt status by the Agre em en t ’s ex piration. Howeve r, it asser ts Emde and the District did not

co m p l y wi th terms of the exempt Ag ree ment beca use Emde did not actua lly retire i n

acc ordanc e with her

intent to retire notice

. ¶ 27 Initially
, we note that, in making its argument, the District insists Emde qualified for the retire ment incentives under the Ag ree ment. Whil e the Boa rd points out Emde was n o t elig ible to rec eive the A g ree ment’s re tirement ince ntives beca use she was not 55 y ear s old by the last day of the school y ear as require d by section 13.1(b) of the Ag ree ment, the Boa rd d oes not argue the District should be denied the section 16-158(g ) exemption beca u s e o f noncompliance with the agree ment, and thus we do not a ddress that iss ue. More over, both parties c ite and discuss var ious bulletins of TRS that addre ssed sec tions 16-158(f ) and 16- 158(g ) of the Pension Code in support of their respe ctive arguments. Howeve r, the Boa rd did
not rely on any TRS bulletin in m ak i n g i ts deter mination, and the bulletins do not addre ss the spec ific matter at issue in this case . Thus, we a lso do not address the TRS bulletins. ¶ 28 Acc ording to the Boa rd, the key issue is whether Emde sever ed her employ ment with the Di s t ri ct on J une 8, 2008. Section 16-118 of the Pension Code (40 I L CS 5/16-118 (West 2008)) define s “re tirement” as “[e]ntry upon a retire ment annuity or rec eipt of a single -sum retire ment benef

it g rante d under this Article afte r termination of active service as a teac her.” Applying s ection 16-118, the Boa rd stated, “in Emde’s case , that meant sever ing her employ ment with [the Dist rict] on J une 8, 2008 and retiring effe ctive Decembe r 5, 2008.” The Boa rd then found Emde did not terminate her active service with the District on J une 8, 2008, but, rathe r, “re mained employ ed” by the District in th e 2008-09 school y ear as a substitut e tea cher

. ¶ 29 The pertinent fac ts are undisputed. First, Emde only submitt ed one document stating he r

-7-retire ment date, which listed a retire ment date at the end of the 2007-08 school y ear

. Emde

did not submit any other documents to the District chang ing that retire ment date. In an April 2008 e-ma il to TRS, Emde st at ed s he was retiring at the end of the school y ear and understood her retire ment was not eff ective until Dec ember when she turned 55. Moreove r, the District’s orig inal supplementary report t o TRS for the 2007-08 school y ear stated a resignation date of J une 9, 2008 (June 8 and 9, 2008, are both listed as the last day of school for the District’s 2007-08 school y ear in various documents). Second, afte r the last day of the 2007-08 school y ear , Emde did not rema in in h er s am e p o s i tion with the District, did not

rema in a full-time employ ee, and did not rec eive the same pay

. In fac t, her pay rate was substantially low er as s h e re ceive d $720.17 per day for the 2007-08 school y ear and only $148.08 per day as a substitut e teac her for the 52 day s she worke d. Third, Emde’s substitut e teac h ing for the District did not violate any TRS rules as TRS did not argue any such violation a

nd its responses to Emde’s e -mail inquiries show such a ctivity was permissible. Four th, Emde made $723.80 in retire ment contributions to T R S an d ea rned TRS service

cre dit i n the fall of 2008. Fifth, the District’s second supplementary repor t to TRS had a resignation date of Dec ember 4, 2008. TRS’s response to Emde’s e-ma il inquiries noted any school district for which she was a substitut e teac her would have to submit such a document. L ast, Emde’s eff

ective retire ment date of Dec ember 5
, 2 0 0 8, was unchang ed by her substitut e teac hing. ¶ 30 The only rea sonable conclusion from the afor ementioned undisputed fac ts is Emde did

sever her relationship wi t h the District at the end of the 2007-08 school y ear and the substitut e teac h i n g was a new, temporar y relationship betwee n the parties. All of the documentation betwee n Emde and the District shows she retire d from her position with the District in J une 2008. The only document stating a resignation date later than J une 2008 was the sec ond supplementary repor t that TRS required the District to complete with the dates listed due to Emde’s substitut e teac hing. The Boa rd cannot bootstrap a resignation date later than J une 2008 by pointing to a document it require d the District to c omplete as a result of the disputed substitut e teac hing. Moreove r, we n o t e that, if Emde had not sever ed her relationship with the District, her pay would have been substantially highe r than $148.08 per day and some new retire ment documentation would have been submitt ed. The fac t she still

co n t ri buted to TRS and ear ned service cre dit does not chang e that conclusion since t h e substitut e teac hing was in acc ordanc e with T RS rules. Moreove r, the supplementary repor t

was require d by TR S t o ad dress the substitut e teac hing, not her orig inal employ ment. Acc ording ly
, the Boa

rd’s finding Emde did not sever her employ ment with the District at the end of the 2007-08 school y ear was ag ainst the manifest weight of the evidenc e, and thus the Boa rd err ed by ordering the District to pay TRS an excess-salar y contribution of $53,705.27.

¶ 31 I I I . CONCLUSI ON ¶ 32 For the rea sons stated, we reve rse the Sang amon County circ uit court’s judgme nt as we ll as the B oard’ s order

.

¶ 33 J udg ment reve rsed; orde r re verse d.

-8-