Court Opinion

ID: 4196591
Source: CourtListenerOpinion
Date Created: 2017-08-17 00:07:34.181148+00
Date Added: 2024-06-11T07:47:29.512413
License: Public Domain

2017 IL App (1st) 153074
                                              No. 1-15-3074
                                                                                        Fifth Division
                                                                                       August 4, 2017

     ______________________________________________________________________________

                                         IN THE
                             APPELLATE COURT OF ILLINOIS
                                     FIRST DISTRICT
     ______________________________________________________________________________

                                                    )
     BOARD OF TRUSTEES OF THE CITY                  )   Appeal from the Circuit Court
     OF HARVEY FIREFIGHTERS’ PENSION FUND,          )   of Cook County.
                                                    )
           Plaintiff-Appellee/Cross-Appellant,      )   No. 10 CH 53364
                                                    )
     v.                                             )   The Honorable
                                                    )   Mary L. Mikva,
     THE CITY OF HARVEY,                            )   Judge Presiding.
                                                    )
           Defendant-Appellant/Cross-Appellee.     )
                                                    )
     ______________________________________________________________________________

               PRESIDING JUSTICE GORDON delivered the judgment of the court, with opinion.
               Justice Reyes concurred in the judgment and opinion.
               Justice Lampkin specially concurred, with opinion.

                                                OPINION

¶1         Defendant City of Harvey (Harvey) is a municipality with a population of approximately

        25,000 residents, located south of the city of Chicago. Plaintiff, the Board of Trustees of the

        City of Harvey Firefighters’ Pension Fund (Pension Board), is an administrative body created

        pursuant to section 4-121 of the Illinois Pension Code (Code) (40 ILCS 5/4-121 (West 2014))

        to oversee and manage the City of Harvey Firefighters’ Pension Fund (Pension Fund). 40

        ILCS 5/4-120 to 4-129 (West 2014). The Pension Board filed suit, alleging that Harvey has
     No. 1-15-3074

        underfunded the Pension Fund and breached a 1996 settlement agreement in which Harvey

        agreed to make certain contributions to the Pension Fund. The Pension Board sought a

        declaratory judgment, a writ of mandamus, injunctive relief, and an order compelling

        enforcement of the 1966 settlement agreement. After both parties filed motions for summary

        judgment, the trial court granted the Pension Board’s motion for a declaratory judgment,

        injunctive relief, and enforcement of the 1996 settlement agreement and denied summary

        judgment for a writ of mandamus. The trial court found that Harvey violated the pension

        statute but was not on the verge of default or imminent bankruptcy. The trial court denied

        Harvey’s motion for summary judgment. Pursuant to this ruling, the trial court assessed

        damages against Harvey for $15,071,089.15. The injunction that was issued required Harvey

        to approve a line-item property tax levy specifically for the Pension Fund, which would be

        sufficient to meet the annual actuarial requirements set forth in the Code. Harvey filed a

        notice of appeal, and the Pension Board filed a notice of cross-appeal.

¶2         The parties argue on appeal about (1) whether the trial court correctly determined that

        Harvey breached the 1996 settlement agreement; (2) whether the trial court correctly

        calculated the damages; (3) whether the trial court correctly rejected Harvey’s affirmative

        defenses of separation of powers and laches; (4) whether the trial court erred in making a

        finding of violations of the Code and requiring certain monies to be paid into the Pension

        Fund, without first finding that Harvey was on the verge of default or imminent bankruptcy;

        and (5) whether the trial court erred in finding that Harvey is not on the verge of default or

        imminent bankruptcy.

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     No. 1-15-3074

¶3                                         BACKGROUND

¶4                   I. THE 1993 COMPLAINT AND 1996 SETTLEMENT AGREEMENT

¶5         On February 17, 1993, the Pension Board filed a complaint for mandamus, declaratory

        judgment and accounting, alleging that Harvey had failed to adequately fund the Pension

        Fund between 1988 and 1994 and claiming that not all of the taxes levied and collected were

        deposited into the Pension Fund as required by the Code. 40 ILCS 5/4-120 to 4-129 (West

        2014).

¶6         On August 22, 1996, the parties entered into a settlement agreement that required Harvey

        to “repay the amount due and owing to the [Pension Fund] *** which is approximately

        $912,652.00 over a five (5) year period including [Harvey’s] annual tax levy an amount in

        addition to the amount of levy requirements minus the allocation of personal property

        replacement taxes, recommended by the Illinois Department of Insurance.”

¶7         Further, Harvey agreed that, “in the future,” it would “ensure property taxes levied or

        personal property replacement taxes received on behalf of the [Pension Fund], which are

        assessed, collected and remitted to the City of Harvey by the Cook County Treasurer’s

        Office, shall be paid to the [Pension Fund] within 30 days of receipt by [Harvey] and not

        used by [Harvey] for other corporate purposes.” In addition, the parties agreed that the trial

        court retained jurisdiction over the matter to enforce the settlement agreement, providing:

        “The Court hereby expressly retains jurisdiction of this matter for the purposes of enforcing

        all of the terms and provisions of this Agreed Settlement Order.”

¶8                                      II. 2010 COMPLAINT

¶9         On December 17, 2010, 15 years after the execution of the settlement agreement, the

        Pension Board filed a complaint stemming from Harvey’s alleged violations of section 4-118

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       No. 1-15-3074

          of the Code (40 ILCS 5/4-118 (West 2010)), commencing in the fiscal year 2005 and

          continuing through fiscal year 2010. All of the evidence in this case concerned facts that

          ended with the fiscal year 2014.

¶ 10         The Pension Board filed an amended complaint on September 29, 2011, which added

          individual defendants Eric Kellogg, the mayor of Harvey; Maggie Britton, the Harvey

          comptroller in 2010; and Charles Givines, Joseph Whittington, Daryle Crudup, Michael

          Bowens, Donald Nesbit, and Keith Price, members of Harvey’s city council.

¶ 11         On November 18, 2011, Harvey moved to strike the individual defendants from the

          Pension Board’s first amended complaint. Following the filing of this motion, the Pension

          Board filed a second amended complaint on June 25, 2012, which asserted a count for breach

          of fiduciary duty against the individual defendants. On July 25, 2012, Harvey filed a

          combined section 2-615 and 2-619 motion to dismiss the second amended complaint with

          prejudice or, alternatively, a section 2-615 motion to strike the individual defendants from

          the second amended complaint. 735 ILCS 5/2-615(a), 2-619(a)(9) (West 2010).

¶ 12         On October 24, 2012, while Harvey’s motions were pending, the Pension Board filed an

          emergency motion to compel Harvey to levy a tax in order to fund in “an amount at least

          equal to the amount determined by an actuary for 2011 in the amount of $1,558,762.00.” On

          October 26, 2012, Harvey filed a motion to strike the Pension Board’s emergency motion,

          arguing that the emergency motion sought the same remedy that the Pension Board seeks in

          its second amended complaint. On October 29, 2012, the trial court denied the Pension

          Board’s emergency motion.

¶ 13         On November 5, 2012, the Pension Board filed its third amended complaint, adding

          claims for mandamus and injunctive relief.

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       No. 1-15-3074

¶ 14                     III. PLAINTIFF’S FOURTH AMENDED COMPLAINT

¶ 15         On December 14, 2012, the Pension Board filed its fourth amended complaint, which is

          the subject complaint in this appeal. Its four counts seek (1) a declaratory judgment that

          Harvey must annually levy a tax to contribute to the Pension Fund and pay money damages,

          (2) a writ of mandamus compelling Harvey to levy an annual tax for the Pension Fund or

          otherwise annually contribute to the Pension Fund an amount that fulfills the annual actuarial

          requirement, (3) injunctive relief ordering Harvey to levy an annual tax for the Pension Fund

          or otherwise annually contribute to the Pension Fund an amount that meets the annual

          actuarial requirement and to pay money damages, and (4) an order that finds that Harvey

          breached the 1996 settlement agreement and an order compelling enforcement of that

          agreement.

¶ 16         On January 15, 2013, Harvey filed a combined section 2-615 and 2-619 motion to

          dismiss the Pension Board’s fourth amended complaint. 735 ILCS 5/2-615(a), 2-619(a)(9), 2-

          619.1 (West 2012). Harvey’s motion addressed each count of the Pension Boards’ fourth

          amended complaint as follows.

¶ 17         First, Harvey argues that an action for declaratory judgment is inappropriate because

          declaratory judgment is a vehicle used to address a “controversy one step sooner than normal

          after a dispute has arisen, but before steps are taken which would give rise to a claim for

          damages or other relief.” Harvey also argues that declaratory judgment would be inadequate

          because it cannot alter actions that the parties have already taken. Second, Harvey argues that

          a writ of mandamus cannot force a legislative body to perform a discretionary act; therefore,

          a writ is unable to “compel [Harvey] to make municipal pension fund contributions that meet

          the annual actuarial requirement[.]” Third, Harvey argues that the Pension Fund had not

                                                      5
       No. 1-15-3074

          sustained any damages that could not be adequately remedied with money damages;

          therefore, injunctive relief is an inapplicable remedy. Finally, Harvey argues that the trial

          court has no jurisdiction to enforce the 1996 settlement agreement because the agreement

          explicitly agreed that the original court in the 1993 action retained jurisdiction to enforce the

          agreement. That original court in 1993 was Calendar 12 of the Chancery Division in the

          circuit court of Cook County. 1

¶ 18          In addition to its section 2-615 arguments, Harvey also moved to dismiss pursuant to

          section 2-619(a)(9), claiming that the suit was barred by governmental immunity. 735 ILCS

          5/2-615(a), 2-619(a)(9) (West 2010). Harvey argues that the Pension Board’s claims must

          fail because “(a) [Harvey] is not liable for its council members’ negligence in performing

          governmental functions; and (b) [Harvey] is not liable under the Local Governmental and

          Governmental Employees Tort Immunity Act. [Tort Immunity Act] [745 ILCS 10/8-101(a)

          (West 2010).]”

¶ 19          The trial court heard argument on May 24, 2013, and denied Harvey’s motion to dismiss

          count I, for declaratory judgment; count II, for a writ of mandamus; and count III, for

          injunctive relief. However, the trial court granted Harvey’s motion to dismiss count IV, for

          breach of the 1996 settlement agreement, due to lack of jurisdiction, and cited in support the

          provision of the settlement agreement allowing only the 1996 court to maintain jurisdiction

          over enforcement of the agreement. However, after granting the motion to dismiss count IV,

          the trial court allowed the Pension Board leave to re-plead before the original trial court that

          had approved the 1996 settlement agreement (hereinafter, the 1996 court) and that matter was

          transferred to the 1996 court.

              1
              The trial court in this matter was Calendar 6 of the Chancery Division in the circuit court of
       Cook County.
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       No. 1-15-3074

¶ 20                   IV. MOTIONS TO COMPEL ENFORCEMENT AND CONSOLIDATE

¶ 21            On December 11, 2013, the trial court consolidated this case with the earlier case and

          transferred the motion to compel enforcement of the 1996 settlement agreement to Calendar

          12.

¶ 22            Following consolidation, both parties filed motions for summary judgment on October

          14, 2014, with the Calendar 6 Court, which are the subject of this appeal. 735 ILCS 5/2-1005

          (West 2012).

¶ 23                   V. PENSION BOARD’S MOTION FOR SUMMARY JUDGMENT

¶ 24            The motions for summary judgment are described in depth with year-by-year financial

          detail, which is necessary to understand the magnitude of the funding problem. In the

          Pension Board’s motion for summary judgment, the Pension Board argues that Harvey must

          be required to adequately contribute to the Pension Fund because the Pension Fund is on the

          verge of default or imminent bankruptcy and will become insolvent without judicial

          intervention.

¶ 25                                           A. OVERVIEW

¶ 26            To support its claims, the Pension Board attached to its motion for summary judgment 16

          exhibits, including the complete transcripts of the discovery depositions of the following

          individuals: (1) Gloria Morningstar, the Harvey City Treasurer; (2) Maggie Britton, a CPA

          for Alli Financial and a Harvey City Assistant Comptroller; (3) Joseph Letke, a CPA and the

          Harvey City Comptroller; (4) Sandor Goldstein, an actuary; (5) Calene Zabinski, the Pension

          Fund’s auditor; (6) Jamie Wilkey, a CPA with Lauterbach & Amen; (7) James Ritchie, the

          Pension Fund’s CPA; (8) Todd Schroeder; the Pension Fund’s actuary; (9) Jon Willhite, the

          Pension Fund’s financial consultant; (10) Daniel Mumpher, the Director of the Local

                                                       7
       No. 1-15-3074

          Government Division for the State Comptroller; and (11) Scott Brandt, an Illinois

          Department of Insurance representative.

¶ 27          In addition, the Pension Board attached, as exhibits, the Illinois Department of Insurance

          notice of noncompliance issued to Harvey, dated February 20, 2013, and the Securities and

          Exchange Commission complaint filed against Harvey and Joseph Letke on June 24, 2014.

¶ 28                                   B. MISMANAGEMENT CLAIM

¶ 29          In its motion for summary judgment, the Pension Board argues that the Pension Fund

          contributions are being mismanaged and underfunded by Harvey and the Pension Fund is

          being underfunded. In support of this assertion, the Pension Board presented financial

          information regarding the Pension Fund from fiscal year 2005 through fiscal year 2014. First,

          the Pension Board presented the annual actuarial requirement as calculated by three different

          actuaries. Section 4-118 of the Code explains what an annual actuarial requirement is:

                       “[T]he annual actuarial requirements of the pension fund are equal to (1) the

                       normal cost of the pension fund, or 17.5% of the salaries and wages to be paid to

                       firefighters for the year involved, whichever is greater, plus (2) an annual amount

                       sufficient to bring the total assets of the pension fund up to 90% of the total

                       actuarial liabilities of the pension fund by the end of municipal fiscal year 2040,

                       as annually updated and determined by an enrolled actuary ***.” 40 ILCS 5/4-

                       118(a) (West 2012).

¶ 30          In its motion, the Pension Board presented the calculations of three separate actuaries

          concerning the annual actuarial requirements: Tim Sharpe; 2 Todd Schroeder; and Scott

          Brandt, who represents the Illinois Department of Insurance. Second, the Pension Board

              2
                Tim Sharpe was not deposed; however, the information regarding his actuarial evaluations was
       introduced through the deposition of Jon Willhite.
                                                        8
       No. 1-15-3074

          attached the deposition transcript of Maggie Britton, who is the Harvey comptroller, and who

          testified about the monies that Harvey appropriated for the Pension Fund and how the

          appropriation ordinance was determined. Further, the Pension Board attached Britton’s

          deposition exhibits, which set forth the amount appropriated by way of the ordinance and the

          amount sought through a tax levy. Lastly, the Pension Board attached the depositions of

          Jamie Wilkey, a CPA, and Calene Zabinski, the Pension Fund auditor. Through these

          depositions and exhibits, the Pension Board established the amount that Harvey actually

          contributed to the Pension Fund for each fiscal year.

¶ 31          The Pension Board presented various exhibits to provide the financial information for

          fiscal years 2005 through 2014:

       Year                    Annual Actuarial            Levied for Pension Paid to Pension
                               Requirement                 Fund               Fund
       2005                    $876,692 (Brandt)           $0                 $9,885
                               $880,632 (Sharpe)
       2006                    $980,024 (Brandt)           $0                 $38,304
                               $945,580 (Sharpe)
       2007                    $1,060,727 (Brandt)         $480,632           $615,407
                               $1,061,219 (Sharpe)
       2008                    $1,140,932 (Brandt)         $1,061,219         $771,471
                               $1,077,837 (Sharpe)
       2009                    $1,294,791 (Brandt)         $1,061,219         $18,181
       2010                    $1,574,792 (Brandt)         $350,000           $5,143
       2011                    $1,611,369 (Brandt)         $0                 $0
                               $1,558,762 (Sharpe)
       2012                    $1,611,369                  $0                 $0
                               $1,558,762
       2013                    $1,531,760 (Schroeder)      $0                 $0
       2014                    $2,070,500 (Schroeder)      $600,000           $600,000

¶ 32          In the motion for summary judgment, the Pension Board cited information provided in

          the deposition of Sandor Goldstein, an actuary, who was retained by Harvey to calculate how

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       No. 1-15-3074

          much money Harvey owed the Pension Fund. Goldstein testified that he calculated the

          contribution deficiency using the difference between the annual actuarial valuations and the

          actual amount Harvey contributed to the Pension Fund between fiscal year 2005 and fiscal

          year 2013. Goldstein opined that the total contribution deficiency up to the end of 2013 was

          $8,077,602. Additionally, he calculated that the accumulated contribution deficiency, which

          is the loss of revenue to the Pension Fund because Harvey did not properly contribute to the

          Pension Fund, to be $10,009,403. Basically, Goldstein calculated that Harvey “deprived the

          Pension Fund of $8 million in actual contributions and another $2 million in actual

          investment gains on those contributions.” Lastly, the Pension Board cited the deposition of

          Todd Schroeder, who calculated that the Pension Fund should have approximately $34

          million in assets as of 2014 rather than the $11,180,962 in assets that the Pension Fund

          actually had. As a result, the Pension Fund was deficient at the end of 2013 by approximately

          $23 million.

¶ 33                   C. ON THE VERGE OF DEFAULT OR IMMINENT BANKRUPTCY

¶ 34         In its motion for summary judgment, the Pension Board argues that the Pension Fund is

          on the verge of default or imminent bankruptcy. The following deposition testimonies

          provided the evidence to determine whether the Pension Fund is on the verge of default or

          imminent bankruptcy.

¶ 35                                       (1) Gloria Morningstar

¶ 36         The deposition of Gloria Morningstar, Harvey’s treasurer, was attached to the motion for

          summary judgment. Morningstar testified that, as treasurer for Harvey, she oversees its fiscal

          monies, revenue, and disbursements and is responsible for preparing the annual financial

          report submitted to the Illinois Comptroller’s Office, as required by statute. She testified that

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       No. 1-15-3074

          she had not completed the annual financial reports since the fiscal year of 2008 because she

          never received the 2008 audit, which Harvey is yet to complete and which is necessary to

          complete the report.

¶ 37         Morningstar testified that Harvey budgeted $458,400 in 2005 for retirement and pension

          funds, but Harvey contributed only $9,885, while the employees contributed $204,149 to the

          Pension Fund. However, the Pension Fund paid out $1,398,003 in benefits for that year.

¶ 38         Morningstar testified that Harvey’s total revenue for fiscal year 2006 was $20,446,917,

          and that it contributed $38,304 to the Pension Fund, while the employees contributed

          $245,146, and the Pension Fund paid $1,439,262 out in benefits.

¶ 39         For fiscal year 2007, Morningstar testified that Harvey collected $19,328,100 in revenue

          and contributed $565,407 to the Pension Fund, while employees contributed $245,555.

          However, the Pension Fund paid out $1,582,325 in benefits. Morningstar explained that

          Harvey’s tax levy ordinance for fiscal year 2007 showed that Harvey had budgeted

          $1,180,632 for the Pension Fund, but Morningstar was unable to explain why the amount

          budgeted for the Pension Fund at the beginning of the year was greater than the amount

          budgeted in the fiscal year end audit.

¶ 40         For fiscal year 2008, Morningstar testified that Harvey collected $19,585,131 in total

          revenue and that the audit report showed that the annual required contribution to the Pension

          Fund was $1,077,837. However, the actual contribution made by Harvey was only $468,365.

¶ 41         Morningstar testified that Harvey does have a statutory requirement to contribute to the

          Pension Fund and that Harvey has not contributed as required by statute since 2005. At the

          time of her deposition on February 28, 2014, Morningstar testified that Harvey had not made

          any contributions to the Pension Fund since 2009.

                                                     11
       No. 1-15-3074

¶ 42                                         (2) Maggie Britton

¶ 43         Maggie Britton, a certified public accountant for Alli Financial and one of two

          comptrollers for Harvey, provided deposition testimony that, as comptroller, her duties

          include financial management, preparation of the annual budget, internal audits, and tracking

          expenditures and revenue. Britton testified that she performs the day-to-day comptroller

          duties, while Joseph Letke is the official comptroller for Harvey, which means that she

          assists in the preparation of the annual financial reports, which are submitted to the Illinois

          Comptroller’s Office. Britton testified that Harvey has not been completing the required

          audits, so they are unable to complete the annual financial reports. Britton testified that

          Harvey had not undergone an audit for fiscal years 2010, 2011, 2012, or 2013.

¶ 44         Britton next testified regarding personal property replacement taxes, which are taxes

          disbursed by the State of Illinois to the municipalities eight times per year. Britton testified

          that a portion of the personal property replacement taxes is statutorily required to be

          contributed to the Pension Fund. Britton testified that Harvey received $805,674 in personal

          property replacement taxes for 2007; $888,081 for 2008; $778,539 for 2009; $649,436.17

          2010; and $797,445.69 for 2011. However, Harvey had not contributed any personal property

          replacement taxes to the Pension Fund during these years. Additionally, Britton testified that

          Harvey did not levy any money for either the fire or police pension funds for 2005 through

          2010.

¶ 45         Britton testified that Harvey appropriated $300,000 in 2005, $300,000 in 2006,

          $1,180,632 in 2007, $197,000 in 2008, $1,161,219 in 2009, $1,161,219 in 2010, $0 in 2011,

          $480,000 in 2011, $450,000 in 2013, and $1,781,542 in 2014 for the Pension Fund.

                                                      12
       No. 1-15-3074

¶ 46         Britton testified that she knows there is a statute that requires contributions to be

          transmitted to the Pension Fund every year and that Harvey should fund the Pension Fund,

          based on the most recent actuarial calculations that provide the required amount of funding.

          Specifically, Britton testified that “based on the rate of return for investments and employee

          contributions, the [Pension Fund] could be facing a shortfall in [fewer than 10 years].”

¶ 47                                          (3) Joseph Letke

¶ 48         During his deposition, Joseph Letke, the official comptroller for Harvey starting in 2003,

          invoked his Fifth Amendment privilege against self-incrimination 178 times and refused to

          answer questions regarding (1) fraudulent and misleading bond offerings, (2) a developer

          who collected bond proceedings from Harvey then fled to India, (3) the accusation that Letke

          collected fees from both Harvey and the developer, who fled to India, (4) why each Harvey

          alderman had an $80,000 unmonitored expense account, (5) why Harvey paid an alderman’s

          son $325 an hour for snow removal, and (6) why Harvey paid the mayor’s son $88,000 to

          develop a social media website.

¶ 49         Additionally, the Pension Board attached to its motion for summary judgment a

          complaint filed by the Securities and Exchange Commission (SEC) against both Harvey and

          Letke. The complaint alleges:

                       “[a] scheme by [Harvey] and Joseph T. Letke to misuse proceeds raised from

                       investors in municipal bonds issued by Harvey. From 2008 to present, Harvey and

                       its Comptroller, Letke, have engaged in a scheme to divert bond proceeds for

                       improper purposes, including undisclosed payments to Letke.”

          Further, the complaint alleges that Harvey and Letke offered fraudulent bond offerings for $6

          million in 2008, $3 million in 2009, and $3 million in 2010.

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       No. 1-15-3074

¶ 50          The complaint alleges that these bond offerings were to provide funding for a “Holiday

          Inn Hotel in Harvey” and:

                       “Thus, it was important to bond investors that money raised from the bond

                       offerings, consistent with the stated purpose, was actually used to fund the hotel

                       development, since the amount of funds to repay the bonds derived from tax

                       revenues would be materially affected by the funding and progress of the Hotel

                       Redevelopment Project.”

          However, unknown to the bond investors and contrary to the representations made by Harvey

          and Letke, “Harvey officials improperly diverted at least $1.7 million of bond proceeds from

          these offerings into the general operation accounts of Harvey to pay [Harvey’s] operation

          costs, including payroll. Letke *** also received approximately $269,000 in undisclosed

          payments derived from bond proceeds[.]”

¶ 51          Due to these alleged misappropriations and misrepresentations, the SEC sought (1)

          money damages against Letke, (2) a temporary restraining order prohibiting Harvey from

          offering or selling its own municipal securities, (3) a permanent injunction prohibiting

          Harvey from selling municipal securities for five years, unless an independent consultant

          reviews and approves of its municipal security disclose policies and procedures, and (4) a

          permanent injunction prohibiting Letke from participating in any capacity in a municipal

          securities offering.

¶ 52                                           (4) Jon Willhite

¶ 53          Jon Willhite, the Pension Fund’s financial consultant since the 1980’s, testified in his

          deposition regarding a calculation table showing his calculations for lost revenue between

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       No. 1-15-3074

          fiscal years 2005 and 2013. This table is a calculation for lost revenue based on the

          recommended tax levy as opposed to the collected tax levy. The table appears as follows:

       Fiscal      Required       Contribution   Investment   Shortfall     Lost Revenue      Cumulative
       Year        Contribution   Received       Return
       2005        $880,632       $9,885         4.18%        $870,747      $888,963.37       $888,963
       2006        $945,580       $38,304        7.80%        $907,276      $942,661.93       $1,900,969
       2007        $1,061,219     $615,407       10.17%       $445,812      $468,476.94       $2,562,735
       2008        $1,140,932     $771,471       3.06%        $369,461      $375,115.17       $3,016,289
       2009        $1,294,791     $18,181        -12.06%      $1,276,610    $1,199,637.40     $3,852,195
       2010        $1,574,792     $5,134         18.15%       $1,569,658    $1,712,113.49     $6,263,527
       2011        $1,611,369     $0             9.65%        $1,611,369    $1,689,086.91     $8,556,806
       2012        $1,611,369     $0             -2.05%       $1,611,369    $1,594,812.58     $9,975,780
       2013        $1,531,760     $0             7.07%        $1,531,760    $1,585,940.72     $12,267,438

¶ 54            Willhite testified that he created this document to show the data that he examined in

          calculating the cumulative loss in revenue to the Pension Fund. Based on his calculations,

          Harvey’s lack of contributions to the Pension Fund has resulted in a cumulative lost revenue

          of $12,267,438 from 2005 to 2013. Willhite testified that the cumulative total is the total lost

          revenue plus the investment returns.

¶ 55            Willhite was asked, based on his experience as the Pension Fund’s financial consultant,

          whether the Pension Fund is on the verge of default or imminent bankruptcy. Willhite

          responded by testifying:

                       “we took on the plan in 2009 *** and the assets were at 17 million and some

                       change. We’ve had a positive annual rate of return in the 7s, I believe, over that

                       time frame compounding. I would have to go back and get the actual number, but

                       it’s been a fairly decent return. And [the Pension Fund has] gone from over 17

                       million to approximately $11.1 million as of the close two days ago.

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       No. 1-15-3074

                        So that would tell me that if you were to take the monthly—or the monthly

                        outflows of over 300,000 a month going out and continue to expand upon that and

                        just take that annual number of $1.2 million and divide that by the 11 million,

                        yeah there’s going to be a time when there’s no money left in that plan; and it’s

                        shorter than the life expectancy of the retirees.”

¶ 56         Willhite further opined: “[a]t their current condition and the rate of money that’s going

          out they will reach a time when there will be no money left in the [Pension Fund] as we

          know it today.” Willhite further opined that if the tax levy is not reinstated, then the Pension

          Fund is going to be in “dire, dire problems.” Willhite continued his opinion by stating that

          the Pension Fund is being forced to sell assets to pay the beneficiaries. Willhite testified that

          of all the pension funds he works with, Harvey’s Pension Fund is the worst funded.

¶ 57         Willhite opined that the Pension Fund would be insolvent in seven to nine years. He

          based this opinion on the fact that, in 2009, the Pension Fund had over $17 million in assets;

          however, it lost over $7 million in assets since that year without adequate contributions from

          Harvey. Even more concerning to Willhite is that the Pension Fund has had a 9.75 percent

          return over that same time frame, which, normally, would indicate a positive increase in

          monies in the fund. However, that was not the case in Harvey because of inadequate

          contributions by Harvey.

¶ 58                                           (5) Sandor Goldstein

¶ 59         Sandor Goldstein is an actuary who was hired by Harvey to review the calculations by

          Jon Willhite, the actuary for the Pension Fund. Goldstein testified as follows at his

          deposition.

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       No. 1-15-3074

¶ 60          In reviewing the pertinent documentation, Goldstein opined that Willhite’s calculations

          were deficient as to the total loss revenue for the Pension Fund due to the lack of

          contributions from Harvey. Goldstein testified:

                       “Well, it was deficient because he basically just went to each year’s actuarial

                       valuation and considered the annual requirement for that year versus the employer

                       contribution for that year and added it all up over the full period from 2005 to

                       2013, and that doesn’t take into account that if there’s—if [Harvey] had actually

                       made those contributions in the early years, then those contributions would have

                       had some investment earnings and would have added to the assets, and therefore

                       the contributions in the later years would have been less, so in a way, when we

                       look at the deficiency in contributions in one year, we’ve already taken it into

                       account, but if we—and that affects the required contribution in the future year,

                       and if you don’t make that contribution, the required contribution in the future

                       year will be less also; so you’re counting the effect of these deficiencies in

                       contributions twice, first in the year when it’s not made and then also in the later

                       years where you’re contributing more, so I feel that once you’ve recorded a

                       deficiency in contributions you need to add it into the assets to calculate future

                       year deficiencies.”

¶ 61          Goldstein testified that, in his calculations for accumulated contribution deficiency, he

          would assume that Harvey had actually contributed the annual actuarial requirement and that

          the Pension Fund had the money invested at a particular rate of return for each fiscal year.

          Based on this method of calculation, Goldstein provided the following chart, which lays out

          all of his calculations:

                                                        17
       No. 1-15-3074

       Fiscal Year     Adjusted         Employer     Contribution Rate             of Accumulated
                       Annual           Contribution Deficiency   Return              Contribution
                       Actuarial                                                      Deficiency
                       Requirements
       2005            876,692          9,885          866,807         4.3381%         885,608
       2006            857,500          38,304         819,196         8.0961%         1,809,666
       2007            990,302          615,407        374,895         10.4075%        2,392,410
       2008            1,042,696        771,471        271,225         3.1250%         2,742,636
       2009            1,179,421        18,181         1,161,240       -12.6001%       3,485,142
       2010            1,423,897        5,143          1,418,754       19.2365%        5,710,775
       2011            1,190,734        0              1,190,734       10.1914%        7,544,193
       2012            864,407          0              864,407         -2.1699%        8,235,520
       2013            1,110,344        0              1,110,344       7.5482%         10,009,403
       Total           9,535,993        1,458,391      8,077,602

¶ 62           Based on his accumulated contribution deficiency calculations, Goldstein opined that if

          Harvey had been contributing pursuant to the requirements of the Code, that the Pension

          Fund would have an additional $10,009,403 in assets, for a total of approximately $22

          million on May 1, 2012.

¶ 63                                        (6) Calene Zabinski

¶ 64           Calene Zabinski, a CPA who works as a finance director and treasurer for various towns

          and municipalities across the state, was hired to perform the year-end audit of the Pension

          Fund for 2008 through 2013. As a result of conducting these audits, Zabinski testified

          regarding the assets, annual actuarial requirement calculations, and the percentage of the

          annual actuarial requirement Harvey had contributed. Additionally, Zabinski used that

          information to establish the Pension Fund’s net change in assets and the percent it was

          funded.

                                                     18
       No. 1-15-3074

       Year            Annual          Harvey           % of AAR         Net Change       % Funded
                       Actuarial       Contribution     Harvey           in Assets (+/-
                       Requirement                      contributed      )
                       (AAR)
       2008            $1,077,837      $771,471         71.58%           -$185,866        59.16%
       2009            $1,294,791      $18,181          1.4%             -$3,619,875      50.79%
       2010            $1,574,792      $5,143           0.33%            +$955,176        38.28%
       2011            $1,611,369      $0               0.0%             -$156,474        40.46%
       2012            N/A             $0               0.0%             -$1,860,149      N/A
       2013            $2,036,497      $0               0.0%             -$704,363        34.68%

¶ 65          Zabinski testified that, although it is rare for a municipality to have a fully funded

          pension fund, she is concerned regarding the continued underfunding of the Pension Fund in

          Harvey. She testified that “the continued underfunding, coupled with that increase in the rate

          of pay higher than the actuarial assumption, eventually will get to the point where [Harvey] is

          going to have to pay for the pensioners.” In other words, the underfunding will cause the

          dissipation of the Pension Fund’s assets which will result in the fund having no assets,

          thereby requiring Harvey itself to pay the pension benefits.

¶ 66                                          (7) Jamie Wilkey

¶ 67          Jamie Wilkey, an accountant with Lauterbach & Amen, an accounting firm that

          specializes in the accounting of government entities, testified that his firm was hired to

          perform an audit of the Pension Fund for fiscal years 2005, 2006, and 2007. She testified that

          there were 113 plan members in the Harvey firefighter’s pension fund as of 2004, with 49

          active plan members and 64 retirees and beneficiaries.

¶ 68          Wilkey testified that the Pension Fund had $16,699,170 in assets as of April 30, 2005,

          that Harvey contributed $9,885 to the Pension Fund for that same year, and that the Pension

          Fund paid out $1,398,003 in benefits for that year. Harvey was required to contribute 12.2%

          of the Personal Property Replacement Tax (PPRT), but did not do so.
                                                      19
       No. 1-15-3074

¶ 69         Based on the 2005 annual audit report, Wilkey testified that the Pension Fund, as of fiscal

          year 2005, was 63.87% funded. She testified that the category entitled “annual pension cost”

          is the number “that reflects the annual required contribution adjusted for the interest on the

          outstanding net pension obligation as well as adjusted for the actuary’s calculation of retiring

          the unfunded portion of the liability as well.” For fiscal year 2005, Wilkey testified that the

          annual pension costs were $823,021 and that Harvey’s contribution of $9,885 to the Pension

          Fund accounted for only 1.20% of the annual pension cost for 2005. There were 47 active

          plan members and 71 retirees and beneficiaries drawing off the Harvey firefighter’s pension

          fund as of April 30, 2005.

¶ 70         Wilkey testified that the Pension Fund had $16,782,216 in assets as of April 30, 2006,

          and paid out $1,585,940 in benefits and refunds, while Harvey contributed only $38,304.

          Using these numbers, Wilkey opined that the Pension Fund was 59.31% funded. Although

          Harvey contributed $38,304 to the Pension Fund, the contribution accounted for only 3.91%

          of the annual required contribution. As of April 30, 2006, there were 50 active plan members

          and 66 retirees and beneficiaries; the percent funded of the firefighters’ pension fund was

          57.82 percent for the 2006 year.

¶ 71         Wilkey testified that the Pension Fund had $17,715,906 in assets as of April 30, 2007.

          For this same year, Harvey contributed $615,407 to the Pension Fund, and the Pension Fund

          paid out $1,582,325 in benefits and refunds. Additionally, the Pension Fund was 57.8%

          funded, and Harvey contributed 58.02% of the annual pension costs. Further, after examining

          the annual financial report for fiscal year 2009, she testified that the net pension obligation

          for Harvey was $4,539,179, and Harvey contributed only $18,181.

                                                      20
       No. 1-15-3074

¶ 72          Wilkey testified that personal property replacement taxes are revenue transmitted to cities

          within Illinois, which then contribute 12.2% of these taxes to the cities’ pension funds.

          Wilkey opined that Harvey would owe the Pension Fund $125,773.33 in personal property

          replacement taxes as of the time of her deposition on February 28, 2014.

¶ 73                                             (8) James Ritchie

¶ 74          James Ritchie, a CPA and client manager for Lauterbach & Amen, who worked directly

          with the Pension Fund, testified to the Pension Fund’s financial condition and was concerned

          for its financial viability. He testified:

                       “With statutorily required increases in benefits being paid out as well as the

                       expenses and then the lack of municipal funding that is coming in, it looks that the

                       assets are slowly being depleted to pay out benefits as required by statute.

                       Without municipal funding I would say, in an estimation, the [Pension Fund] will

                       begin to have difficulty paying out benefits by the end of this decade.”

¶ 75          Richie testified that the lack of cash assets or investments that are available for the

          payment of benefits, combined with the increases in the cost of living, is going to create

          problems in paying out benefits. Ritchie testified that, in his opinion, the Pension Fund is on

          the verge of going insolvent and “has approximately five years before that’s a very real

          possibility, of being completely insolvent.”

¶ 76          Based on his review of the fund’s statement of net position ending December 31, 2013,

          Ritchie testified that Harvey has collected $469,637.06 on behalf of the Pension Fund, but

          has not remitted any of it into the Pension Fund. Ritchie reviewed financial statements from

          April 30, 2007, through April 30, 2013, and calculated the total amount of money that

          Harvey had failed to contribute to the Pension Fund between fiscal years 2005 and 2013 as

                                                         21
       No. 1-15-3074

          approximately $10,190,000. However, Ritchie did not account for the loss of investment

          opportunity in his calculations.

¶ 77                                          (9) Todd Schroeder

¶ 78         Todd Schroeder, an actuary with Lauterbach & Amen, was hired to conduct the actuarial

          valuation for the Pension Fund for 2012 and 2013. Lauterbach & Amen then assigned this

          task to Schroeder, who testified about what a contribution of zero dollars would do to a

          pension fund:

                       “Contribution of zero dollars would increase the unfunded liability of a pension

                       fund. If you look at the current—the prior year recommended contribution,

                       whatever that dollar figure was, versus a contribution of zero, that difference is

                       what’s called unexpected unfunded accrued liability that comes in in the next

                       year. So that unexpected unfunded liability adds to whatever unfunded liability

                       already existed from last year to this year that we already knew was there.”

          Schroeder further explained that a municipality that continues to make no contribution to a

          pension fund would result in an increase of the annual required contribution going forward.

¶ 79         Schroeder explained why municipalities should contribute the annual actuarial

          requirement every year:

                       “The idea behind contributing the annual actuarial requirement each year is that

                       you can—to some extent you can manage the increase in cost over time. So if you

                       set up, for example, an actuarial requirement that’s going to increase at four-and-

                       a-half or five percent per year, then you have some predictability as to those

                       contributions if those contributions are being made over time. If those

                       contributions are not made, then you have much more volatility and you see more

                                                       22
       No. 1-15-3074

                       rapid increases in the contribution calculations and annual actuarial requirements

                       over time.”

          Putting these ideas together, Schroeder, when asked whether Harvey’s failure to contribute at

          least the minimum annual actuarial requirement to the Pension Fund was concerning to him,

          testified:

                       “Yes. *** One thing that jumps out is that right now the cash flow out greatly

                       exceeds the cash flow that’s coming in. The benefit payments that are being paid

                       out of the [Pension Fund] are close to 20 percent of the [Pension Fund’s] assets.

                       So the dollars that are coming in from employees and investment income is not

                       enough to offset that, so we’re seeing a declining asset base each year.”

¶ 80                                         (10) Daniel Mumpher

¶ 81          Daniel Mumpher, the Director of Local Government in the Illinois Comptroller’s Office,

          testified that he is in charge of managing the reporting process of local governments

          throughout the State of Illinois. This includes the intake of annual financial reports, annual

          audits, and tax increment reports. Mumpher testified that municipalities in Illinois are

          required to submit annual financial reports to his office within six months of the end of their

          respective fiscal years.

¶ 82          Mumpher testified that Harvey filed its annual financial report for 2005 on July 31, 2006,

          its annual financial report for 2006 on July 6, 2007, its annual financial report for 2007 on

          April 8, 2008, and its annual financial report for 2008 on November 15, 2011. He futher

          testified that Harvey's annual financial reports for 2009, 2010, 2011, and 2012 were all filed

          on November 1, 2013. However, Mumpher testified that he had not received an annual

          financial report from Harvey for the year 2013 or after.

                                                        23
       No. 1-15-3074

¶ 83         Additionally, Mumpher testified that, while he had received an annual audit for fiscal

          year 2009, he did not receive it until December 16, 2013. However, Harvey has not filed an

          annual audit for fiscal years 2010, 2011, 2012, or 2013. Mumpher testified that he is

          concerned that Harvey has either not timely filed or has not filed at all the annual financial

          reports and annual audits for several years. Both these reports are statutorily required;

          however, Harvey has not timely filed for multiple years. Mumpher testified that Harvey is

          one of approximately 20 municipalities that are multiple years behind on these reports.

¶ 84         Due to Harvey’s lack of filing, Mumpher testified that his office had issued several

          requests for Harvey to file these reports with his office. As a result of the continued

          delinquency of these reports, Mumpher’s office has issued multiple fines against Harvey. He

          testified that he is unsure of the exact amount, but the total is more than $10,000 at this point.

¶ 85         Mumpher testified that Harvey reported that it paid $1,513,003 to the Pension Fund

          during fiscal year 2005, $1,580,608 during fiscal year 2006, $0 in fiscal year 2007,

          $1,761,830 during fiscal year 2009, $0 during fiscal year 2010, $0 during fiscal year 2011,

          and $1,761,830 during fiscal year 2012.

¶ 86                                           (11) Scott Brandt

¶ 87         Scott Brandt, an actuary with the Illinois Department of Insurance, testified that he is

          familiar with Article 4 of the Code, which establishes firefighter’s pension funds for

          municipalities based on their population. Brandt testified that the Code:

                       “dictates a methodology in which the actuary is to use [when determining pension

                       contributions]. It dictates the time frame under which the unfunded is to be paid

                       off and the method in which that unfunded is to be calculated. It dictates that the

                       assets are to be smoothed over a five-year period. It dictates that the unfunded—

                                                       24
       No. 1-15-3074

                        or the fund only needs to be funded to a 90 percent level by the end of period

                        dictated under the statute which is in 2040.”

¶ 88         Brandt then examined actuarial valuation reports produced by the Department of

          Insurance for the Pension Fund for the fiscal years 2004 through 2010. The preparation of

          these reports involves examining the documents submitted to his office by the Pension Fund.

          Then, his department sends the report through an “electronic check” that ensures the

          information is fairly accurate. This program then “computes the liability, the actual liabilities,

          compares the two, comes up with a shortfall if that is the case.” The shortfall is then

          amortized over a period to ensure it is paid off. Brandt further testified that his department

          used a funding method called “entry age normal cost” for the earlier actuarial valuation

          reports. However, the Code changed the calculation method to projected unit credit, which

          “projects the liabilities in a different method.”

¶ 89         Examining an actuarial experience study from September 26, 2012, Brandt testified that

          the Department of Insurance commissioned this report to determine the effects of the change

          in Article 4 of the Code in 2011. This study was used to determine how the actuarial

          assumptions needed to be reviewed and changed to be in line with the new law. The report

          provided the Department of Insurance updated assumptions to use when conducting its

          valuations.

¶ 90         Next, Brandt examined a biannual public pension report for the State of Illinois for years

          2011 through 2013. Examining this report, Brandt testified that Illinois public pensions were

          54.3% funded in 2011. However, the pension funds were only 49% funded in 2013 when the

          report was published.

                                                         25
       No. 1-15-3074

¶ 91                      VI. HARVEY’S MOTION FOR SUMMARY JUDGMENT

¶ 92           In its motion for summary judgment, Harvey argued that the Pension Fund is not on the

           verge of default or imminent bankruptcy and therefore, Harvey is not liable to the Pension

           Board. In addition, Harvey argued that the Pension Board’s action is barred by laches and

           separation of powers and that the Pension Board lacks the authority to sustain this lawsuit. 3

           Additionally, Harvey argued that, even if the foregoing is incorrect, the Pension Board’s

           claims for damages are still wholly unreasonable.

¶ 93                   A. THE VERGE OF DEFAULT OR IMMINENT BANKRUPTCY

¶ 94           Harvey argued that the Pension Fund is not on the verge of default or imminent

           bankruptcy. 4 In support, it attached the deposition transcript of Calene Zabinski, “who

           performs annual audits for around 20 Illinois police and firefighters’ pension funds, and who

           has knowledge of the state of other police and firefighters’ pensions[.]” Zabinski testified

           that, in her experience, only in rare instances are pension funds fully funded.

¶ 95                                B. REASONABLENESS OF DAMAGES

¶ 96                        (1) THE MOST RECENT ACTUARIAL VALUATION

¶ 97           Harvey argues that, under the Code, municipalities are required only to levy “a sum

           sufficient to meet the annual actuarial requirements of the pension fund.” 40 ILCS 5/4-118(a)

           (West 2014). To achieve this goal, the Code provides a two-step process: (a) funding the

           normal cost of the pension fund and (b) providing the annual amount required to bring the

           total assets of the pension fund up to 90% by fiscal year 2040. 40 ILCS 5/4-118(a) (West

               3
                  The affirmative defenses arguments for laches, separation of powers, and lack of authority made
       before this court are substantially similar to those made before the trial court. Therefore, these arguments
       will be discussed in the Analysis portion of this opinion.
                4
                  Harvey’s argument that the Pension Board is not on the verge of default or imminent bankruptcy
       is the same in its motion for summary judgment as on appeal. Therefore, we will cover the majority of
       this argument in the Analysis section rather than here. Supra ¶¶ 172-205.
                                                           26
       No. 1-15-3074

          2014). Based on this, Harvey argued that the second portion of that formula, “an annual

          amount sufficient to bring the total assets of the pension fund up to 90% of the total actuarial

          liabilities *** by the end of [the] municipal fiscal year 2040,” takes into account

          underfunding of the pension fund and changes based on the contributions of previous years.

          40 ILCS 5/4-118(a) (West 2014).

¶ 98         To support this argument, Harvey attached the discovery deposition transcript of Todd

          Schroeder, the Pension Fund’s actuary. Schroeder testified that actuarial valuations would be

          different based on funding from prior years. Therefore, the underfunding of previous years is

          taken into account when determining each year’s actuarial valuation. For this reason, Harvey

          argued that the Code “only asks municipalities to contribute the recommended amount from

          the most recent actuarial valuation, not the sum of prior actuarial valuations.”

¶ 99         Additionally, Harvey attached the discovery deposition transcript of Scott Brandt, a

          representative of the Illinois Department of Insurance. Harvey cited the following exchange:

                          “Q. Does the Public Pension Division have a position on whether a

                       municipality that did not fund its Firefighters’ Pension Fund in the fiscal year

                       April 13, 2013, does it have a position on whether that municipality would owe

                       the recommended contribution for the fiscal year ending April 30th, 2014, or

                       whether it would owe that recommended contribution plus the prior recommended

                       contribution?

                          A. The Public Pension Division’s position would be that the municipality

                       would only need to fund the amount computed under a 2014 actuarial valuation.

                          Q. Why is that the Public Pension Division’s position?

                                                       27
        No. 1-15-3074

                           A. Actuarially speaking, the 2013 nonfunded amount is taken into

                        consideration when calculating the 2014 liabilities and unfunded amounts.”

           Harvey argued that, based on this interpretation of Article 4, even if the Pension Board had a

           claim against Harvey for underfunding, Harvey was liable only for the most recent actuarial

           valuation, not all prior valuations combined.

¶ 100                               (2) RECOVERY FOR 2009, 2010, OR 2012

¶ 101          Harvey argued that the Code requires an enrolled actuary to calculate the annual actuarial

           valuation every year; therefore, because an enrolled actuary did not perform a valuation for

           years 2009, 2010, and 2012, the Pension Board cannot recover for those years. In its motion

           for summary judgment, Harvey included the following table:

        Fiscal Year     Actuary 1    Actuarial       Actuary    Actuarial       Source(s)
                                     Requirement     2          Requirement
        2005            Scott        $876,692        Tim        $880,632             Pension Fund
                        Brandt                       Sharpe                         Valuation 2005
        2006            Scott        $980,024        Tim        $945,580             Pension Fund
                        Brandt                       Sharpe                         Valuation 2006
        2007            Scott        $1,060,727      Tim        $1,061,219           Pension Fund
                        Brandt                       Sharpe                         Valuation 2007
        2008            Scott        $1,140,932      Tim        $1,077,837           Pension Fund
                        Brandt                       Sharpe                         Valuation 2008
        2009            Scott        $1,294,791      None                            Pension Fund
                        Brandt                                                      Valuation 2009
        2010            Scott        $1,574,792      None                            Pension Fund
                        Brandt                                                      Valuation 2010
        2011            Scott        $1,611,369      Tim        $1,558,762           Pension Fund
                        Brandt                       Sharpe                         Valuation 2011
        2012            None                         None                           2013 Biannual
                                                                                    Pension Report
        2013            Todd         $1,531,760      None                            Pension Fund
                        Schroeder                                                   Valuation 2013

                                                       28
        No. 1-15-3074

¶ 102           Harvey argued that, in 2009 and 2010, only Brandt performed the actuarial valuation.

            However, according to Brandt’s deposition testimony and a copy of a list compiled by the

            Internal Revenue Service of Active Enrolled Actuaries, Brandt is not an enrolled actuary. 5

            Harvey argued that no annual actuarial valuation was performed by an enrolled actuary for

            2009 and 2010 as required by the Code, so therefore it cannot be liable for any damages

            during these years. Additionally, no annual actuarial valuations took place during 2012.

            Therefore Harvey argues that it cannot be liable for damages during 2012 either.

¶ 103           In support of its motion, Harvey attached the deposition transcript of Jon Willhite, the

            Pension Fund’s financial consultant, who testified that the amount of damages should be

            $12,267,438, based on his calculations. Harvey also attached the deposition transcript of

            Sandor Goldstein, an actuary, who testified that Willhite’s calculations were deficient.

            Harvey argued that, based on Goldstein’s calculations, the maximum amount of damages

            should be $10,009,403.

¶ 104               C. PENSION BOARD’S MOTION TO COMPEL ENFORCEMENT OF THE

                                           SETTLEMENT AGREEMENT

¶ 105           The parties disagreed as to whether Harvey violated the following clause of the 1996

            settlement agreement:

                        “that in the future, any property taxes levied or personal property replacement

                        taxes received on behalf of the [Pension Fund], which are assessed, collected and

                        remitted to [Harvey] by the Cook County Treasurer’s Office, shall be paid to the

                5
                 The Code states an enrolled actuary is an actuary “(1) who is a member of the Society of
        Actuaries or the American Academy of Actuaries; and (2) who is enrolled under Subtitle C of Title III of
        the Employee Retirement Income Security Act of 1974 [(29 U.S.C. § 1241 (2012))], or who has been
        engaged in providing actuarial services to one or more public retirement systems for a period of at least 3
        years as of July 1, 1983.” 40 ILCS 5/4-118(e) (West 2014).
                                                            29
        No. 1-15-3074

                        [Pension Fund] within 30 days of receipt by [Harvey], and not used by [Harvey]

                        for any other corporate purposes as required by [the Code].”

¶ 106          Harvey argues that it did not fail to remit levied funds to the Pension Fund because it

           never collected the money levied for the funds. Harvey presented the following tables to

           support this argument:

        Fiscal Year         Total General       Total Pension      Total Actually      Shortfall
                            Levy                Fund Levy          Collected
        2005                $6,837,195          $0                 -                   -
        2006                $6,837,195          $0                 -                   -
        2007                $6,832,504          $480,632           $5,907,424          $925,080
        2008                $7,952,086          $1,061,219         $5,208,438          $2,743,648
        2009                $7,952,086          $1,061,219         $7,551,900          $400,186
        2010                $8,759,841          $350,000           $7,834,933          $924,908
        2011                $9,633,132          $0                 -                   -
        2012                $9,975,330          $0                 -                   -
        2013                $10,771,419         $0                 -                   -

        Fiscal Year              Revenues                Expenditures            Deficit
        2007                     $30,260,000             $36,740,000             $5,360,000
        2008                     $31,540,000             $35,890,000             $4,350,000
        2009                     $34,849,798             $54,829,361             $19,979,563
        2010                     $33,218,986             $6,157,595              $6,157,595
        Totals                   $129,868,784            $166,835,942            $36,967,158

        Fiscal Year                                        Personal Property Replacement Taxes
                                                                        Received
        2005                                             $391,736
        2006                                             $501,237
        2007                                             $805,674
        2008                                             $888,081
        2009                                             $778,539
        2010                                             $646,436
        2011                                             $797,446
        2012                                             $703,326

                                                        30
        No. 1-15-3074

        2013                                             $744,405
        2014                                             $780,142

¶ 107          Based on this information, Harvey argued that between 2007 and 2010, the years the

           Pension Board claims Harvey failed to remit the funds to the Pension Fund, “Harvey

           specifically levied $2,953,070 to be paid to the Pension Fund as part of its general corporate

           levy. [Citation.] However, during this same period, Harvey experienced a shortfall in its

           collections and collected $4,993,822 less than it had levied.” For this reason, Harvey argued

           that it never collected the funds intended for the Pension Fund and, therefore, Harvey could

           not remit funds to the Pension Fund that it did not receive.

¶ 108                   VII. RESPONSE TO THE MOTIONS FOR SUMMARY JUDGMENT

¶ 109          Following the filing of both parties’ motions for summary judgment, the trial court

           ordered both parties to submit their responses and replies, which they did. Then, on March

           18, 2015, Harvey moved to supplement its motion for summary judgment in order to attach

           two settlement agreements, which Harvey felt impacted its financial status. Those settlement

           agreements were from two cases involving Harvey: City of Chicago v. City of Harvey, No. 12

           CH 44855 and SEC v. City of Harvey, No. 14-cv-7744. On April 14, 2015, the Pension Board

           also sought to supplement its motion for summary judgment with five additional exhibits,

           including (A) the actuarial valuation of the Pension Fund as of May 1, 2014, (B) the Pension

           Fund’s UBS Asset Allocation Review as of March 4, 2015, (C) correspondence between the

           Illinois Municipal Retirement Fund and the Illinois Department of Insurance dated March 17,

           2015, (D) an April 3, 2015, Cook County Circuit Court Judgment Order assessing damages

           for the Harvey Police Pension Fund against Harvey in the amount of $7,334,181.88, and (E)

           Harvey’s mayor’s campaign brochure entitled “Re-Elect—A Lifetime of Commitment” in

                                                        31
        No. 1-15-3074

           which he states that Harvey is in better financial shape than it has ever been and that all

           outstanding litigation has been settled.

¶ 110          In support of this motion, the Pension Board argued that the Pension Fund’s net present

           assets have decreased since the last valuation: “As of March 4, 2015, the Pension Fund had

           only $10,936,532.72 in assets. According to the most recent actuarial valuation, the Pension

           Fund was only 27.18 percent funded as of May 1, 2014, and the Pension Fund’s unfunded

           accrued liability has increased to nearly $30 million.” Additionally, the Pension Board

           attached correspondence between the Illinois Municipal Retirement Fund and the Illinois

           Department of Insurance regarding the change in the Code which allows a form of

           ‘enforcement provision’ relied on by Harvey in its motion for summary judgment.

           Specifically, this letter shows that the State Comptroller is refusing to comply with the

           statutory provision; therefore, the Pension Board argued that “the enforcement provision in

           Article 4 is currently useless and it does not save the Pension Fund from default or

           bankruptcy.”

¶ 111          The trial court granted both motions to supplement. Then, on June 5, 2015, the Pension

           Board filed an emergency motion to supplement, in which it sought to attach: (1) the Illinois

           Supreme Court decision of In re Pension Reform Litigation, 2015 IL 118585 (Heaton), and

           (2) House Bill 3484 and Senate Amendment #1. 6

¶ 112          On June 9, 2015, the trial court granted the emergency motion to supplement.

               6
                 Harvey argued that the Senate amendments to the Code would remove any enforcement rights
        the Pension Fund would have been given pursuant to the Code, and that the amendments would negate
        the lawsuit.
                                                       32
        No. 1-15-3074

¶ 113                                  VIII. TRIAL COURT’S ORDER

¶ 114         On June 25, 2015, the trial court granted the Pension Board’s motion for summary

           judgment as to count I for declaratory judgment and count III for injunctive relief and also

           granted the Pension Board’s motion to compel enforcement of the settlement agreement.

           However, the court denied count II for a writ of mandamus.

¶ 115                           A. HARVEY’S PRELIMINARY DEFENSES

¶ 116         First, the trial court determined that the Pension Board had authority to bring the claim

           and that laches, the statute of limitations, or separation of powers doctrine did not bar this

           claim. The court found that the Pension Board is an administrative body, which is a “separate

           and independent entity from the municipality in which it serves.” Therefore, the Pension

           Board is not a branch of the Harvey government, and therefore, it can maintain a suit against

           Harvey.

¶ 117                         1. LACHES AND STATUTE OF LIMITATIONS

¶ 118         Harvey had argued that the Pension Board’s suit was barred by either laches or the statute

           of limitations because the Pension Board waited to “bring suit for more than five years after

           first learning of the behavior of which it complains.” Harvey argued that the Tort Immunity

           Act, which has a one-year statute of limitations, applies in this case. 745 ILCS 10/8-101(a)

           (West 2014). However, the trial court found that the Tort Immunity Act applies only to civil

           tort actions, and was, therefore, not applicable in this case. Rather, the trial court determined

           that the statute of limitations was five years in accordance with section 13-205 of the Code of

           Civil Procedure. 735 ILCS 5/13-205 (West 2014). The trial court explained: “Due to the

           interplay between the actuarial valuation, fiscal year, tax levy and Pension Code, the Board

           could not have known of Harvey’s failure to properly levy or contribute to the Fund for fiscal

                                                        33
        No. 1-15-3074

           year 2005 until February 6, 2006. [Citations Omitted.] Thus, the board properly brought suit

           within the applicable five year statute of limitations.”

¶ 119         The trial court found that to succeed on a claim of laches, “Harvey must show that it was

           misled or prejudiced by such delay, or pursued ‘a course different from that which [it] would

           otherwise have taken. [Citation.]’ ” The trial court found that Harvey was not unknowingly

           accruing liability. Rather, Harvey was knowingly accruing liability, failed to utilize any

           formula to determine its contributions to the fund, and failed to fulfill its duty according to

           the Code. Additionally, the trial court cited to the fact that, even after the suit was filed in

           2010, Harvey continued its course of failure to contribute to the Fund. Therefore Harvey was

           not unknowingly accruing liability.

¶ 120                                   2. SEPARATION OF POWERS

¶ 121         The trial court partially agreed with Harvey’s argument regarding separation of powers.

           The trial court acknowledged that the judiciary branch has always been cautious when

           venturing into the world of taxation. However, the trial court found that, when a municipality

           abuses its discretion in the enforcement of statutory provisions, the judiciary will step in to

           enforce the law. Accordingly, the trial court denied the Pension Board’s claim for a writ of

           mandamus. On all other counts, the court denied the affirmative defense of separation of

           powers.

¶ 122             B. CONSTITUTIONAL, CONTRACTUAL, AND STATUTORY RIGHT TO

                                                   FUNDING

¶ 123         In reaching its finding, the trial court drew distinctions among (1) a constitutional right to

           funding, (2) a contractual right to funding, and (3) a statutory right to funding. The trial court

                                                        34
        No. 1-15-3074

           found that article XIII, section 5 of the Illinois Constitution was the basis for both (1) a

           constitutional and (2) a contractual right to funding:

                           “Membership in any pension or retirement system of the State, any unit of

                        local government or school district, or any agency or instrumentality thereof, shall

                        be an enforceable contractual relationship, the benefits of which shall not be

                        diminished or impaired.” (Emphasis added.) Ill. Const. 1970, art. XIII, § 5.

           The trial court found that the Pension Fund must prove that it is on the verge of default or

           imminent bankruptcy to maintain an underfunding claim based on a constitutional violation

           under section 5. Ill. Const. 1970, art. XIII, § 5.

¶ 124          However, the trial court found that to determine whether a contractual right to funding

           exists requires an additional step, in which a pension fund must prove that it has “vested

           contractual rights to *** funding levels.” People ex rel. Sklodowski v. State, 182 Ill. 2d 220,

           231 (1998). This level of proof requires “citing specific language in the [Code] that

           demonstrates a legislative intent to establish a contractual right to funding.” Board of

           Trustees of the Riverdale Police Pension Fund v. Village of Riverdale, 2014 IL App (1st)

           130416, ¶ 38.

¶ 125          While the trial court found that both (1) a constitutional and (2) a contractual right were

           based on the constitution, the trial court found that (3) a statutory right was derived directly

           from the Code itself. The trial court specified that, even if a statute does not create vested

           rights, the statute can still create a legal obligation that a party must follow.

¶ 126                            1. CONSTITUTIONAL RIGHT TO FUNDING

¶ 127          The trial court focused on whether pension funds, in general, have a constitutional right

           to funding, and found, based on Riverdale, 2014 IL App (1st) 130416, and Sklodowski, 182

                                                          35
        No. 1-15-3074

            Ill. 2d 220, that they do not have that right. Rather, the trial court found that pensioners have

            a right to receive benefits from a pension fund once their interest vests. As a result, the trial

            court found that a fund cannot demand funding unless the fund is “on the verge of default or

            imminent bankruptcy *** such that pension benefits were being impaired.” (Internal

            quotation marks omitted.) Riverdale, 2014 IL App (1st), ¶ 31. However, the trial court

            observed that “by the time that a pension fund is on the verge of default, the deficiency in the

            pension payments is certain to be quite large and the likelihood of the public employer’s

            ability to pay is certain to be quite small.”

¶ 128           The trial court then attempted to determine whether this Pension Fund was or was not on

            the verge of default or imminent bankruptcy but, in the end, the trial court left that decision

            for a higher court 7 to determine because “[n]o court in this State ha[d] yet” made this ruling:

                        “In this case, [Harvey] is undoubtedly in a state of near crisis. The parties have

                        produced ample discovery and deposition testimony describing the deficient

                        payments by Harvey over the years. If Harvey continues to underfund and often

                        contribute zero or minimal dollars to the Fund, it will most certainly be at risk of

                        denying benefits within the next five to ten years. However, throughout Illinois,

                        municipalities, police and firefighters’ pension funds are underfunded. ***

                        Harvey points out that many other municipal pension funds are severely

                        underfunded. For example, as of fiscal year 2012, the Chicago Firefighters’

                        Pension was 24.4% funded, the Downstate Fire Pension was 55.5% funded, and

                        the Village of Stone Park’s Police Pension was 7% funded. No court in this State

                        has yet equated these funding deficiencies with a constitutional violation. Thus,

                7
                On January 11, 2016, the trial court stated: “hopefully the appellate court can consider it because
        may[be] this is the case in which the standard for *** [on the verge] is met.”
                                                            36
        No. 1-15-3074

                        this Court concludes that the severe underfunding of the Fund in this case does

                        not equate with the ‘verge of default or imminent bankruptcy’ necessary to find a

                        constitutional violation.”

¶ 129         In addition, the trial court observed (1) that Joseph Letke is no longer Harvey’s

           comptroller, (2) that the Harvey Police Pension Fund was recently awarded a $7 million

           judgment against Harvey for underfunding, and (3) that the Code now includes a provision

           that allows the Pension Board to bring an action to collect a portion of the deficiency directly

           from the state. 40 ILCS 5/4-118(b-5) (West 2014). Taking these things together, the trial

           court found that, although Harvey’s finances were “in sorry shape,” this evidence did not rise

           to the level necessary to “meet this draconian ‘verge of default or imminent bankruptcy’

           standard.”

¶ 130                             2. CONTRACTUAL RIGHT TO FUNDING

¶ 131         The trial court found that the “Code itself does not create any contractual right to a

           certain level of funding.” In reaching this finding, the trial court determined that it would

           presume 8 that the law did not intend to create a contractual right, so that a plaintiff has the

           burden of proving specific language within the Code, which establishes the legislature’s

           intent to create a contractual right. Based on this presumption, the trial court found that the

           Pension Board did not fulfill the high burden necessary to prove it had a contractual right to

           funding based on the Code.

¶ 132                               3. STATUTORY RIGHT TO FUNDING

¶ 133         The trial court found that the Code did provide an enforceable statutory right to funding.

           In reaching this conclusion, the trial court drew a line between the state and the individual

              8
               The legal support for this presumption is discussed later in this opinion at infra ¶ 170.
                                                           37
        No. 1-15-3074

           municipalities. Citing Sklodowski, the trial court examined a situation where the state

           legislature amended the funding requirements for an employee pension plan, as it is legally

           allowed to do. 182 Ill. 2d at 231. The trial court explained that “[a]lthough one might wish

           the legislature would acknowledge when it enacts legislation replacing previous statutory

           funding requirements, absent some contractual right or constitutional prohibition, the

           legislature retains the power to change such statutory policies by amendment.”

¶ 134         In contrast to the State legislature, the trial court found that a municipality does not have

           the authority to amend or ignore a state statute. A city is required to levy “a tax at a rate

           which will produce a sum sufficient to satisfy the annual requirements of the *** pension

           fund.” People ex rel. Sweet v. Central Illinois Public Service Co., 48 Ill. 2d 145, 156-57

           (1971). The trial court found that the state legislature did not intend to remove all discretion

           from the municipality in setting the levy every year. However, the state legislature intended

           for the municipality to set that levy in accordance with the Code. In sum, the trial court

           concluded:

                        “while the statutory formula set forth in section 4-118(a) leaves Harvey some

                        discretion and the Illinois legislature retains the power to alter such a formula

                        through legislative action, Harvey must comply with the [Code] in effect for any

                        given year. There can be no dispute that Harvey has completely failed to do this

                        and that the discretion afforded [Harvey] has been completely abused.”

           The trial court found that Harvey had not followed the statutory formula and provided

           “absolutely no justification or formula to support the amount of its levy or its contribution for

           any fiscal year at issue in this case.” For these reasons, the trial court found that Harvey

           violated the Pension Fund’s statutory right as provided in the Code.

                                                        38
        No. 1-15-3074

¶ 135         Based on the violation of the Pension Fund’s statutory rights, the trial court granted the

           Pension Board’s request for declaratory judgment and injunctive relief. However, the trial

           court denied its request for a writ of mandamus. In calculating damages, the trial court

           determined “that, if Harvey had actually funded the full amount in any fiscal year, the

           actuarial requirement in the following year would be lower because the unfunded liability

           would be lower.” The trial court assessed damages of $10,009,403 against Harvey.

¶ 136         C. MOTION TO COMPEL ENFORCEMENT OF THE SETTLEMENT AGREEMENT

¶ 137         With respect to the settlement agreement, the trial court first examined Harvey’s

           affirmative defenses, which included claims that the settlement agreement is void and that the

           Pension Board waived its right to sue for enforcement of the settlement agreement. As to

           whether the agreement is void, the trial court found that the settlement agreement was simply

           a mirror of Harvey’s statutory obligations pursuant to the Code. Therefore, because there is

           no illegal or unlawful purpose contained within it, the Pension Board has “every right to

           enforce, enjoin or enter into an agreement on behalf of the [Pension] Fund to compel

           Harvey’s compliance with the law.”

¶ 138         Next, Harvey argued that the Pension Board waived its right to enforce the settlement

           agreement, in that the Pension Board “lulled” Harvey into a false sense that the Pension

           Board would not be enforcing strict compliance with the settlement agreement. The trial

           court determined that, because Harvey’s finances “were in complete disarray for much of the

           period at issue,” that the Pension Board could not have known how much Harvey owed it

           because Harvey did not even know how much it was collecting in property taxes each year.

           Further, the trial court found that, “[g]iven the chaotic state of Harvey’s finances, the

                                                      39
        No. 1-15-3074

           [Pension] Board’s failure to take action prior to filing this lawsuit in 2010 comes nowhere

           close to an intentional relinquishment of a known right.”

¶ 139         The trial court then examined Harvey’s argument that, because it collected less than it

           levied in property taxes, it was justified in not contributing the money to the Pension Fund.

           Harvey argues that it levied $2,953,070 for the Pension Fund, but that it collected $4,993,822

           less than its total levy. As such, the trial court had to determine whether Harvey was allowed,

           under the Code, to attribute the entirety of this deficiency to a single levy, namely the

           Pension Fund. The trial court found that, “under the Settlement Agreement, Harvey is

           entitled to attribute a proportionate amount of the deficiency in its collections to the Pension

           Fund. It is required now to pay in damages the specific amounts levied for the Pension Fund

           in fiscal years 2008, 2009 and 2010, less the percentage of that amount that represents the

           deficiency in collections of taxes for that fiscal year and also less any amount already

           contributed.”

¶ 140         Additionally, the trial court found that the settlement agreement required that a

           percentage of the personal property replacement taxes that Harvey collected should have

           been contributed to the Pension Fund. Therefore, Harvey owed the Pension Fund 12.2% of

           all the personal property replacement taxes that Harvey received during the relevant years.

           Therefore, the trial court found that Harvey owed the Pension Fund $809,892 in unpaid

           personal property replacement taxes.

¶ 141                            D. TRIAL COURT’S DAMAGE FINDING

¶ 142         The trial court entered a judgment against Harvey for $10,009,403 in damages, plus

           $809,892 in unremitted personal property replacement taxes, plus an amount to be decided

           for unlevied taxes for the Pension Fund for the fiscal years of 2008, 2009, and 2010.

                                                       40
        No. 1-15-3074

           Additionally, the trial court granted declaratory judgment and injunctive relief. The court set

           a date to determine the exact terms of the damages and to discuss the language that would

           control the injunction.

¶ 143         IX. MOTIONS TO CALCULATE DAMAGES AND DETERMINE INJUNCTION

                                                LANGUAGE

¶ 144         Due to the complexity of the case, the trial court allowed each party to prepare a motion

           regarding the total costs of the suit and the language of the injunction. The Pension Board

           filed a motion seeking an additional award of costs for $12,526.46, plus five-percent pre-

           judgment interest and six-percent postjudgment interest on the total damages. On August 17,

           2015, Harvey filed its response to the motion.

¶ 145         On September 22, 2015, the trial court issued its final damages order. The trial court

           found that the Pension Board was not entitled to pre-judgment interest in accordance with

           section 2 of the Interest Act (815 ILCS 205/2 (West 2014)). However, the trial court did find

           that the Pension Board “is entitled to judgment against [Harvey] in the amount of

           $11,561,117.00 plus six percent (6%) postjudgment interest” in accordance with section 2-

           1303 of the Code of Civil Procedure. 735 ILCS 5/2-1303 (West 2014). Additionally, the trial

           court found that the Pension Board was entitled to an additional $2,694,000 “plus six percent

           postjudgment interest as a lesser included amount of the $1,561,117.00 in damages due to the

           Pension Board on its statutory claim and will only become relevant if the award of damages

           on the statutory claim is disturbed on appeal.” See 735 ILCS 5/2-1303 (West 2014). Further,

           the trial court found that the Pension Board was entitled to $809,892 plus six percent

           postjudgment interest for unremitted personal property replacement taxes. See 735 ILCS 5/2-

           1303 (West 2014).

                                                       41
        No. 1-15-3074

¶ 146         Also on September 22, 2015, the trial court issued its final injunctive order. This

           injunction required Harvey to “fully comply with the funding formula set forth in [section 4-

           118(a) of the Code], as that provision may be amended from time to time.” Additionally, the

           injunction requires that, starting with the May 1, 2015 fiscal year, and every fiscal year

           thereafter, Harvey shall “annually approve a line-item property tax levy specifically for the

           [Pension Fund] as part of its annual property tax levy ordinance that must be approved and

           submitted to the Cook County Clerk’s Office on or before the last Tuesday in December of

           each year.” Further, that line-item property tax for the Pension Fund “shall equal a sum

           sufficient to meet the ‘annual actuarial requirements’” as provided for in the Code.

¶ 147         The trial court specifically found that the line-item property tax levy for the Pension Fund

           must be listed on the annual property tax levy ordinance to ensure that the Cook County

           Clerk’s Office remits the funds directly to the Pension Fund rather than to Harvey’s general

           fund. If, however, the funds are remitted to Harvey’s general fund, Harvey shall remit those

           funds to the Pension Fund within fourteen days of receipt.

¶ 148         Additionally, on January 11, 2016, the trial court, during its final hearing on the case

           made the following statements:

                        “I will say for the record, for what it’s worth—I’ll say two things for the record.

                        One is I think this case is just tragic on both sides and sort of a microcosm of

                        what’s going on with the pensions throughout the state and, you know, sort of an

                        on steroids [sic] kind of way in terms of the inability of the municipality to meet

                        the requirements that—to meet its promises. And I completely believe you,

                        counsel, that it’s not like you’re spending money on frivolous things, you know.

                        And I—so I just think it’s tragic.

                                                         42
        No. 1-15-3074

                        And I do think that, perhaps, and I don’t know, I mean, I’m glad you got this

                        stuff in the record and hopefully the appellate court can consider it because

                        may[be] this is the case in which the standard for *** [on the verge of bankruptcy

                        or imminent default] is met because everything that you predicted was going to

                        happen has, unsurprisingly, in fact, happened. And, you know, the reality of these

                        people ever getting paid under their pension is certainly at issue.

                        However, I think there was an obligation to make the funding even before then.

                        So let’s see what the appellate court has to say both about the stay and about the

                        merits, but I am not going to grant the stay because I just don’t think I have

                        jurisdiction.”

¶ 149                                            X. THE APPEAL

¶ 150         On October 22, 2015, Harvey filed a notice of appeal, seeking (1) partial reversal of the

           May 24, 2013, order, (2) partial reversal of the August 23, 2013 order, (3) partial reversal of

           the June 25, 2015, order and opinion, (4) reversal of the September 22, 2015, corrected

           injunctive order, (5) reversal of the September 22, 2015, corrected damages order, and (6)

           reversal of all other orders entered in the case and which resulted in the prior orders. In

           response, on October 30, 2015, the Pension Board filed a notice of cross-appeal seeking (1)

           partial reversal of the August 23, 2013, order denying the Pension Board’s motion to strike

           affirmative defenses I and II, (2) partial reversal of the June 25, 2015, order and opinion

           denying count II for a writ of mandamus and finding that the Pension Fund is not on the

           verge of default or imminent bankruptcy, and (3) other relief the court deems necessary.

¶ 151         This appeal followed.

                                                         43
        No. 1-15-3074

¶ 152                                            ANALYSIS

¶ 153         Both parties have presented multiple issues for this court’s determination on appeal. The

           issues raised on appeal include (1) whether the trial court's determination that the Pension

           Fund is not on the verge of default or imminent bankruptcy was correct, (2) whether the trial

           court correctly determined that Harvey violated the Pension Fund’s statutory rights, (3)

           whether the trial court correctly determined that Harvey breached the 1996 settlement

           agreement, (4) whether the trial court correctly calculated the damages, and (5) whether the

           trial court correctly rejected Harvey’s affirmative defenses of separation of powers and

           laches.

¶ 154         For the following reasons, we affirm in part and reverse in part the trial court’s findings.

           We affirm the trial court’s findings on issues (2), (3), (4), and (5) in finding that Harvey

           violated the Pension Fund’s statutory rights, that Harvey did violate the 1996 settlement

           agreement; that the trial court’s calculation of damages is correct, and that Harvey’s

           affirmative defenses were correctly rejected. However, we reverse the trial court’s finding

           that the Pension Fund is not on the verge of default due to the blatant disregard for financial

           responsibility shown by Harvey towards the pension fund.

¶ 155         This court’s findings in this regard are discussed below.

¶ 156         I. THE PENSION FUND IS ON THE VERGE OF DEFAULT OR IMMINENT

                                               BANKRUPTCY

¶ 157         The trial court specifically asked the appellate court to set the standard for what qualifies

           as on the verge of default or imminent bankruptcy. There is very little case law or

           interpretation as to what, exactly, the framers of the Illinois Constitution intended when they

           used this phrase.

                                                       44
        No. 1-15-3074

¶ 158          To understand the meaning of ‘on the verge of default or imminent bankruptcy,’ a

           historical review of the Illinois Constitutional Convention is necessary. First, pension

           benefits are protected by article XIII, section 5 of the Illinois Constitution. This section

           provides: “Membership in any pension or retirement system of the State, any unit of local

           government or school district, or any agency or instrumentality thereof, shall be an

           enforceable contractual relationship, the benefits of which shall not be diminished or

           impaired.” Ill. Const. 1970, art. XIII, § 5.

¶ 159          In reviewing the record of the proceedings of the Sixth Illinois Constitutional

           Convention, Delegate Kinney, who sponsored section 5, stated that the terms “enforceable”

           and “impaired” should be interpreted as follows:

                            “To establish the record as to intent, I should just like to briefly say that the

                        word ‘enforceable’ is meant to provide that the rights so established shall be

                        subject to judicial proceedings and can be enforced through court action. The

                        word ‘impaired’ is meant to imply and to intend that if a pension fund would be

                        on the verge of default or imminent bankruptcy, a group action could be taken to

                        show that these rights should be preserved.” (Emphasis added.) 4 Record of

                        Proceedings, Sixth Illinois Constitutional Convention 2926 (hereinafter, Record

                        of Proceedings)..

           Additionally, Delegate Kinney defined the word “diminished”:

                        “Benefits not being diminished really refers to this situation: If a police officer

                        accepted employment under a provision where he was entitled to retire at two-

                        thirds of his salary after twenty years of service, that could not subsequently be

                        changed to say he was entitled to only one-third of his salary after thirty years of

                                                          45
        No. 1-15-3074

                        service, or perhaps entitled to nothing. That is the thrust of the word ‘diminished.’

                        It was not intended to require 100 percent funding or 50 percent or 30 percent

                        funding or get into any of those problems, aside from the very slim area where a

                        court might judicially determine that imminent bankruptcy would really be

                        impairment.” 4 Record of Proceedings 2929.

¶ 160                              A. ILLINOIS SUPREME COURT CASES

¶ 161                   (1) People ex rel. Illinois Federation of Teachers v. Lindberg, 1975

¶ 162         A few years after the new constitution was ratified, our Illinois Supreme Court

           considered a case involving multiple class action lawsuits by members of several teachers’

           pension funds (Teachers). People ex rel. Illinois Federation of Teachers v. Lindberg, 60 Ill.

           2d 266, 268 (1975). The Teachers sought declaratory relief claiming that an appropriation

           reduction by the governor of three pension funds that the Illinois General Assembly had

           appropriated monies for was unconstitutional. Lindberg, 60 Ill. 2d at 268. The Governor had

           reduced the total appropriation amount from $330,215,000 to $143,190,000. Lindberg, 60 Ill.

           2d at 269.

¶ 163         The Teachers argued that section 5 of the Constitution “create[d] a contractual

           relationship between the State and participants in the pension systems which the Governor

           may not infringe by use of his power to reduce or veto appropriations.” Lindberg, 60 Ill. 2d at

           271. In examining the debates of the constitutional convention, the supreme court determined

           that the framers did not intend to “require a specific level of pension appropriations during a

           fiscal period.” Lindberg, 60 Ill. 2d at 272. Specifically regarding whether the Teachers had a

           contractual right to the initially appropriated monies, the supreme court found: “ ‘[i]t has

           long been settled that compulsory participation in a statutory pension plan confers no vested

                                                         46
        No. 1-15-3074

           rights, thus permitting amendment, change or repeal as the legislature sees fit.’ ” Lindberg,

           60 Ill. 2d at 273 (quoting Bergin v. Board of Trustees of the Teachers’ Retirement System, 31

           Ill. 2d 566, 574 (1964)). For this reason, the supreme court determined that the Teachers

           possessed no contractual right by statute to challenge appropriation reductions, and have only

           contractual rights to their pension under the facts of that case. Lindberg, 60 Ill. 2d at 275.

¶ 164                                     (2) McNamee v. State, 1996

¶ 165         Twenty years later, in McNamee v. State, 173 Ill. 2d 433 (1996), our Illinois Supreme

           Court examined an amendment to the Code, which changed the funding scheme for pension

           funds. McNamee, 173 Ill. 2d at 435-36. The plaintiffs claimed that this amendment violated

           section 5 of the constitution because “it will allow municipalities to contribute lower initial

           annual contributions to the police pension funds, thereby making the funds less secure.”

           McNamee, 173 Ill. 2d at 436-37. Relying on the constitutional convention transcript, the

           defendant argued that section 5 “only protects pension benefits and does not require any

           particular method of funding.” McNamee, 173 Ill. 2d at 437.

¶ 166         In a detailed analysis of the constitutional convention transcript, the supreme court found

           that the framers intended “only to put state and municipal governments on notice that they

           may not abandon their pension obligations on the belief that such payments were gratuities.

           The clearly expressed intention of the framers was to protect public pension benefits, but not

           to control funding.” McNamee, 173 Ill. 2d at 444. Based on this reasoning, the supreme court

           reaffirmed its commitment to invalidate amendments to the Code only if the amendment

           diminished benefits. McNamee, 173 Ill. 2d at 445. Since the amendment did not diminish the

           plaintiff’s right to receive pension benefits and did not place the pension fund on the verge of

                                                         47
        No. 1-15-3074

           default or imminent bankruptcy, the supreme court upheld the amendment. McNamee, 173

           Ill. 2d at 446-47.

¶ 167                             (3) People ex rel. Sklodowski v. State, 1998

¶ 168          A few years later, five plaintiffs from five separate state pension systems sued, alleging

           that Illinois was not in compliance with the funding provisions contained in the Code. People

           ex rel. Sklodowski v. State, 182 Ill. 2d at 223. The defendants moved to dismiss because the

           claim required a judicial order to appropriate money to the pension fund which, the

           defendants argued, would violate the separation of powers clause of the Illinois Constitution.

           Skodowski, 182 Ill. 2d at 224.

¶ 169          Our supreme court found that there is a presumption that “laws do not create private

           contractual or vested rights, but merely declare a policy to be pursued until the legislature

           ordains otherwise.” Skodowski, 182 Ill. 2d at 231. Therefore, “[a] party asserting that a law

           creates a contractual right bears the burden of overcoming this presumption.” Skodowski, 182

           Ill. 2d at 232. As a result, the supreme court affirmed its holding in Lindberg, 60 Ill. 2d 266,

           which found that the Code does not establish a vested contractual right to statutory funding

           levels.

¶ 170          Next, the Skodowski plaintiffs argued that their benefits were at risk of being diminished.

           Skodowski, 182 Ill. 2d at 232. The supreme court found that the plaintiffs had “alleged only

           an opinion that present funding levels are insufficient, from a prudential standpoint, to meet

           the accrued future obligations of the funds. The claims contain no factual allegations that

           would support a finding that the funds at issue are ‘on the verge of default or imminent

           bankruptcy’ such that benefits are in immediate danger of being diminished.” (Emphasis

           added.) Skodowski, 182 Ill. 2d at 233. For these reasons, the supreme court determined that

                                                       48
        No. 1-15-3074

           the plaintiffs neither had a vested contractual right or a constitutional right to enforce

           statutory funding levels under the facts of that case. Skodowski, 182 Ill. 2d at 233.

¶ 171                         (4) In re Pension Reform Litigation (Heaton), 2015

¶ 172         In the Heaton case, our Illinois Supreme Court was asked to determine the

           constitutionality of an amendment (Pub. Act 98-599 (eff. June 1, 2014)) to the Code. Heaton,

           2015 IL 118585, ¶ 1. This amendment reduced the retirement annuity benefits for four of the

           five main Illinois state-funded pension funds. Heaton, 2015 IL 118585, ¶ 1.

¶ 173         In discussing contributions, the supreme court highlighted Delegate Green’s comments

           during the Illinois Constitutional Convention, in which he stated that section 5 protects public

           pensions by mandating a contractual relationship between the employee and the employer

           and ensuring that the state cannot impair or diminish pensioners’ right to receive their

           benefits. Heaton, 2015 IL 118585, ¶ 15. However, the supreme court notes that Delegate

           Green’s hope that this constitutional provision would induce the General Assembly to fund

           the pensions was unfulfilled. Heaton, 2015 IL 118585, ¶ 17. In quoting a Securities and

           Exchange Commission cease and desist action, the court found that Illinois has been funding

           its pensions using an approach that had no relation to actuarial calculation of liability.

           Heaton, 2015 IL 118585, ¶ 17.

¶ 174         Nonetheless, in 1995, the General Assembly passed a funding plan that “called for the

           legislature to contribute sufficient funds each year to ensure that its contributions, along with

           the contributions by or on behalf of members and other income, would meet the cost of

           maintaining and administering the respective retirement systems on a 90% funded basis in

           accordance with actuarial recommendations by the end of the 2045 fiscal year.” Heaton,

           2015 IL 118585, ¶ 19. However, “[b]y the end of June 2013, the five State-funded retirement

                                                        49
        No. 1-15-3074

           systems contained a total of only 41.4% of the funding necessary to meet their accrued

           liabilities based on the market value of fund assets.” Heaton, 2015 IL 118585, ¶ 21 (citing

           Commission on Government Forecasting & Accountability, Illinois State Retirement

           Systems: Financial Condition as of June 30, 2013, at 27 (Mar. 2014)).

¶ 175         Due to the problems facing the state-sponsored retirement systems, the General Assembly

           passed an amendment to the Code, which was the subject of the appeal. Heaton, 2015 IL

           118585, ¶ 25. Although there are many pieces to this amendment, the biggest section at issue

           was a “comprehensive set of provisions designed to reduce annuity benefits for members ***

           entitled to Tier 1 benefits, i.e., members who belonged to those systems prior to January 1,

           2011.” Heaton, 2015 IL 118585, ¶ 27. As a result, the plaintiffs filed suit alleging that,

           among other things, the amendment violated article XIII, section 5 of the Illinois

           Constitution. Heaton, 2015 IL 118585, ¶ 35.

¶ 176         Our supreme court found that, under section 5, members of a pension have a “legally

           enforceable right to receive the benefits they have been promised.” Heaton, 2015 IL 118585,

           ¶ 46. “[O]nce an individual begins work and becomes a member of a public retirement

           system, any subsequent changes to the Pension Code that would diminish the benefits

           conferred by membership in the retirement system cannot be applied to that individual.”

           Heaton, 2015 IL 118585, ¶ 46. As such, the supreme court found that this amendment would

           result in the diminishment of the pensioners’ pension benefits; therefore, it was in violation

           of the Illinois Constitution. Heaton, 2015 IL 118585, ¶ 47. Hannigan v. Hoffmeister, 240 Ill.

           App. 3d 1065 (1992); Kuhlmann v. Board of Trustees of Police Pension Fund of Maywood,

           106 Ill. App. 3d 603 (1982); Thompson v. Retirement Board of Policemen's Annuity &

                                                      50
        No. 1-15-3074

           Benefit Fund of City of Chicago, 379 Ill. App. 3d 498 (2008); In re Marriage of Winter, 387

           Ill. App. 3d 21 (2008).

¶ 177                   B. “VERGE OF DEFAULT OR IMMINENT BANKRUPTCY”

¶ 178          As is apparent, neither the Illinois constitutional framers nor the Illinois Supreme Court

           have completely defined what qualifies as “on the verge of default or imminent bankruptcy.”

           The framers established the standard in reference to section 5, and the supreme court has

           referenced the standard in multiple cases; however, the standard has never been applied to a

           ‘real-world’ case to find that a fund is on the verge of default or imminent bankruptcy. Nor,

           as far as this court is aware, has any Illinois court ever found a pension fund to have fallen so

           far as to have satisfied this “draconian” standard, as the trial court referred to it.

¶ 179          The best indication of a drafter’s intent is the language that he chose to use, as given its

           plain and ordinary meaning. See People v. Davidson, 233 Ill. 2d 30, 40 (2009). When a

           drafter uses terms that are otherwise undefined, “it is entirely appropriate to employ a

           dictionary to ascertain the plain and ordinary meaning of those terms.” Davidson, 233 Ill. 2d

           at 40. Therefore, in order for this court to determine what “on the verge of default or

           imminent bankruptcy” means, we first look to the dictionary. “Verge” is defined as

           “sink[ing] to a point.” Verge, Webster’s Third New International Dictionary, 2543 (1971).

           “Default” means “to fail to fulfill an obligation,” and “imminent” means “ready to take

           place.” Default, Webster’s Third New International Dictionary, 590 (1971).

¶ 180          The Pension Fund is not ready to file bankruptcy, nor are its beneficiaries ready to file

           bankruptcy because they are still being paid. So in our analysis, we must determine whether

           the subject pension fund is on the verge of default. In Skodowski, our supreme court

           instructed that, to support a finding that the funds are on the verge of default (or imminent

                                                          51
        No. 1-15-3074

           bankruptcy), the benefits must be “in immediate danger of being diminished.” Skodowski,

           182 Ill. 2d at 233. This court finds that the fund-supported benefits are already impaired and

           shortly they will be diminished because the benefits are being supported primarily by the

           contributions of the firefighters. In other words, when a firefighter makes a contribution to

           the Pension Fund, that current firefighter expects that his money and the money contributed

           by Harvey will be available to him at his retirement. Without Harvey's contribution, there

           will be no pension for him in the future or his pension will be substantially diminished within

           a short time. We look at certain factors in evidence in this case in making that determination.

¶ 181         First, we look at what the pension fund’s financial history reveals. We start that history in

           2005 because the evidence in this case starts with figures from 2005. In 2005 and 2006,

           Harvey did not levy for the Pension Fund but in 2005 paid $9,885.00 into the Fund and

           $38,304.00 in 2006. However, what is revealing is that the Pension Fund paid out

           $1,435,138.00 in 2005 and $1,502,894.00 in 2006.

¶ 182         In 2007, Harvey levied for $480,632.00 and paid into the Pension Fund $615,407.00,

           while paying out $1,633,677.00. In 2008 and 2009, Harvey levied for $1,061,219.00 in each

           year and paid $771,471.00 into the Pension Fund in 2008 and $18,181.00 in 2009, while

           paying out $1,740,481.00 in 2008 and $1,761,830.00 in 2009. In 2010, Harvey levied

           $350,000.00 and paid $5,143.00 into the Pension Fund, while paying out $1,812,963.00. In

           2011, 2012, and 2013, Harvey failed to levy for the Pension Fund and paid in nothing each

           year but paid out $1,827,420.00 in 2012 and $1,879,693.00 in 2013. 9

¶ 183         If this trend continues, the Pension Fund will be paying out increased benefits each year

           and receiving nothing in contributions from Harvey. As noted, the Pension Fund is surviving

              9
               The briefs do not disclose what was paid out in 2011.
                                                         52
        No. 1-15-3074

           on the contributions paid into the plan by the firefighters and the interest and other money

           received on the funds invested. Once the funds in the pension are diminished to a point, the

           fund will not be able to pay benefits and that point can be in less than five years, and there

           will be a point where the Fund will be so diminished that Harvey could never contribute

           enough money to make the Fund a viable pension plan again.

¶ 184         Based on the expert testimony, we find that the Pension Fund is in a precarious position.

           Jon Willhitte, the Pension Fund’s financial consultant since the 1980s, opined in his

           testimony that the Pension Fund is being forced to sell assets to pay the beneficiary’s current

           pension benefits. Willhitte testified that, if the tax levy is not reinstated, the Pension Fund is

           going to experience “dire, dire problems.” Willhitte opined that the Pension Fund is being

           forced to sell assets to pay the beneficiaries, and that the time when there is no money left in

           the plan is shorter than the life expectancy of the retirees. Calene Zabinski, a CPA who works

           as a financial director and treasurer for various municipalities across the state, testified that

           “the continued underfunding, coupled with that increase in the rate of pay higher than

           actuarial assumption, eventually will get to the point where [Harvey] is going to have to pay

           for the pensioners.” James Ritchie, a CPA who worked directly with the Pension Fund, was

           concerned for the Fund’s financial viability. He testified:

                        “With statutorily required increases in benefits being paid out as well as the

                        expenses and then the lack of municipal funding that is coming in, it looks that the

                        assets are slowly being depleted to pay out benefits as required by statute.

                        Without municipal funding I would say, in an estimation, the [Pension Fund] will

                        begin to have difficulty paying out benefits by the end of this decade.”

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        No. 1-15-3074

           Ritchie testified that Harvey collected approximately $400,000 on behalf of the Pension Fund

           but paid none of those funds between 2007 and 2013. As of March 4, 2015, the Pension Fund

           had only $10,936,532.72 in assets. According to the most recent actuarial valuation, the

           Pension Fund was only 27.18% funded as of May 1, 2014, and the Pension Fund’s unfunded

           accrued liability has increased to nearly $30 million.

¶ 185         Second, we look at Harvey’s financial condition. The evidence has revealed that Harvey

           has gone without an audit or the filing of an annual financial report for a number of years.

           Specifically, Harvey has not undergone an audit for the fiscal years 2010, 2011, 2012, or

           2013. Maggie Britton, one of the two comptrollers for Harvey, testified that, since Harvey

           has not obtained audits, they cannot complete their annual financial reports. Britton further

           testified that Harvey received $805,674.00 in personal property replacement taxes for 2007,

           $888,081.00 for 2008, $778,539.00 for 2009, $649,436.17 for 2010, and $797,445.69 for

           2011, but Harvey failed to contribute any of the personal property replacement tax revenue to

           the pension fund during these years. In addition, Harvey appropriated monies for the Pension

           Fund that were not paid: $300,000.00 annually in 2005 and 2006, $1,180.63 in 2007,

           $197,000.00 in 2008, $1,161,219.00 in 2009, $1,161,219.00 in 20101, $0 in 2011,

           $480,000.00 in 2012, $450,000.00 in 2013, and $1,781,542.00 in 2014.

¶ 186         The evidence further disclosed that Joseph Letke, the official comptroller for Harvey

           since 2003, invoked his Fifth Amendment privilege against self-incrimination 178 times and

           refused to answer questions concerning Harvey’s financial conditions regarding (1)

           fraudulent and misleading bond offerings, (2) a developer who collected bond proceedings

           from Harvey then fled to India, (3) the accusation that Letke collected fees from both Harvey

           and the developer that fled to India, (4) why each Harvey alderman had an $80,000

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        No. 1-15-3074

           unmonitored expense account, (5) why Harvey paid an alderman’s son $325 an hour for

           snow removal, and (6) why Harvey paid the mayor’s son $88,000 to develop a social media

           website. In addition, the U.S. Securities and Exchange Commission filed a complaint against

           Harvey and Letke, claiming misuse of proceeds raised from investors in municipal bonds

           issued by Harvey from 2008 to the present and that the bond money was used for a Holiday

           Inn hotel in Harvey and not for a governmental purpose. The complaint further alleged that

           “Harvey officials improperly diverted at least $1.7 million of bond proceeds from these

           offerings into the general operation accounts of Harvey to pay [Harvey’s] operation costs,

           including payroll.”

¶ 187             Third, we look at whether Harvey intends to correct the pension deficit in the future.

           Harvey has provided no plan to correct its handling of this penson crisis. Harvey has a

           complete lack of accountability now and in the past, and asserts that the Pension Fund’s

           hemorrhaging of money is not in any way its fault.

¶ 188             Harvey relies heavily on the case of Riverdale to establish that the Pension Fund is not on

           the verge of default or imminent bankruptcy. 2014 IL App (1st) 130416. The case at bar is

           readily distinguishable from Riverdale, where the Riverdale Police Pension Fund (Police

           Fund) filed a suit seeking a declaratory judgment that the Village of Riverdale (Riverdale)

           had “breached its statutory funding obligations under [the Code] by failing to levy the

           appropriate taxes for pension contributions from 2000 to 2010.” Riverdale, 2014 IL App (1st)

           130416, ¶ 7. The Police Fund alleged that Riverdale had failed to follow the Illinois

           Department of Insurance recommended tax amounts “necessary to meet the municipal

           contribution requirements provided by the [Code].” Riverdale, 2014 IL App (1st) 130416,

           ¶ 8.

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        No. 1-15-3074

¶ 189          Riverdale admitted that it owed the Police Fund money and that, between 2003 and 2010,

           it admitted that Riverdale did not follow the tax levy issued by the Illinois Department of

           Insurance. Riverdale, 2014 IL App (1st) 130416, ¶ 9. Additionally, Riverdale admitted the

           following: “(1) for 2003, the 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.” Riverdale, 2014 IL App

           (1st) 130416, ¶ 9.

¶ 190          Both the Police Fund and Riverdale filed motions for summary judgment. Riverdale,

           2014 IL App (1st) 130416, ¶¶ 10-11. The trial court granted Riverdale’s motion for summary

           judgment and the Police Fund appealed. Riverdale, 2014 IL App (1st) 130416, ¶ 13. On

           appeal, this court, in a well-written opinion by Justice Lampkin, found that the Police Fund

           “did not provide evidence, nor even allege, the Pension Fund was on the ‘verge of default or

           imminent bankruptcy.’ ” Riverdale, 2014 IL App (1st) 130416, ¶ 40 (quoting McNamee, 173

           Ill. 2d at 446-47).

¶ 191          An examination of the contributions to the Police Fund shed significant light on why

           Riverdale is distinguishable from the case at bar. In Riverdale, it is undisputed that Riverdale

           contributed the following to the Police Fund:

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No. 1-15-3074

Year            Annual Actuarial             Contribution         Percent of Annual
                Requirement                                       Actuarial Requirement
                                                                  Contributed
2003            $432,261                     $420,000             97.2%
2004            $473,860                     $262,940             55.5%
2005            $486,673                     $262,940             54.0%
2006            $603,772                     $280,000             46.4%
2007            $651,990                     $440,000             67.5%
2008            $754,607                     $440,000             58.3%
2009            $849,300                     $440,000             51.8%
2010            $1,018,396                   $866,168             85.1%

   Riverdale, 2014 IL App (1st) 130416, ¶ 9. By contrast, when we examine the amounts

   contributed by Harvey to the Pension Fund, the differences are readily apparent:

Fiscal Year     Annual Actuarial             Contribution        Percent of Annual
                Requirement                                      Actuarial Requirement
                                                                 Contributed
2005            $876,692                     $9,885              0.01%
2006            $980,024                     $38,304             0.04%
2007            $1,060,727                   $480,632            45.31%
2008            $1,077,837                   $771,471            71.58%
2009            $1,294,791                   $18,181             1.40%
2010            $1,574,792                   $5,143              0.33%
2011            $1,611,369                   $0                  0.00%
2012            N/A                          $0                  N/A
2013            $2,036,497                   $0                  0.00%
2014            $2,070,500                   $600,000            28.98%

   Although the Police Fund in Riverdale was underfunded, it was nowhere near the level of

   underfunding exhibited in this case. Even if we remove 2012 because Harvey disputes the

   annual actuary valuation for that year, Harvey still contributed less than ten percent of the

   annual actuarial requirement six out of nine years.

                                               57
        No. 1-15-3074

¶ 192         Also, the Pension Board here presented the deposition testimony of experts in the field of

           accounting and actuary science, who opined that the Pension Fund is well on its way to

           insolvency. For example, Maggie Britton, one of Harvey’s comptrollers and a CPA, testified

           that the Pension Fund would be facing a shortfall. Jon Willhite, the Pension Fund’s financial

           consultant, testified that Harvey owes the Pension Fund more than $12 million; that, without

           a tax levy contribution, the Pension Fund will experience “dire, dire problems”; and that the

           Pension Fund is his worst funded pension fund client. James Ritchie, a CPA, testified that the

           money going out significantly exceeds the money flowing back in. Therefore, it was his

           belief that the Pension Fund has approximately five years before it could be “completely

           insolvent.” Even Sandor Goldstein, the expert hired by Harvey, testified that Harvey owed

           the Pension Fund over $10 million in accumulated contribution deficiency and provided no

           evidence or testimony that the Pension Fund has any possibility of recovery from its

           precarious position.

¶ 193         Harvey has presented no evidence that disproves that it is in financial disarray. Harvey

           does point out that Joseph Letke, its past comptroller, is no longer employed by them.

           However, Letke was employed for multiple years, allegedly issuing misleading and

           fraudulent bonds in the name of Harvey and allowing developers to flee the country with

           millions of Harvey’s dollars. Even after the public disclosures concerning Letke were

           published, he still remained as Harvey’s comptroller. Aside from these two events directly

           linked to Letke, his replacement has done nothing to put this court’s mind at ease because

           there is still the alleged issues of Harvey aldermen’s $80,000 unregulated expense accounts,

           paying the relatives of prominent city officials thousands of dollars for doing relatively

           simple tasks such as creating a social media website and shoveling snow. Harvey has

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        No. 1-15-3074

           presented no testimony and no evidence to demonstrate that it has the ability to manage its

           finances and properly fund the Pension Fund.

¶ 194         Combining the ever-decreasing assets in the Pension Fund, the consistent lack of

           contributions, and the lack of evidence to support a changing of financial habits by Harvey,

           this court is convinced that the Pension Fund is on the verge of default. To be clear, it is not

           merely the financial status of the Pension Fund that leads this court to this finding, and we

           understand that we are the first court to find in this manner. However, the compounding

           nature of the situation—including the precarious financial position of the Pension Fund based

           on multiple experts in relevant fields, the constant declarations by Harvey that it has not

           contributed to the Pension Fund’s poor financial condition, and the continued lack of

           financial responsibility shown by Harvey over a significant period of time—has convinced

           this court that this case is a perfect example of a fund on the verge of default.

¶ 195         Although it is true that pension funds do not have a right to a specific level of funding,

           the framers of the Illinois Constitution intended to put the municipalities on notice that, if

           they completely abandoned their pension obligations, then the pensioners would be able to

           sustain a constitutional claim. McNamee, 173 Ill. 2d at 444. Therefore, if pensioners can

           prove that their rights to receive pension benefits are “diminished or impaired” in a way that

           places the pension fund on the verge of default, then an action alleging a violation of

           constitutional rights will be sustained. Ill. Const. 1970, art. XIII, § 5; McNamee, 173 Ill. 2d at

           446. In order to prove that a pension fund is on the verge of default, our supreme court has

           found that the allegations must demonstrate more than “only an opinion that present funding

           levels are insufficient *** to meet the accrued future obligations of the funds.” Skodowski,

           182 Ill. 2d at 233. Rather, a plaintiff must prove that the benefits are in immediate danger of

                                                        59
        No. 1-15-3074

           being diminished or impaired. Skodowski, 182 Ill. 2d at 233; McNamee, 173 Ill. 2d at 444.

           Based on the testimony from multiple witnesses, Harvey’s blatant disregard for the Pension

           Fund over a long period of time, and the dwindling status of the Pension Fund assets, this

           court finds that the Pension Fund is on the verge of default, which establishes a valid and

           enforceable constitutional right to funding. Harvey has set up a collision course over a period

           of many years where the beneficiaries of their firefighters’ Pension Fund are being paid

           substantially out of the money that the firefighters have themselves contributed to the

           Pension Fund and the money the Pension Fund earns from investments, causing an ever

           increasing dissipation of the Pension Fund’s assets, which will result in the fund having no

           assets to pay its beneficiaries or fulfill its obligations under the fund. In essence, Harvey is

           robbing Peter to pay Paul, but what happens when Peter retires?

¶ 196                              II. STATUTORY RIGHT TO FUNDING

¶ 197         The trial court found that the Code “does create a valid and enforceable statutory right” to

           funding. We affirm the trial court’s finding that, although a municipality does retain

           discretion in the application of the Code, it must do so within the statutory formula

           determined by the Illinois legislature.

¶ 198         Illinois courts have made it clear that the Code does not create a contractual right to a

           certain level of funding. A party asserting that a statute creates a contractual right has a high

           burden of overcoming the presumption that laws do not create a contractual or vested right.

           Skodowski, 182 Ill. 2d at 231. The Illinois Supreme Court and this court have determined that

           neither the history nor the language of the Pension Code support a claim that the Code

           establishes vested contractual rights to statutory funding levels. Skodowski, 182 Ill. 2d at 232;

           Lindberg, 60 Ill. 2d at 274-75; Riverdale, 2014 IL App (1st) 130416, ¶ 38.

                                                        60
        No. 1-15-3074

¶ 199         Section 4-118 of the Pension Code states:

                  “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 firefighters and revenues

                  available from other sources, will equal a sum sufficient to meet the annual actuarial

                  requirements of the pension fund, as determined by an enrolled actuary ***. ***

                  [T]he annual actuarial requirements of the pension fund are equal to (1) the normal

                  cost of the pension fund, or 17.5% of the salaries and wages to be paid to [the]

                  firefighters for the year involved, whichever is greater, plus (2) an annual amount

                  sufficient to bring the total assets of the pension fund up to 90% of the total actuarial

                  liabilities of the pension fund by the end of municipal fiscal year 2040[.]” (Emphasis

                  added.) 40 ILCS 5/4-118(a) (West 2014).

           The word “shall” within the statute indicates that a municipality must levy a tax at a rate that

           “will equal a sum sufficient to meet the annual actuarial requirements of the pension fund.”

           40 ILCS 5/4-118(a) (West 2014). However, municipalities are allowed discretion in the

           amount it must levy to contribute to the pension fund. Board of Trustees v. City of Rockford,

           96 Ill. App. 3d 102, 108 (1981) (“While the finance and reserve sections of the [Code] are

           clearly designed to ensure the financial integrity of these pension funds, we do not believe it

           was [the legislature’s] purpose to remove all discretion from the city council in determining

           the dollar amount to be levied for these funds in any particular year ***.”); Riverdale, 2014

           IL App (1st) 130416, ¶ 36 (citing Rockford, 96 Ill. App. 3d at 108); Board of Trustees of the

           Police Pension Fund v. City of Evanston, 281 Ill. App. 3d 1047, 1051-52 (1996) (citing

           Rockford, 96 Ill. App. 3d at 108).

                                                       61
        No. 1-15-3074

¶ 200         In Skodowski and the United States Supreme Court cases that it cites, the courts have

           recognized that, where a statute does not create vested rights, it does create a legal obligation

           that must be followed until it has been revised or repealed. National R.R. Passenger Corp. v.

           Atchison, Topeka & Santa Fe Ry. Co., 470 U.S. 451, 466 (1985). The trial court in the case at

           bar made the following findings:

                           “A municipality, however, has no equivalent power to ignore or amend a state

                        statute. Indeed, the Illinois Supreme Court has long recognized that a city is

                        required ‘to levy a tax at a rate which will produce a sum sufficient to satisfy the

                        annual requirements of the … pension fund.’ People ex rel. Sweet v. Cent. Ill.

                        Pub. Serv. Co., 48 Ill. 2d 145, 156-57 (1971). In Evanston and Rockford, the

                        courts recognized that while the funding provisions of the Pension Code were not

                        intended to withdraw all discretion from local governments in determining the

                        necessary dollar amount to be levied for these funds in any particular fiscal year, a

                        municipality must comply with the requirements of the Pension Code in effect

                        when setting its levy. Evanston, 281 Ill. App. 3d at 1054; Rockford, 96 Ill. App.

                        3d at 106.

                           In short, while the statutory formula set forth in section 4-118(a) leaves

                        Harvey some discretion and the Illinois legislature retains the power to alter such

                        a formula through legislative action, Harvey must comply with the Pension Code

                        in effect for any given year. There can be no dispute that Harvey has completely

                        failed to do this and that the discretion afforded the City has been completely

                        abused.

                                                         62
No. 1-15-3074

                    During fiscal years 2011 through 2013, Harvey failed to levy or contribute

                any money whatsoever to the Fund in accordance with its obligations under

                section 4-118 of the Code. [(Emphasis in original.)] For 2005 and 2006 the City

                made some contributions but failed to specifically levy on behalf of the Pension

                Fund. This was despite the fact that section 4-118(b) provides that the tax for the

                Firefighters’ Pension Fund ‘shall be levied and collected in the same manner as

                the general taxes of the municipality, *** and shall be in addition to the amount

                authorized to be levied for general purposes ***.’ 40 ILCS 5/4-118(b).

                    In 2007, 2010 and 2014, Harvey imposed a specific levy but it was less than

                half of the amount that the AAR calculation would have suggested. This cannot

                possibly be a good faith attempt to meet the statutory requirements. In 2008 and

                2009, although Harvey apparently levied a more significant amount on behalf of

                the Fund, the testimony is devoid of any mention of the statutory formula

                proscribed by the Code. [(Citation omitted.)] Harvey had provided absolutely no

                justification or formula to support the amount of its levy or its contributions in

                any fiscal year at issue in this case.

                    Moreover when Harvey did impose a specific levy, it failed to forward the

                amounts collected to the treasurer of the Board within 30 business days of receipt

                as required by 40 ILCS 5/4-118(b). While Plaintiffs acknowledge there may be

                some difference between the amount collected and the amount levied, since taxes

                are not collected at 100% of the amount levied, the figures above make clear that

                there was no effort by Harvey to contribute to the Fund in accordance with the

                specific levied amounts. Moreover, Harvey admitted to using such funds collected

                                                   63
        No. 1-15-3074

                        on behalf of the Fund for other corporate purposes [(citation omitted)], which is

                        specifically prohibited under 40 ILCS 5/22-403. None of these facts are in

                        dispute.”

           We agree.

¶ 201         While Harvey has discretion under the Code in the amount that it distributes to the

           Pension Fund, Harvey’s conduct towards the Pension Fund has exceeded its discretionary

           authority under the Code. Based on a review of the amounts levied and contributed to the

           Pension Fund, this court fails to find any statutory formula, within the Code or otherwise,

           that Harvey has followed in its contributions. Further, Harvey has, on multiple occasions

           failed to contribute and failed to levy any money for the Pension Fund. No contributions have

           been made in 2010, 2011, 2012, or 2013. Additionally, only once since 2003 has Harvey

           contributed more than 50% of the annual actuarial requirement to the Pension Fund.

¶ 202         As explained by the trial court, “the figures *** make clear that there was no effort by

           Harvey to contribute to the [Pension] Fund in accordance with the specific levied amounts,”

           or any reasonable amounts whatsoever. (Emphasis added.) The fund is using the firefighters’

           contributions and interest payments to pay its beneficiaries.

¶ 203         Therefore, we affirm the trial court’s finding that Harvey has exceeded its discretion

           under the Code.

¶ 204         III. WHETHER HARVEY BREACHED THE 1996 SETTLEMENT AGREEMENT

¶ 205         The trial court found that Harvey was in breach of the 1996 settlement agreement in two

           respects: (1) failure to remit property taxes levied specifically for the Pension Fund and (2)

           failure to remit 12.2% of collected personal property replacement taxes to the Pension

                                                       64
        No. 1-15-3074

           Fund. 10 Additionally, the trial court found that the Pension Board had the authority to enforce

           the agreement, that the agreement was not void, and that the Pension Board did not waive its

           right to enforce the agreement. For the reasons that follow, we affirm the trial court’s

           findings.

¶ 206                       A. BREACH OF THE SETTLEMENT AGREEMENT

¶ 207          Harvey argues that People ex rel. Toman v. Chicago & Northwestern Ry. Co. supports its

           argument that it is not in breach of the settlement agreement because it experienced a

           shortfall and had to allocate its resources accordingly. 377 Ill. 547 (1941). In Toman, the city

           approved a tax levy for corporate purposes of $106,970. Toman, 377 Ill. at 548. To collect

           the full amount levied for, the city would have needed to tax at a rate significantly higher

           than what was actually taxed. Toman, 377 Ill. at 548-49. For this reason, the city collected

           only 28% of the amount levied. Toman, 377 Ill. at 549. The plaintiff argued that the levy was

           in violation of the law because it did not specify the purpose for which the taxes were

           appropriated. Toman, 377 Ill. at 549.

¶ 208          The supreme court explained: “The determination, annually, of the amounts necessary to

           be raised by taxation for corporate purposes is committed to the municipal authorities. Their

           judgment as to such amounts is final.” Toman, 377 Ill. at 550. Additionally, if a municipality

           receives less than the amount levied, the Court found that the municipality officers should

           faithfully discharge their duties to ensure the spending of monies is done in a way best suited

           for that municipality. Toman, 377 Ill. at 551-52.

¶ 209          Harvey compared the situation in Toman to its situation. Harvey argues that between

           2007 and 2010, “Harvey levied a total general corporate property tax of $31,496,517. That

               10
                  Harvey’s arguments regarding personal property replacement taxes will be covered in the
        section discussing damages. Supra ¶¶ 233-34.
                                                       65
        No. 1-15-3074

           amount included a total of $2,953,070 levied as line items for the Pension Fund. During this

           same period, Harvey collected only $26,502,965 in property taxes: a $4,993,822 deficit[.]

           Nevertheless, Harvey still paid the Pension Fund $1,410,202.” Harvey argues that, although

           it did levy money specified for the Pension Fund, the shortfall was allocated to the funds that

           were to be collected for the Pension Fund. Because this money was uncollected, Harvey

           argues that it did not breach the settlement agreement. Applying Toman, Harvey argues that

           its city officials exercised their best judgment in allocation of the monies and that these

           officials should be given a presumption “that they have done so faithfully.” Toman, 377 Ill. at

           552.

¶ 210         However, Toman is inapplicable here. Toman does allow municipal officials to allocate

           levied funds that are contributed to a general fund. Toman, 377 Ill. at 550. However, Toman

           does not discuss contractual obligations pursuant to a settlement agreement, which is the

           issue in this case. As the trial court found: “Toman does not speak to a specific levy or a

           specific contractual and statutory obligation to impose a specific levy. Certainly nothing in

           Toman suggests that Harvey was entitled to charge the entire collection deficiency to this

           specific levy. While there may be no general prohibition on a general levy, the specific levy

           utilized here, even if it was done as a part of a general levy, meant that Harvey was required

           to remit all funds received which were attributable to that specific levy.” (Emphasis added.)

¶ 211         We agree with the reasoning of the trial court. Due to the shortfall in collections on the

           levies, Harvey is entitled to charge a proportionate amount of the shortfall in 2008, 2009, and

           2010 to the Pension Fund’s levy; however, under the settlement agreement, Harvey cannot

           charge the entirety of the shortfall to the Pension Fund. As such, we affirm the lesser

           included damages of $2,694,600 for unremitted property taxes.

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        No. 1-15-3074

¶ 212         B. WHETHER THE PENSION BOARD HAS THE AUTHORITY TO ENFORCE THE

                                                AGREEMENT

¶ 213         Harvey argues that the Pension Board lacks the authority to seek enforcement of the

           settlement agreement “because the legislature did not grant it the power to bring this

           lawsuit.” To support its argument, Harvey cites sections 16-158.1 and 7-172.1 of the Code,

           which allow members of the Teachers Retirement System of Illinois [40 ILCS 5/16-158.1

           (West 2012)] and Illinois Municipal Retirement Fund [40 ILCS 5/7-172.1(a) (West 2012)]

           the power to compel the Illinois State Comptroller to redirect delinquent payments from

           funds intended for the municipality to the pension funds instead, unless there are no funds to

           be remitted to the municipality; then it allows the fund to bring an action against the

           municipality to recover the delinquent payment. 40 ILCS 5/16-158.1 (West 2014). However,

           the Code does not provide a similar provision for the Pension Fund.

¶ 214         In response, the Pension Board argues that its authority to bring the claim lies in sections

           1-101.2 and 1-115 of the Code. Section 1-115 allows a fiduciary to bring a claim for civil

           enforcement to “[e]njoin any act or practice which violates any provision of this Code; or

           *** [o]btain other appropriate equitable relief to redress any such violation or to enforce any

           such provision.” (Emphases added.) 40 ILCS 5/1-115(b)-(c) (West 2014). Section 1-101.2

           defines a fiduciary as one that “exercises any discretionary authority or discretionary control

           respecting management of the pension fund *** or exercises any authority or control

           respecting management or disposition of its assets; *** renders investment advice ***; or

           *** has any discretionary authority or discretionary responsibility in the administration of the

           pension fund.” 40 ILCS 5/1-101.2(1)-(3) (West 2014). Additionally, the Pension Board

           argues that sections 16-158.1 and 7-172.1 of the Code are not comparable because they allow

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           the pension funds to collect delinquent payments from sources other than the municipality. In

           contrast, the Pension Board is relying on section 1-115 and case law to bring a lawsuit

           alleging it is on the verge of default or imminent bankruptcy.

¶ 215         Since the Pension Board is an administrative body that is in a fiduciary relationship with

           the Pension Fund, we affirm the trial court and find that the Pension Board does have the

           authority to maintain the suit against Harvey. It is readily apparent that the Pension Board is

           a fiduciary of the Pension Fund; multiple deponents testified that the Pension Board exercises

           discretional authority or control over its assets and ensures that it is adequately managed.

           Therefore, pursuant to section 1-115(a), the Pension Board has the authority to bring an

           action to “[e]njoin any act or practice which violates any provision of this Code.” (Emphases

           added.) 40 ILCS 5/1-115(b) (West 2014).

¶ 216         Courts should attempt to give each word of a statute its reasonable meaning without

           rendering any terms superfluous. People ex rel. the Department of Labor v. Sackville

           Construction, Inc., 402 Ill. App. 3d 195, 198 (2010). Additionally, courts should “not read

           into [a] statute exceptions, limitations or conditions that the legislature did not intend.”

           Sackville Construction, 402 Ill. App. 3d at 198; People v. Roake, 334 Ill. App. 3d 504, 510

           (2002). Applying these principles, section 1-115 is clear and allows the Pension Fund to

           bring an action against a party who is conducting any act that violates any provision of the

           Code. 40 ILCS 5/115(b) (West 2014). Therefore, we affirm the trial court’s finding.

¶ 217                   C. WHETHER THE SETTLEMENT AGREEMENT WAS VOID

¶ 218         Harvey argues that the Pension Board lacked the authority to enter into the settlement

           agreement in 1996; therefore, the settlement agreement is void ab initio and cannot be

           enforced. To support its argument, Harvey cites the case of Elk Grove Township Rural Fire

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           Protection District v. Village of Mount Prospect, 228 Ill. App. 3d 228 (1992). In this case,

           Elk Grove entered into a contract with the Village of Mount Prospect to provide firefighting

           services for the district for 10 years. Mount Prospect, 228 Ill App. 3d at 230. In exchange, the

           District agreed to levy the maximum allowed amount, then turn over the revenues from that

           tax to Mount Prospect. Mount Prospect, 228 Ill. App. 3d at 230. The trial court found that

           this agreement was void ab initio because the municipality lacked the authority to enter into a

           contract to execute a blanket tax for a long period. Mount Prospect, 228 Ill. App. 3d at 232.

¶ 219            Additionally, Harvey cites the case of Ad-Ex, Inc. v. City of Chicago, in which Chicago

           had an ordinance that required signs to be set back 500 feet from expressways. 207 Ill. App.

           3d 163, 165 (1990). Chicago entered into a settlement agreement with the plaintiff that

           waived the 500-foot set back ordinance. Ad-Ex, 207 Ill. App. 3d at 166. The court, however,

           declared the settlement agreement void ab initio because it essentially waived the notice and

           hearing requirements, which Chicago could not legally do. Ad-Ex, 207 Ill. App. 3d at 172,

           75.

¶ 220            Harvey’s reliance on Mount Prospect and Ad-Ex is misplaced. In both these cases, the

           agreements the cities entered into were in violation of the law. The cities could not enter into

           a legally binding contract because to do so would inherently make the contracts void ab

           initio. However, this is not the case before this court. The settlement agreement between

           Harvey and the Pension Board does not violate any law, nor is it in violation of the Pension

           Code. As the trial court found: “the Settlement Agreement mirrored Harvey’s statutory

           obligations. As an administrative body and fiduciary of the [Pension] Fund, the [Pension]

           Board has every right to enforce, enjoin or enter into an agreement on behalf of the [Pension]

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        No. 1-15-3074

           Fund to compel Harvey’s compliance with the law.” For these reasons, we affirm the finding

           of the trial court.

¶ 221          D. WHETHER THE PENSION BOARD WAIVED ITS RIGHT TO ENFORCE THE

                                        SETTLEMENT AGREEMENT

¶ 222          Harvey argues that the Pension Board waived its right to enforce the settlement

           agreement. Waiver “ ‘is either an express or implied voluntary and intentional relinquishment

           of a known and existing right.’ ” Midway Park Saver v. Sarco Putty Co., 2012 IL App (1st)

           110849, ¶ 20 (quoting Whalen v. K mart Corp., 166 Ill. App. 3d 339, 343 (1988)).

           Additionally, a party to a contract can waive enforcement of some provisions “by conduct

           indicating that strict compliance with the contractual provisions will not be required.”

           Midway Park Saver, 2012 IL App (1st) 1100849, ¶ 20; Downs v. Rosenthal Collins Group,

           L.L.C., 2011 IL App (1st) 090970, ¶ 27.

¶ 223          Harvey argues that, based on the standards above, the Pension Board delayed suit, which

           intentionally triggered a waiver of its right to bring suit under the settlement agreement.

           Harvey argues:

                        “The Pension Board became aware that Harvey allegedly violated the levy

                        provision of the Settlement Agreement at the latest on April 30, 2008. The

                        Pension Board became aware that Harvey allegedly violated the [personal

                        property replacement tax] provision of the Settlement Agreement at the latest on

                        April 30, 2005. The Pension Board did not assert that Harvey breached the

                        Settlement Agreement until December 14, 2012: more than four years after it first

                        learned of Harvey’s alleged breach of the levy provision and more than seven

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        No. 1-15-3074

                        years after it first learned of Harvey’s alleged breach of the [personal property

                        replacement tax] provision.”

¶ 224         In response, the Pension Board asserts that Harvey has the burden to prove that the

           Pension Board impliedly waived its right in a “clear, unequivocal, and decisive” manner.

           Ryder v. Bank of Hickory Hills, 146 Ill. 2d 98, 105 (1991); Lavelle v. Dominick’s Finer

           Foods, Inc., 227 Ill. App. 3d 764, 771 (1992) (“Waiver is the voluntary, intentional

           relinquishment of a known right. *** There must be either an intention to waive which, while

           unexpressed, can be clearly inferred from the circumstances, or where there is no such

           intention, the conduct of one party must have misled another into acting on a reasonable

           belief that waiver has occurred.”). Additionally, an appellate court should not disturb the

           finding of the trial court unless that court’s finding is contrary to the manifest weight of the

           evidence. Sexton v. Smith, 112 Ill. 2d 187, 194 (1986).

¶ 225         The trial court found:

                        “While certainly contract rights can be waived, [citations omitted.], such waiver

                        occurs where one party to a contract is clearly aware that the contract is being

                        violated, but accepts benefits of the contract and offers not a hint of protest. In

                        this case, Harvey’s finances were in complete disarray for much of the period at

                        issue. In the depositions in this case, [Harvey] officials acknowledged that they

                        were unable to determine how much money Harvey actually collected in property

                        taxes on behalf of the [Pension] Fund. Until the parties engaged in discovery in

                        this case, the Board did not know whether [Harvey’s] partial contributions to the

                        [Pension] Fund during certain years included the disbursement of [personal

                        property replacement taxes] received. Given the chaotic state of Harvey’s

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        No. 1-15-3074

                        finances, the [Pension] Board’s failure to take action prior to filing this lawsuit in

                        2010 comes nowhere close to an intentional relinquishment of a known right.”

¶ 226         We find that the trial court’s finding regarding waiver was not against the manifest

           weight of the evidence; therefore, we will not disturb its finding that Harvey’s claim of

           waiver is without merit.

¶ 227         IV. WHETHER THE TRIAL COURT CORRECTLY CALCULATED THE DAMAGE

                                                     AWARD

¶ 228         Harvey argues that the trial court’s award of damages is too high because it does not

           accurately reflect section 4-118 of the Code. In relevant part, this section reads:

                        “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 *** will equal a sum sufficient to meet the

                        annual actuarial requirements of the pension fund ***. *** For the purposes of

                        this Section, the annual actuarial requirements of the pension fund are equal to (1)

                        the normal cost of the pension fund, or 17.5% of the salaries and wages to be paid

                        to the firefighters for the year involved, whichever is greater, plus (2) an annual

                        amount sufficient to bring the total assets of the pension fund up to 90% of the

                        total actuarial liabilities of the pension fund by the end of municipal fiscal year

                        2040[.]” (Emphases added.) 40 ILCS 5/4-118(a) (West 2014).

           Based on this section, Harvey argues that “prior underfunding is taken into account in

           calculating the ‘sum sufficient to meet the annual actuarial requirements of the pension fund,’

           municipalities must contribute each year only the recommended amount from the most recent

           actuarial valuation, not the sum of prior actuarial valuations.” Therefore, rather than a

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        No. 1-15-3074

           calculation of damages that combines the missed annual actuarial valuations, Harvey argues

           that the monetary damages award should be based on only the most recent annual actuarial

           valuation.

¶ 229         This court agrees with the trial court and the Pension Board. The inclusion of the word

           “annually” within section 4-118(a) leads this court to believe that these contributions should

           be made annually. 40 ILCS 5/4-118(a) (West 2014). Additionally, the trial court found “that

           [the] damage figure reflects Harvey’s position that the damage recovery should include the

           ‘normal cost’ of the [Pension] Fund for each fiscal year plus the amount that the enrolled

           actuary calculated *** as the contribution ‘sufficient to bring the total assets of the [Pension

           Fund] up to 90% of the total actuarial liability of the [Pension Fund] by the end of municipal

           fiscal year 2040[.]” The trial court continued, “if Harvey had actually funded the full amount

           in any fiscal year, the actuarial requirement in the following year would be lower because the

           unfunded liability would be lower.” Therefore, the trial court did not exceed its authority

           under the Code to award monetary damages of $11,561,117, which is the accumulation of

           damages for 2005 through 2014.

¶ 230         Additionally, Harvey argues that, because an enrolled actuary did not perform the annual

           actuarial valuation for 2009, 2010 or 2012, Harvey was not required to levy for those years,

           and the trial court should not have granted damages for those years. In response, the Pension

           Board argues that many Illinois downstate pension funds rely on the annual actuarial

           requirement provided by the Department of Insurance and presume that its calculations are

           valid. Additionally, the Pension Board argues that Harvey was never required to accept the

           calculations of the Department of Insurance and could have hired an actuary to perform the

           calculations during these years. Nonetheless, the failure to do so should “not shield it from

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        No. 1-15-3074

           liability particularly where the Pension Board did not know, and could not have known, that

           the [Department of Insurance] was either (1) not using an enrolled actuary or (2) was not

           going to prepare an actuarial valuation for 2012. Further, the Pension Board argues that

           Harvey’s expert, Sandor Goldstein, prepared an updated annual actuarial valuation for 2009,

           2010 and 2012.

¶ 231         The Code states that a municipality shall annually levy a tax that will meet the annual

           actuarial requirements of a pension fund “as annually updated and determined by an enrolled

           actuary employed by the Illinois Department of Insurance or by an enrolled actuary

           employed by the pension fund or the municipality.” 40 ILCS 5/4-118(a) (West 2014).

           Whether Scott Brandt is or is not an enrolled actuary does not matter because of his

           employment by the Department of Insurance, who presumably, because it created the

           calculations currently used to determine the annual actuary valuations, understands how to

           calculate the annual actuarial valuations. As such, pension funds and municipalities across

           Illinois rely on and use the Department of Insurance’s calculations every year. Additionally,

           many of the deponents in this case, including Jon Willhite and Sandor Goldstein, testified

           that these calculations were acceptable based on their knowledge and experience. Therefore,

           the trial court did not exceed its authority in including the years 2009 and 2010 in its damage

           calculation.

¶ 232         As for 2012, Harvey is correct that the Illinois Department of Insurance did not issue an

           annual actuarial valuation for this year. However, the annual actuarial valuation for 2012 was

           determined both by Sandor Goldstein, Harvey’s expert, and Jon Willhite. Goldstein

           conducted the calculation retroactively, determining it was $864,407 for 2012. Willhite

           testified that, traditionally, actuaries would take the previous years’ calculations and add five

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        No. 1-15-3074

           to fifteen percent, then use that as the annual actuarial requirement. However, Willhite

           testified that he used 2011’s calculations as 2012 calculations. Further, he testified that this is

           common practice within the field.

¶ 233         Both Goldstein and Willhite are enrolled actuaries, and both determined an annual

           actuarial requirement for 2012. Therefore, the trial court did not exceed its authority in

           relying on the calculations of Willhite to determine damages for 2012. For these reasons, the

           trial court’s damage calculation of $2,694,600, as a lesser included amount of the

           $11,561,117 in damages, is affirmed.

¶ 234         Lastly, Harvey argues that the trial court incorrectly calculated the unremitted personal

           property replacement taxes. It is undisputed that Harvey collected $7,067,022 in personal

           property replacement taxes between 2005 and 2014. It is also undisputed that Harvey should

           have remitted 12.2% of these funds to the Pension Fund, which would equal $858,516.68.

           However, Harvey argues that the trial court “misinterpreted Comptroller Williams’s affidavit

           as stating that Harvey has paid, in total, only $48,624 in [personal property replacement

           taxes] from 2005 to 2013.” Therefore, Harvey asks this court to vacate the damage award

           because it should be $537,727.44.

¶ 235         However, upon review of the record, this court finds that Harvey waived this issue on

           appeal. The “primary purpose of the waiver rule is to ensure that the trial court has the

           opportunity to correct any errors before they are raised on appeal.” First National Bank of

           La Grange v. Lowrey, 375 Ill. App. 3d 181, 201 (2007); Moller v. Lipov, 368 Ill. App. 3d

           333, 342 (2006) (“A primary purpose of the waiver rule is to ensure that the trial court has

           the opportunity to correct the error. [Citation.] A trial court cannot correct the error and

           prevent prejudice when the objection is not made as the error occurs.”). As such, the trial

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        No. 1-15-3074

            court was not provided an opportunity to correct the personal property replacement taxes if it

            committed an error in its decision. However, Harvey had ample opportunity to raise the

            issue. The trial court on June 25, 2015, found that “[t]here is no dispute that Harvey owes the

            [Pension] Fund $809,892 in unremitted [personal property taxes].” Nonetheless, the trial

            court asked the parties to submit an updated damage calculation before it entered a final

            damages order. In its proposed damages argument, Harvey did not argue that the trial court’s

            determination of $809,892 in unremitted personal property replacement taxes was incorrect.

            Additionally, Harvey never presented any evidence that the personal property replacement

            tax calculation was incorrect. Therefore, Harvey has waived this argument, and we affirm the

            calculation of the trial court.

¶ 236           V. WHETHER THE TRIAL COURT CORRECTLY RULED ON HARVEY’S

                                              AFFIRMATIVE DEFENSES

¶ 237                                     A. SEPARATION OF POWERS

¶ 238           The trial court ruled 11 that the Pension Board’s claims were not barred by the separation

            of powers clause of the Illinois Constitution. Ill. Const. 1970, art. II, § 1. The separation of

            powers clause states: “The legislative, executive and judicial branches are separate. No

            branch shall exercise powers properly belonging to another.” Ill. Const. 1970, art. II, § 1. The

            trial court determined that, although the judiciary is cautious when choosing to venture into a

            legislative branch’s powers, such as taxation, the judiciary will step in to enforce the law

            when a municipality abuses its discretion under the law.

                11
                  The trial court partially granted Harvey’s affirmative defense of separation of powers. The trial
        court denied the Pension Board’s motion for summary judgment for a writ of mandamus based on the
        separation of powers doctrine. However, because neither party appealed the trial court’s ruling regarding
        the writ of mandamus, we will not be discussing it here.
                                                            76
        No. 1-15-3074

¶ 239         Harvey’s reliance on Diamond v. Board of Fire & Police Commissioners, as the appellate

           court’s interpretation of the separation of powers doctrine, is misplaced. 115 Ill. App. 3d 437

           (1983). The quotation provided by Harvey is about whether the district court had the

           authority to compel Elk Grove to establish a special board on remand to hear the case of a

           terminated officer. Diamond, 115 Ill. App. 3d at 445. The appellate court found that the trial

           court could not force Elk Grove to establish this special board because that would require the

           adoption of a city ordinance. Diamond, 115 Ill. App. 3d at 445. The appellate court

           determined that a circuit court does not have the authority “to dictate that such an ordinance

           be adopted.” Diamond, 115 Ill. App. 3d at 445. Therefore, the appellate court reversed the

           trial court’s ruling. Diamond, 115 Ill. App. 3d at 445.

¶ 240         The case of Mathews v. City of Chicago, which is cited by both parties, is more

           applicable to the current case. 342 Ill. 120 (1930). In Mathews, an Illinois taxpayer

           challenged three laws passed by the General Assembly that allowed the creation and

           maintenance of a “working cash fund” in cities, counties, and school districts that were over

           a certain population. Mathews, 342 Ill. at 123. These cash funds authorized the city, county,

           or school district to issue bonds without a referendum to fund the working cash funds.

           Mathews, 342 Ill. at 123. Mathews argues that these three acts to create the funds and the

           issuance of bonds were unconstitutional because “they attempt to authorize taxation which is

           not needful and is for other than public or corporate purpose, in violation of [the Illinois

           Constitution].” Mathews, 342 Ill. at 127.

¶ 241         In deciding the case, the Illinois Supreme Court found: “The amount of taxes and the rate

           of taxation are exclusively for the General Assembly and may be increased or decreased at its

           pleasure. The exercise of its discretion cannot be controlled by the court. *** The amount

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        No. 1-15-3074

           [to] be levied is left to the sound discretion and business judgment of the city council, the

           county board or the board of education.” Mathews, 342 Ill. at 141. The supreme court

           continued: “the courts have the authority to interfere and prevent a clear abuse by such

           authorities of their discretionary powers.” Mathews, 342 Ill. at 141.

¶ 242         Therefore, although Harvey is correct in stating that it has the authority to set its levies, it

           cannot abuse its discretionary powers pursuant to the Code. See Barrett v. Henry, 2013 IL

           App (2d) 120829, ¶¶ 12-13. The Code explicitly states: “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 *** will equal a sum sufficient to meet the annual actuarial

           requirements of the pension fund.” 40 ILCS 5/4-118(a) (West 2014). Although Harvey is

           allowed discretion by the Code, the General Assembly requires Harvey to enact a levy for the

           Pension Fund, which Harvey has failed to do. Because Harvey has abused its discretion, this

           court affirms the trial court’s ruling that the separation of powers doctrine does not bar the

           Pension Board’s claim.

¶ 243                                             B. LACHES

¶ 244         When reviewing a trial court’s determination as to whether the affirmative defense of

           laches applies to a case, an appellate court will reverse the decision only if the trial court’s

           decision was “ ‘so clearly wrong as to constitute an abuse of discretion.’ ” Lozman v.

           Putnam, 379 Ill. App. 3d 807, 822 (2008) (quoting Hannigan v. Hoffmeister, 240 Ill. App. 3d

           1065, 1074 (1992)). An abuse of discretion standard is met when the trial court’s decision

           was “ ‘palpably erroneous, contrary to the manifest weight of the evidence, or manifestly

           unjust.’ ” Lozman, 379 Ill. App. 3d at 822 (quoting O’Brien v. Meyer, 281 Ill. App. 3d 832,

           835 (1996)). A trial court’s decision is considered an abuse of discretion only when it is

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           arbitrary, fanciful, or unreasonable or where no reasonable person would take the view

           adopted by the trial court. People v. Dunmore, 389 Ill. App. 3d 1095, 1105 (2009).

¶ 245         To prevail on the affirmative defense of laches, defendants must prove (1) that there was

           a lack of due diligence by plaintiffs in bringing suit and (2) that plaintiffs’ delay resulted in

           prejudice to defendant. Lozman, 379 Ill. App. 3d at 822; see People v. McClure, 218 Ill. 2d

           375, 389 (2006). Harvey claims that it has fulfilled these two requirements because the five-

           year delay in bringing suit was due to a lack of diligence and this delay prejudiced Harvey.

           Harvey has to prove that it was unknowingly accruing liability because the Pension Board

           slept on its rights; however, as the trial court noted and this court can determine based on the

           record, Harvey was knowingly accruing liability and this fact is clear from review of the

           Pension Fund’s annual actuarial reports. Further, Harvey contributed well below the annual

           actuarial requirement to the Pension Fund in 2009 and 2010 before the suit was filed and then

           continued to contribute nothing to the Pension Fund for the three years after the filing of the

           suit. There is nothing to suggest that Harvey was “unknowingly” accruing liability over the

           period alleged by Harvey.

¶ 246         This court finds ample evidence to support the trial court’s finding that laches does not

           apply; therefore, we affirm the ruling of the trial court, which found Harvey did not fulfill the

           requirements to establish the affirmative defense of laches.

¶ 247                                          VI. MANDAMUS

¶ 248         In the Pension Board's cross-appeal, they seek a reversal of the trial court's denial of its

           request for a writ of mandamus in Count II of its complaint. A writ of mandamus is issued to

           force a defendant to perform a ministerial act that is not discretionary in character. Evanston,

           281 Ill. App. 3d at 1052. In order for the Pension Board to be entitled to relief, it must show:

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           (1) a clear right to the relief requested, (2) a clear duty of Harvey to act, and (3) clear

           authority for Harvey to comply with the writ. Clarke v. Community Unit School District 303,

           2012 IL App (2d) 110705, ¶ 24.

¶ 249         The Pension Board argues that section 4-118(a) of the Pension Code clearly mandates

           that Harvey make annual contributions to the Fund according to an annual actuarial

           evaluation. However, section 4-118(a) does not remove Harvey's discretion in making annual

           contributions. The statute allows Harvey to base its levy on the AAR as calculated by any of

           three different actuaries. In addition, Harvey can make a calculation as to the amount that it

           must levy to "produce" an amount necessary to meet Harvey's required contribution to the

           Fund. 40 ILCS 5/4-118(a) (West 2014). Taxes levied by Harvey are not collected at the rate

           of 100% and, as a result, there is clearly some discretion required in order to make this

           projection. As long as Harvey, within its discretion, is levying an amount that would be

           enough to produce the AAR-mandated contribution, Harvey would be meeting its obligations

           under the Pension Code. Harvey "is vested with the authority to take the final action:

           adopting an ordinance levying the tax." Evanston, 281 Ill. App. 3d at 1053. Although Harvey

           must meet the statutory funding requirements, the enactment of the pension tax levy is not a

           mere ministerial act subject to a writ of mandamus. We affirm the trial court on its denial of

           the issuance of a writ of mandamus.

¶ 250                                      VII. JUDICIAL NOTICE

¶ 251         “Upon the review by any court of appellate jurisdiction of a judgment or order of a circuit

           court the court of appellate jurisdiction shall take judicial notice of all matters of which the

           circuit court was required to take judicial notice, including all rules of practice adopted by the

           circuit court.” 735 ILCS 5/8-1002 (West 2014).

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        No. 1-15-3074

¶ 252         At oral arguments, this court invited the parties to request judicial notice of agreed facts

           that have occurred after the conclusion of this case in the circuit court of Cook County.

¶ 253         This court takes judicial notice of the following facts that are undisputed by the parties.

           However, the taking of judicial notice of these facts does not in any way affect this court’s

           decision on this appeal:

                  (1) That between July 11, 2014, and December 31, 2016, the City of Harvey

              contributed $2,177,319.31 to the Firefighter’s Pension Fund from tax revenue collected

              from Harvey’s taxpayers during that period of time.

                  (2) That Harvey levied $800,000 for the Pension Fund for fiscal year 2015 (collected

              in 2016). However, the statutory minimum annual actuarial requirement for the Pension

              Fund for fiscal year 2015 was $1,950,025. Harvey contributed $750,764 and the Pension

              Fund had net assets of $10,954,619 for fiscal year ended April 30, 2015. In accordance

              with the trial court’s injunction entered in September 2015, the City levied the statutorily

              required annual actuarial requirement for the Pension Fund of $2,083,797 for fiscal year

              2016 (collected in 2017). However, the City did not levy the required amount on or

              before the last Tuesday in December 2015 as required by the injunction but approved the

              levy four months late. The Cook County Clerk agreed to accept the late levy. The

              Pension Fund received $398,566 in City contributions and had net assets of $9,290,602

              for the fiscal year ended April 30, 2016. The City did not levy on or before the last

              Tuesday in December 2016 the annual actuarial requirement for the Pension Fund for

              fiscal year 2017.

                  (3) That, as of May 3, 2017, the Pension Fund currently has $9,245,541.93 in assets.

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¶ 254         The monies that Harvey paid into the Pension Plan were a result of the trial court’s

           injunction. Harvey’s compliance was not timely for the fiscal year of 2016, and Harvey did

           not levy on or before the last Tuesday in December 2016 the annual actuarial requirement for

           the Pension Fund for the fiscal year 2017. As of May 3, 2017, it is noted that the Pension

           Fund’s assets have been depleted to $9,245,541.93.

¶ 255                                            CONCLUSION

¶ 256         The issues on appeal include (1) whether the trial court correctly determined that the

           Pension Fund is not on the verge of default or imminent bankruptcy, (2) whether the trial

           court correctly determined Harvey violated the Pension Fund’s statutory rights, (3) whether

           the trial court correctly determined that Harvey breached the 1996 settlement agreement, (4)

           whether the trial court correctly calculated the damages, and (5) whether the trial court

           correctly rejected Harvey’s affirmative defenses of the separation of powers and laches.

¶ 257         For the reasons discussed above, we affirm in part and reverse in part the trial court’s

           findings. We affirm the trial court’s ruling on issues (2), (3), (4), and (5) in finding that

           Harvey violated the Pension Fund’s statutory rights; that Harvey did violate the 1996

           settlement agreement; that the trial court’s calculation of damages is correct; and that

           Harvey’s affirmative defenses were correctly rejected. However, as to issue (1), we reverse

           the trial court’s finding and find that the Pension Fund is on the verge of default due to

           Harvey’s blatant disregard of the Pension Fund for many years and the severe lack of any

           financial responsibility shown by Harvey, which has substantially impaired the Fund to the

           point that the firefighters' pension rights will be diminished in the near future.

¶ 258         Accordingly, we affirm the trial court’s damages award, injunctive order, and denial of

           writ of mandamus.

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¶ 259         Affirmed in part, reversed in part.

¶ 260         JUSTICE LAMPKIN, specially concurring.

¶ 261         I agree with the majority’s conclusion that the pension fund benefits are already impaired

           and soon will be diminished. I write separately to clarify why I believe the Pension Fund is

           on the verge of default or imminent bankruptcy and the relevant factors considered in that

           analysis.

¶ 262         The pension protection clause makes participation in a public pension plan an enforceable

           contractual relationship and also demands that the “benefits” of that relationship “shall not be

           diminished or impaired.” Ill. Const. 1970, art. XIII, § 5; see also Sklodowski, 182 Ill. 2d at

           229. Although the clause does not create a contractual basis for participants to expect a

           particular level of funding, it does create a contractual right for pension participants to

           receive the money due to them at the time of their retirement. Sklodowski, 182 Ill. 2d at 230

           (the General Assembly did not intend “to create any ‘vested’ contractual relationship in the

           Pension Code that would allow participants to enforce funding provisions”). Furthermore,

           pension beneficiaries do not have to “wait until benefits are actually diminished to bring suit

           under the clause” because if benefits are impaired, i.e., if a pension fund is on the verge of

           default or imminent bankruptcy, the beneficiaries could take a group action to show that their

           rights should be preserved. Id. at 232, citing McNamee, 173 Ill. 2d at 446-47. There is a

           distinction between diminishing a beneficiary’s right to receive pension benefits and

           impairing that right. Benefit rights are diminished if they are abolished, lessened, or if the

           terms are changed after the participant has vested. See 4 Record of Proceedings, Sixth Illinois

           Constitutional Convention 2629, 2931-32 (comments of Delegate Kinney). Benefit rights are

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           impaired when a pension fund is on the verge of default or imminent bankruptcy and the

           rights need to be preserved. See id. at 2996 (comments of Delegate Kinney).

¶ 263         Here, Harvey is currently paying the Pension Fund beneficiaries their pensions, which

           have not been reduced in anyway, so the benefit rights have not been diminished. However,

           the evidence of several relevant factors clearly established that the benefit rights have been

           impaired such that the fund is on the verge of default or imminent bankruptcy. These factors

           include, first, the financial status of the Pension Fund primarily from 2005 through 2013,

           except that the data about the fund’s 2011 financial status should be excluded due to

           conflicting data. According to Jon Willhite, the Pension Fund’s financial consultant since the

           1980’s, the actuarial recommended contributions for 2005 to 2013 were approximately $11.6

           million. Harvey, however, contributed only $1.4 million to the Pension Fund during that time

           period while that fund paid almost $13.6 million to beneficiaries. Accordingly, Harvey

           contributed only about 12% of the actuarial recommendation and the Pension Fund paid, on

           average, nine times more per year to its beneficiaries than Harvey had contributed to the

           fund.

¶ 264         Second, the fast rate at which the Pension Fund is being depleted supports the finding that

           it is on the verge of default or imminent bankruptcy. In his deposition, Sandor Goldstein,

           Harvey’s retained actuary, stated that Harvey “deprived the Pension Fund of $8 million in

           actual contributions and another $2 million in actual investment gains on those

           contributions” because Harvey failed to make proper contributions to the Pension Fund from

           2005 to 2013. Goldstein demonstrated Harvey’s depletion of the net assets of the Pension

           Fund based on the following net asset balances over time: $17,530,040 in April 2008,

           $12,848,718 in May 2012, $11,501,101 in December 2013, $11,180,962 in May 2014,

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           $10,936,532 in March 2015, and $10,119,246 in October 2015. By April 30, 2015, the

           Pension Fund was only 25% funded. The Pension Fund’s $17 million in assets in 2009 was

           depleted by 2013 to approximately $11.1 million, which represented an over one-third

           depletion of the fund in merely four years. Todd Schroeder, the Pension Fund’s retained

           actuary, opined in his deposition that the Pension Fund should have had approximately $34

           million in assets as of 2014 instead of its actual balance of $11,180,962 in assets, which left

           the fund deficient at the end of 2013 by approximately $23 million.

¶ 265         Third, the revenue available to Harvey to support the city’s financial needs supports the

           finding that the Pension Fund is on the verge of default or imminent bankruptcy. Harvey has

           only 25,000 residents, and the evidence demonstrated that Harvey was not able to collect on

           its tax levies to support the city’s general corporate obligations over the time period at issue

           here. Additionally, as of May 2015, Harvey had 47 active firefighters and 67 retirees or

           beneficiaries. In 2014, the Pension Fund paid approximately $157,000 a month to the

           beneficiaries while contributions from the active firefighters were approximately only

           $25,000 a month. The contributions of the active firefighters were being used to pay the

           current beneficiaries instead of being invested for the active firefighters’ future pension

           benefits. Also the evidence established that for several years the Pension Fund had to

           liquidate invested assets every month in order to pay the monthly benefits, and the invested

           assets have been declining at an alarming rate each year. Willhite opined that the Pension

           Fund is unable to invest its way out of financial collapse based on its current allocation and

           return projections relative to cash outflows. Specifically, Willhite stated that based on the

           Pension Fund’s current condition and the rate that money has been going out of the fund, it

           will “reach a time when there will be no money left in the [Pension Fund] as we know it

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           today.” Willhite opined that the Fund will be insolvent in seven to nine years. Consistent

           with Willhite’s opinion, actuary Schroeder accurately predicted that the Pension Fund would

           pay out $2 million in fiscal year 2014. He also predicted that the payouts would increase in

           2017 to $2.7 million due to statutory cost-of-living increases and additional retirements.

           Further, he predicted that within five years from 2015 the Pension Fund will have to pay

           $11.8 million in benefits and administrative costs—which amount is $1.7 million greater than

           the Pension Fund’s October 2015 net assets.

¶ 266          Fourth, from 2007 through 2011, Harvey failed to contribute to the Pension Fund any of

           the statutorily required amount of 12% of the personal property replacement taxes disbursed

           by the State of Illinois.

¶ 267          Based on the foregoing evidence of Harvey’s failure over several years to contribute to

           the Pension Fund any more than an average of about 12% of the actuarial recommendations,

           the fast depletion rate of the fund, and the lack of revenue sources available to Harvey, the

           Pension Board has shown that the Pension Fund is on the verge of default or imminent

           bankruptcy such that the benefits are in immediate danger of being diminished. This is not

           merely a matter of an underfunded pension plan. The severe fund deficiency and alarming

           rate of asset depletion, and Harvey’s demonstrated inability to collect on its tax levies to

           support its obligations establish that the Pension Fund’s ability to pay the beneficiaries will

           be extinguished in the near future.

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