S13-00 (2) Ordinance No. S13-00
AN ORDINANCE
RATIFYING AND APPROVING THE ELGIN POLICE PENSION BOARD
AGREED DECISION AND ORDER REGARDING HOLIDAY PAY
WHEREAS, 40 ILCS 5/3-101 provides that the City Council
shall establish and administer a police pension fund for the
benefit of its police officers and their surviving spouses,
children and certain other dependents; and
WHEREAS, 40 ILCS 5/3-128 provides for the creation of a
Police Pension Board; and
WHEREAS, the City Council of the City of Elgin has so
provided for the creation of a Police Pension Board through
the adoption of Elgin Municipal Code, Chapter 3 .48 , as
amended; and
WHEREAS, 40 ILCS 5/3-131-151 provides for certain powers
and duties of the Elgin Police Pension Board which includes
the power to control and manage the pension fund; and
WHEREAS, the Illinois Department of Insurance changed the
definition of salary to include holiday pay; and
WHEREAS, in accordance with such change by the Illinois
Department of Insurance police pension fund beneficiaries and
their representatives have requested and asserted that such
change of the definition of salary should apply retroactively;
and
WHEREAS, the Elgin Police Pension Board has decided to
apply holiday pay to salary for the purposes of computing
pension benefits; and
WHEREAS, in order for beneficiaries to receive pension
benefits for holiday pay the beneficiaries must make
contributions to the Police Pension Fund; and
WHEREAS, the Elgin Police Pension Board has proposed a
settlement regarding holiday pay and pension benefits which
the City Council preliminarily approved on December 15, 1999;
and
WHEREAS, the Elgin Police Pension Board' s proposed
settlement regarding holiday pay and pension benefits has been
accepted and entered into by 41 beneficiaries of the Elgin
Police Pension Fund.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE
CITY OF ELGIN, ILLINOIS :
Section 1 . That the City Council of the City of Elgin
hereby ratifies and approves the Elgin Police Pension Board
settlement of holiday pay as set forth in the Agreed Decision
and Order Holiday Pay of the Elgin Police Pension Board
attached hereto as Exhibit A for those 41 beneficiaries
identified in the listing attached hereto as Exhibit B .
Section 2 . That all ordinances or parts of ordinances in
conflict with the provisions of this ordinance be and are
hereby repealed.
Section 3 . That this ordinance shall be in full force
and effect upon its passage in the manner provided by law.
s/ Ed Schock
Ed Schock, Mayor
Presented: November 29, 2000
Passed: November 29, 2000
Omnibus Vote : Yeas 6 Nays 0
Recorded: November 30 , 2000
Published:
Attest :
s/ Dolonna Mecum
Dolonna Mecum, City Clerk
BENEFICIARIES THAT HAVE MADE THE ELECTION TO TAKE
ADVANTAGE OF HOLIDAY PAY INCREASE AND HAVE MADE THE
CONTRIBUTION TO THE CITY:
1 . Earl Ackmann
2 . Roy Beverly
3 . Robert Brown
4 . Robert Call
5 . Edward Christ
6 . David Dingel
7 . Gary Eckmann
8 . William Eggert
9 . James L. Gough
10 . Alfred Grantham
11 . Roberta Henke
12 . Alvie Henning
13 . Morgan Homfeldt
14 . Charles Huske
15 . David Jensen
16 . Donald Jensen
17 . William Keeney
18 . Edwin Kehm
19 . Roland Kelahan
20 . Imogene Lagerstrom
21 . Norman Landwehr
22 . John Lawrence
23 . Richard Lifto
24 . John Lloyd
25 . Frederick Lugar
26 . Roger Merrill
27 . Charles Miller
28 . Dale Pate
29 . Harold Pfortmiller
30 . Allan Piske
31 . Roger Rathjen
32 . Jesse Rouse
33 . William Schultz
34 . Donald Sexton
35 . Cipriano Siete
36 . Delores Sodt
37 . JW Smith
38 . Taylor Strickland
39 . Harry Westlake
40 . Phillis Whalen
41 . Carol Zweig
EXHIBIT B
ELGIN POLICE PENSION BOARD
IN THE MATTER OF )
THE ISSUE OF RETROACTIVE ) No. 99-308
HOLIDAY PAY BENEFITS )
AND CONTRIBUTIONS )
)
Edward Christ )
420 Adams Street )
Elgin, IL 60123 )
S.S. #344-12-8342 )
AGREED DECISION AND ORDER HOLIDAY PAY
The City of Elgin Police Pension Board, pursuant to the statutory authority contained in
Chapter 40, Act 5, Article 3, Section 131-151, of the Illinois Pension Code, renders the following
decision and order as it relates to the change in interpretation of Holiday Pay being considered as
part of salary by the Illinois Department of Insurance and its effect on recipients of pension
benefits.
This matter has been discussed and agreement has been reached with relevant parties ie
the police pension board and City of Elgin with the acknowledgment by the Illinois Department
of Insurance.
This is an agreed order and if it is accepted by the beneficiary named its terms will be put
into effect retroactively to January 1, 1999 the date at which the issue was determined.
A. BACKGROUND
The Illinois Department of Insurance originally excluded Holiday pay from salary for
purposes of computing pension benefits. On April 6, 1996 the Illinois Department of Insurance
under Section 4402.30 changed the definition of salary to include Holiday Pay. In accordance
with this change at the request of retirees and their representative on the Pension Board
considered whether such a definition should have applied retroactively.
The Elgin Police Pension Board did decide to apply Holiday Pay to salary. The Illinois
Police Pension Code section 3-110 et al. requires that to receive such benefits contributions must
be made. The Elgin Police Pension Board and City of Elgin have proposed as follows:
1.) That this benefit is retroactive to January 1, 1999
2.) That the beneficiary and Elgin Police Pension Board agree to accept a one time
contribution equal to nine (9%) per cent of the amount of the current annual
pension as ofJanwtwry 1, 1999
1 EXHIBIT A
3.) That the pensioneer will receive an annual increase of four and one quarter
(4 1/4%) percent on their pension upon the payment in full of the nine (9%) percent
contribution
4.) That the salary upon which the contributions and benefits are based is the pension
received on January 1, 1999
5.) That pensioneers will receive such benefits as the four and one quarter (4 ' %)
percent increase in pension retroactive to January 1, 1999
6.) That the contribution must be paid on or before June 1, 2000 and that the
pensioneer sign this agreed Decision and Order
7.) That only Pensioneers who did not previously have holiday pay attached to salary
are entitled to this benefit
8.) That the pensioneer waives any and all retroactive Holiday Pay benefits now and
forever
9.) That the City of Elgin Police Pension Board waives any and all rights to past
contributions due for Holiday Pay now and forever
10.) That both parties agree to hold each other harmless and indemnify each other in
event of a breach of this contract by one party or the other
AGREED this day of , 2000.
Elgin '•lice Pensi• Board
Pension Beneficiary
WHEREFORE, it is agreed and ordered as follows:
1.) That the undersigned beneficiary shall pay a one-time contribution of nine (9%) percent
of their salary equal to $ (Amount for each beneficiary to be inserted)
2.) That upon receipt of this signed order and the aforesaid contribution, that the undersigned
shall receive a one time four and one quarter (4 1/4%) percent increase
3.) That a lump sum check covering January 1, 1999 through July 31, 2000 will be issued in
August 2000.
Prepared by
Elgin Police Pension Board Attorney
Law Offices of Cary J. Collins
2200 W. Higgins Rd., Ste. 145
Hoffman Estates. IL 60195
Phone 4 847-519-0010
Facsimile # 847-519-0016
3
r
BENEFICIARIES THAT HAVE MADE THE ELECTION TO TAKE
ADVANTAGE OF HOLIDAY PAY INCREASE AND HAVE MADE THE
CONTRIBUTION TO THE CITY:
1 . Earl Ackmann
2 . Roy Beverly
3 . Robert Brown
4 . Robert Call
5 . Edward Christ
6 . David Dingel
7 . Gary Eckmann
8 . William Eggert
9 . James L. Gough
10 . Alfred Grantham
11 . Roberta Henke
12 . Alvie Henning
13 . Morgan Homfeldt
14 . Charles Huske
15 . David Jensen
16 . Donald Jensen
17 . William Keeney
18 . Edwin Kehm
19 . Roland Kelahan
20 . Imogene Lagerstrom
21 . Norman Landwehr
22 . John Lawrence
23 . Richard Lifto
24 . John Lloyd
25 . Frederick Lugar
26 . Roger Merrill
27 . Charles Miller
28 . Dale Pate
29 . Harold Pfortmiller
30 . Allan Piske
31 . Roger Rathjen
32 . Jesse Rouse
33 . William Schultz
34 . Donald Sexton
35 . Cipriano Siete
36 . Delores Sodt
37 . JW Smith
38 . Taylor Strickland
39 . Harry Westlake
40 . Phillis Whalen
41 . Carol Zweig
EXHIBIT B
1V
c(OF f�C
` ,0401
' City of Elgin Agenda Item No.
row 4'17[1)1
December 3 , 1999
TO: Mayor and Members of the City Council
FROM: Joyce A. Parker, City Manager
SUBJECT: Police Pension Fund Holiday Pay Request
PURPOSE
The purpose of this memo is to present to the Mayor and members of
the City Council a request from the Board of Trustees of the Police
Pension Fund to include holiday pay in the retiree pension
calculation.
BACKGROUND
In 1996 the State of Illinois Department of Insurance (the State
agency that regulates police and fire pension funds) informed the
City that holiday pay must be included in the calculation of the
final pension that a police officer receives as well as subject to
pension withholding. Prior to 1996, holiday pay was not included
in either calculation.
After the ruling was received, all full-time uniformed police
officers immediately began contributing to the pension fund with
the additional holiday pay included. Likewise, any officers that
retired subsequent to the ruling had holiday pay included as part
of that calculation. Currently there are 11 recognized holidays
and the pension contribution percentage equals 9 percent .
Retired police officers approached the Pension Board requesting
that they too receive this benefit recognizing the fact that no
contribution had been made to the fund. The Pension Board has
indicated that to offset that non-payment, retirees would need to
make a one-time 9 percent contribution to the fund. It is
estimated that their contribution would equal approximately
$154 , 000 . The Board also hired the City' s actuary to determine
what additional cost there would be to the proposed change. Based
on the actuary' s calculation, it appears that inclusion of the
additional benefit would increase the City' s pension cost by
approximately $30, 000 annually. There are 55 retirees affected by
this change .
The Pension Board is requesting the City approve the added benefit
to the retired officers .
. .
t Police Pension Fund Holiday Request
December 3, 1999
Page 2
COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED
The City of Elgin Police Pension Board.
r INANCIAL IMPACT
The program will increase each member' s current pension by 4 . 25
percent . To be included, the 74 eligible members would be required
to pay to the pension fund a one-time charge of 9 percent of their
current annual pension estimated to total $154, 000 . The 4 . 25
percent is intended to reflect the anticipated increase in pension
as a result of including 11 additional holidays in their pension
earnings (ii days x 8 hours per day / 2080 hours per year = 4 . 23
percent) . It is estimated that the annual cost would total
$30, 000 . Property taxes are levied to fund the City' s share of the
Police Pension Fund liability.
Wol, LEGAL IMPACT
rVw V The Pension Board will need to enter an administrative consent
order regarding this matter. Retirees choosing to participate in
r this proposal will need to execute a settlement and release
document .
ALTERNATIVES
Do not alter the existing retiree benefits structure .
RECOMMENDATION
It is recommended that the City Council approve the holiday pay
benefit for retired police officers.
Res ectfully submitted,
ii
Q .
Jce A Parker
City Manager
Attachment
t
Minutes of meeting, of the Elgin Police Pension Fund, Board of Trustees December 2, 1999.
Present at the meeting were President Jerome McGill, Vice-President Bob Christ, Secretary
James Lamkin, Trustees Craig Larsen and Don Jensen and Attorney Cary Collins.
The meeting was called to order at 3:05 p.m.
The Board discussed the issue of holiday pay for current beneficiaries that had not received
holiday pay computed into their salaries at the time at the time of retirement. This issue had been
brought to the Board's attention at the January 28, 1999 meeting. A motion was made by Larsen,
with a second by Christ to direct the Fund's attorney Cary Collins to prepare administrative
orders for beneficiaries to elect to make a one time payment of 4.25% of their benefit as of
January 1999 to receive a retroactive benefit of having holiday pay used for computations added
effective January 1999. Motion was approved.
The Board directed Secretary Lamkin to work with attorney Collins in preparing information to
be mailed to beneficiaries.
The Board also discussed year end banking assurances for cash on hand. Collins had previously
reviewed the situation with Jim Nowicki, City Treasurer finding that the fund was properly
protected.
The meeting was adjourned at 4:15 p.m.
Sincerely,
L
es E. Lamkin
ecretary
Elgin Police Pension Fund
Board of Trustees •
Timothy W. Sharpe
Actuary
1928 Allen Drive
Geneva, Illinois 60134
August 9, 1999 (030)282-0000 .
Fax(630)262-0699
Mr. James R. Nowicki
Finance Director
City of Elgin
150 Dexter Court
Elgin,IL 60120-5555
Re: Police Pension Fund -Holiday Pay Adjustment
Dear Jim:
The purpose of this letter is to provide you with an actuarial analysis of the proposed Holiday Pay
Adjustment program. The program will increase each member's current pension by 4.25%. To
be eligible, each member will be required to pay to the pension fund a one-time charge of 9% of
their current annual pension. 4.25% is intended to reflect the anticipated increase in pension as a
result of including 11 additional holidays in their pension earnings(11 days x 8 hours per day/
2080 hours per year=4.23%).
Number of Annual Aaxued . increase to
Members Pension Liability_ Tax Levy_
Disabled Members 3 52,002 760,099 _
Holiday Increase --___ 2,210 32,304
Charge to Members (4,68Q) ,
Net Cost to City 27,624 1,202
Retired Members 50 1,4164115 16,682,547
Holiday Increase 60,185 709,008
Charge to Members (127,450)
Net Cost to City 581,558 25 300
Surviving Spouses 17 161,222 1_2081,395
Holiday Increase 6,852 45,959
Charge to Members (14,510)
Net Cost to City - 31449
1,363
Terminated Vested 4 78,599 1,076,823
Holiday Increase 3340 45,765
Charge to Members (7,074)
Net Cost to City - 38,691 1,683
Total Net Cost to City 72,587 _ 679,322 29,553
As Always,
Timothy W. Sharpe •