{ "id": 4304204, "name": "CARL SARTWELL, Plaintiff-Appellant, v. THE BOARD OF TRUSTEES OF THE TEACHERS' RETIREMENT SYSTEM OF THE STATE OF ILLINOIS, Defendant-Appellee", "name_abbreviation": "Sartwell v. Board of Trustees", "decision_date": "2010-08-12", "docket_number": "No. 4\u201409\u20140810", "first_page": "719", "last_page": "734", "citations": [ { "type": "official", "cite": "403 Ill. App. 3d 719" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "459 N.E.2d 925", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1984, "pin_cites": [ { "page": "928" } ], "opinion_index": 0 }, { "cite": "99 Ill. 2d 324", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3163484 ], "year": 1984, "pin_cites": [ { "page": "331-32" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/99/0324-01" ] }, { "cite": "N.J. 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Reg. 203", "category": "laws:admin_register", "reporter": "Ill. Reg.", "weight": 3, "opinion_index": 0 } ], "analysis": { "cardinality": 1223, "char_count": 37861, "ocr_confidence": 0.784, "pagerank": { "raw": 4.621887471290392e-08, "percentile": 0.28977017579017156 }, "sha256": "a92b7edf42e84f302c825a019832a0180f1859036d5ea01579fc18d1e2de617c", "simhash": "1:9abff0d2fd1b0ed9", "word_count": 5995 }, "last_updated": "2023-07-14T16:11:09.619155+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "CARL SARTWELL, Plaintiff-Appellant, v. THE BOARD OF TRUSTEES OF THE TEACHERS\u2019 RETIREMENT SYSTEM OF THE STATE OF ILLINOIS, Defendant-Appellee." ], "opinions": [ { "text": "JUSTICE McCULLOUGH\ndelivered the opinion of the court:\nIn February 2009, defendant, the Board of Trustees of the Teachers\u2019 Retirement System of the State of Illinois (Board), denied plaintiff, Carl Sartwell, $12,430.54 in salary credit toward his retirement pension for the conversion of noncreditable fringe benefits into salary in the 2005-06, 2006-07, and 2007-08 school years. The Board found that Sartwell failed to timely appeal a 2005 teachers\u2019 retirement system (retirement system) staff determination regarding the conversion and to rebut the presumption of conversion by clear and convincing evidence. On appeal, the circuit court of Sangamon County affirmed the Board\u2019s judgment.\nSartwell appeals, arguing (1) his appeal falls within the six-month appeal period because the staff made a second determination of non-creditability in January 2008, within six months of his May 2008 appeal; (2) the 2005 letter violated his procedural-due-process rights because it failed to notify him it was an appealable staff determination; (3) his increase in salary did not violate the conversion rule; and (4) the conversion rule is arbitrary and therefore invalid. We affirm in part, reverse in part, and remand with directions.\nIn February 2004, Sartwell and the Board of Education of Rossville-Alvin Community Unit School District No. 7 (District) agreed to a three-year employment contract. The District hired Sartwell to work as the district superintendent and high school principal for three years beginning in the 2004-05 school year. Sartwell\u2019s total creditable earnings toward his retirement amounted to $88,010.98. That figure included $76,490 in salary and $3,600 toward a tax-deferred annuity, totaling $80,090. The District contributed 9.89% of his $80,090 salary into the retirement system, raising his total to $88,010.98 in creditable income. The District also paid $12,912.66 in noncreditable benefits for medical insurance for Sartwell and his family. After the 2004-05 school year, the District opted to close the high school due to financial pressures.\nIn August 2005, the District and Sartwell entered into a two-year contract for him to become the district superintendent and principal of the district\u2019s grade school beginning July 1, 2005. Sartwell\u2019s base salary rose to $85,000, while the tax-deferred annuity contribution rose to $5,600. His compensation totaled $90,600. The contract also cut the District\u2019s payment of medical insurance for Sartwell and his family. Sartwell\u2019s wife began a new job in 2005, at which she was able to purchase medical insurance for $4,930.56 per year. According to an affidavit from Sartwell, coverage through the District would have cost over $14,000 for the 2005-06 school year.\nSartwell reported his income to the Board as $104,441.52, although it is not clear how he arrived at that figure. The Board\u2019s records show that the District contributed 10.37% of Sartwell\u2019s $90,600 salary into the retirement system, which would amount to $100,000.22. The Board arrived at a total of $99,560.43 in reportable earnings, which would indicate the District contributed 9.89% of Sartwell\u2019s salary into the retirement system. In any case, the Board accepted Sartwell\u2019s figure and found that he received a raise of $12,430.54 from the 2004-05 to 2005-06 school years.\nIn November 2005, Sartwell received a copy of a letter to the District from an employer services auditor employed by the retirement system. The letter follows, in pertinent part:\n\u201cThe [tjeachers\u2019 [Retirement [s]ystem has reviewed the contracts submitted on Mr. Sartwell\u2019s behalf for the 2004-05 and 2005-06 school years.\n[The retirement system] periodically reviews employer records to ensure that proper service credit and salary information are reported for its members. ***\nIf there is a decrease in noncreditable compensation in the last seven creditable school years of employment, the [s]ystem considers the difference to have been converted into salary for the purpose of increasing final average salary. ***\n* * *\nBased upon our review, it is our understanding that beginning with the 2005-06 school year, [the District] discontinued providing Mr. Sartwell with board-paid health insurance benefits. Absent any documentation to the contrary, [we] must presume the full family coverage previously paid by the [District] on Mr. Sartwell\u2019s behalf was converted to salary for the purpose of increasing final average salary. Such converted salary will be excluded from creditable earnings if Mr. Sartwell retires before the 2011-12 school year.\u201d\nThe letter also provided Sartwell with contact information for the retirement system employee who made the conversion determination. Sartwell did not respond to the letter until October 2007, when he sent a letter to the retirement system seeking to rebut the presumption of conversion communicated in the November 2005 letter. Sart-well alleged that the District stopped paying for benefits \u201cto save a financially-ailing district a substantial amount of money and further, was pursuant to a change in family status.\u201d\nIn December 2007, Sartwell drafted another letter to the retirement system, which stated, in pertinent part, as follows:\n\u201cAs an employee[,] the difference between the premium and the benefit provided by my wife\u2019s employer had to be paid through payroll deduction, so the [District] opted to provide the cost of the insurance to me in the form of salary. The cost of the insurance to my wife was *** $2,881.58 annually. The cost of the insurance to the board would have exceeded $14,000 in annual premiums. Thus the [District] achieved a significant cost savings as a result eliminating [sic] the provision of the contract that provided for board-paid family health insurance. There is no additional side payment to me for insurance nor was there ever one. ***\nThe remaining difference in salary that was provided the [superintendent between the two contracts can be explained by a change in job responsibilities^] or what I labeled a change in employment. The [District] faced significant financial problems and declining enrollments. After considering all the options available to them, the [District] opted to reduce costs by deactivating Rossville-Alvin High School and paying a negotiated tuition to two [h]igh [s]chools in neighboring districts to provide the educational services to Rossville-Alvin students. At the time, the administration of the *** district consisted of one [g]rade [s]chool principal, one [h]igh [s]chool principal, and the [superintendent. As a result of the reorganization, only the [superintendent would remain employed by the district. The [superintendent's job responsibilities were redefined to include responsibilities of the [g]rade [s]chool [principal. The [District justified the additional compensation because the [superintendent would assume the dual role.\u201d\nIn a January 2008 letter, retirement system staff rejected Sart-well\u2019s request. The letter noted the existence of the November 2005 letter and characterized Sartwell\u2019s request as one to reconsider the prior decision. On the merits, the retirement system found that neither cost savings and financial gain to the District nor Sartwell\u2019s change in job responsibilities overcame the presumption of conversion. In February 2008, Sartwell received a letter from the general counsel of the retirement system enclosing the rules for administrative review of the January 2008 denial of his request.\nSartwell retired after the 2007-08 school year. Pursuant to the retirement system\u2019s conversion finding, the retirement system deducted $12,430.54 from Sartwell\u2019s reported salary for the 2005-06 through 2007-08 school years.\nIn May 2008, Sartwell appealed the retirement system staff\u2019s denial to the Board, which referred the matter to its claims hearing committee. Sartwell attached affidavits from himself and Dennis Price, the president of the District\u2019s board of education, to his appeal. Sart-well\u2019s affidavit restated his earlier arguments but also admitted that his insurance costs for 2005-06 were $4,930.56. Price\u2019s affidavit stated as follows:\n\u201cSartwell\u2019s salary was increased *** for the purpose of compensating him fairly for assuming the duties of [g]rade [s]chool [principal after the deactivation of the high school, and to reimburse Sartwell for the costs of the health insurance premiums he would be paying *** through his wife\u2019s employer.\u201d\nThe committee recommended upholding the staff decision to deduct $12,430.54 from Sartwell\u2019s creditable salary. The committee\u2019s written recommendation found that Sartwell failed to file a timely appeal and, in the alternative, his salary increase violated the conversion rule. Regarding timeliness, the committee found that the November 2005 letter constituted a staff disposition. Pursuant to section 1650.620 of Title 80 of the Illinois Administrative Code (Illinois Code) (80 Ill. Adm. Code \u00a71650.620, as amended by 25 Ill. Reg. 203, 211 (eff. December 22, 2000)), Sartwell failed to file his appeal within the six-month period permitted for appeals of staff dispositions. The committee also found that the staff\u2019s continued correspondence with him did not waive the appeal period.\nRegarding the conversion rule itself, the committee found Sartwell failed to overcome the presumption of conversion. First, the committee found Sartwell had different, rather than more, job duties as the superintendent and grade-school principal in 2005-06 as compared to his duties as superintendent and high-school principal in 2004-05. Second, the committee found that his wife\u2019s change in jobs was not a \u201cchange in family status.\u201d The committee defined a \u201cchange in family status\u201d as a legal change, such as marriage or divorce.\nIn February 2009, the Board voted to adopt the committee\u2019s recommended decision. In September 2009, the circuit court affirmed the Board\u2019s decision.\nThis appeal followed.\nSartwell argues as follows: (1) he filed a timely appeal from the January 2008 rejection letter, (2) the failure to provide notice of the finality of the November 2005 letter and his appeal rights violated his procedural-due-process rights, (3) the Board erred when it determined he violated the conversion rule, and (4) the conversion rule is arbitrary and therefore invalid.\nIn an appeal from an administrative agency\u2019s decision, this court reviews the agency\u2019s determination, not that of the circuit court. Marconi v. Chicago Heights Police Pension Board, 225 Ill. 2d 497, 531, 870 N.E.2d 273, 292 (2006). In all administrative proceedings, the plaintiff bears the burden of proof. Marconi, 225 Ill. 2d at 532-33, 870 N.E.2d at 293. Based upon the question presented, this court reviews agency determinations under three distinct standards of review. The agency\u2019s interpretation of a statute or administrative rule is a question of law, which receives de novo review. Marconi, 225 Ill. 2d at 532, 870 N.E.2d at 293. The agency\u2019s factual determinations will be upheld unless they are against the manifest weight of the evidence. Kouzoukas v. Retirement Board of the Policemen\u2019s Annuity & Benefit Fund, 234 Ill. 2d 446, 465, 917 N.E.2d 999, 1011 (2009). A finding is against the manifest weight of the evidence where the opposite conclusion is clearly apparent. Peacock v. Board of Trustees of the Police Pension Fund, 395 Ill. App. 3d 644, 652, 918 N.E.2d 243, 250 (2009). Finally, this court reviews mixed questions of fact and law under the clearly erroneous standard. See McKee v. Board of Trustees of the Champaign Police Pension Fund, 367 Ill. App. 3d 538, 543, 855 N.E.2d 571, 575 (2006). An administrative agency\u2019s decision is clearly erroneous where the reviewing court comes to the definite and firm conclusion that the agency has committed an error. Cinkus v. Village of Stickney Municipal Officers Electoral Board, 228 Ill. 2d 200, 211, 886 N.E.2d 1011, 1018 (2008). The clearly erroneous standard provides some deference based upon the agency\u2019s experience and expertise, falling between de novo and manifest-weight-of-the-evidence review. McKee, 367 Ill. App. 3d at 543, 855 N.E.2d at 575.\nSartwell argues that the court should apply a de novo standard of review because his argument involves the construction of \u201cstaff disposition\u201d as used in section 1650.620 of Title 80 of the Illinois Code (80 Ill. Adm. Code \u00a71650.620, as amended by 25 Ill. Reg. 203, 211 (eff. December 22, 2000)). To the extent the appeal involves the construction of \u201cstaff disposition,\u201d we agree. The pertinent text of the rule follows:\n\u201cAny member, beneficiary, annuitant!,] or employer may appeal a staff disposition of a claim or interpretation of the [Illinois Pension Code (Pension Code) (40 ILCS 5/1 \u2014 101 through 24 \u2014 109 (West 2004))] to the Board *** within [six] months after the staff disposition or interpretation, by filing a written request for an administrative review with the [executive [director.\u201d 80 Ill. Adm. Code \u00a71650.620, as amended by 25 Ill. Reg. 203, 211 (eff. December 22, 2000).\nNeither party has provided a definition for \u201cstaff disposition\u201d found in the Board\u2019s internal rules, the Illinois Code, or statute, and this court\u2019s own research reveals none. Thus, we turn to principles of statutory interpretation. Administrative regulations have the force and effect of law and are construed according to the same rules of construction governing the construction of statutes. Kean v. Wal-Mart Stores, Inc., 235 Ill. 2d 351, 368, 919 N.E.2d 926, 936 (2009). The touchstone of construction is administrative intent. People v. Hanna, 207 Ill. 2d 486, 497, 800 N.E.2d 1201, 1207 (2003). The language of the regulation itself provides the best evidence of administrative intent. People ex rel. Madigan v. Illinois Commerce Comm\u2019n, 231 Ill. 2d 370, 380, 899 N.E.2d 227, 232 (2008). Where the language of the regulation is clear and unambiguous, this court will apply it as written. Madigan, 231 Ill. 2d at 380, 899 N.E.2d at 232.\nBlack\u2019s Law Dictionary defines \u201cdisposition\u201d as a \u201cfinal settlement or determination.\u201d Black\u2019s Law Dictionary 505 (8th ed. 2004). Similarly, Merriam-Webster\u2019s Collegiate Dictionary defines \u201cdisposition\u201d as a \u201cfinal arrangement.\u201d Merriam-Webster\u2019s Collegiate Dictionary 335 (10th ed. 2000). Based upon those definitions, this court concludes that a \u201cstaff disposition\u201d is a final determination or decision regarding an interpretation of the Pension Code or an administrative rule made by a member of the retirement system staff. Whether the November 2005 letter fell within the definition of \u201cstaff disposition\u201d is reviewed under the clearly erroneous standard. McKee, 367 Ill. App. 3d at 543, 855 N.E.2d at 575.\nThe Board\u2019s determination that the November 2005 letter constituted a staff disposition was clearly erroneous. The letter informed Sartwell that the retirement system had determined his salary increase violated section 1650.450 (80 Ill. Adm. Code \u00a71650.450, as amended by 27 Ill. Reg. 1668, 1675-78 (eff. January 17, 2003)). To fall within the definition of \u201cstaff disposition,\u201d the letter had to inform Sartwell in some manner of the decision\u2019s finality. The November 2005 letter did not state that the decision was final. Instead, the letter sought Sartwell\u2019s response and provided him with contact information for the employee who had made the decision. It likewise did not provide time limits within which Sartwell had to respond.\nFurther, the November 2005 letter could not have achieved the measure of finality necessary to become a staff determination fit for judicial review following an appeal to the Board. Jurisdiction exists in a court of review only where the parties present a justiciable matter. In re M.W., 232 Ill. 2d 408, 424, 905 N.E.2d 757, 769 (2009). Where a controversy is not ripe for review, it is not justiciable. Morr-Fitz, Inc. v. Blagojevich, 231 Ill. 2d 474, 489, 901 N.E.2d 373, 384 (2008). To determine whether an issue is ripe, courts examine (1) the issue\u2019s fitness for judicial determination and (2) any hardship that would result from withholding a judicial ruling. Morr-Fitz, 231 Ill. 2d at 490, 901 N.E.2d at 384. An issue is not fit for judicial determination where an administrative decision has not been formalized and the parties would not feel the effects of the controversy\u2019s resolution. Alternate Fuels, Inc. v. Director of the Illinois Environmental Protection Agency, 215 Ill. 2d 219, 231, 830 N.E.2d 444, 451 (2004).\nHere, any determination made in November 2005 was not fit for judicial determination because it had no impact on the parties. To violate the conversion rule, the change must take place within seven years of retirement. 80 Ill. Adm. Code \u00a71650.450(c)(6), as amended by 27 Ill. Reg. 1668, 1677 (eff. January 17, 2003). Until an employee makes the decision to retire, that date is not fixed. The November 2005 letter had no financial impact on Sartwell. It does not appear from this record that, for example, the Board returned a portion of the school district\u2019s contribution toward Sartwell\u2019s retirement paid for the 2004-05 and 2005-06 school years. The Board accepted the entire contribution, and rightly so, because Sartwell could have retired following the 2011-12 school year. In that event, the conversion rule would not have applied, and the instant dispute would not have arisen.\nFor those reasons, the November 2005 letter was not a staff determination. Accordingly, the staff disposition did not occur until January 2008, from which Sartwell filed a timely appeal to the Board. Because of our ruling, we need not determine whether the letter violated Sartwell\u2019s constitutional rights.\nSartwell next argues that the Board erred when it determined his salary increase violated the conversion rule. According to Sartwell, his wife\u2019s eligibility for health benefits through her new employer was sufficient to overcome the presumption of conversion. The Board argues that the change in employment of Sartwell\u2019s spouse did not constitute a \u201cchange in family status\u201d overcoming the presumption of conversion.\nThe retirement system was created to provide retirement annuities and other retirement benefits for teachers. 40 ILCS 5/16 \u2014 101 (West 2006). To determine the proper annuity for a retiring teacher, retirement system staff must determine a member\u2019s final average salary. See 40 ILCS 5/16 \u2014 133(a)(B) (West 2006). \u201cFinal average salary\u201d is defined as the average of the highest 4 consecutive years of salary within the last 10 years of creditable service, subject to the rules of the Board. 40 ILCS 5/16 \u2014 133(b) (West 2006). \u201cSalary\u201d is defined as the \u201cactual compensation received by a teacher during any school year and recognized by the [retirement] system in accordance with the rules of the [B]oard.\u201d 40 ILCS 5/16 \u2014 121 (West 2006). Section 1650.450(a) of Title 80 of the Illinois Code defines \u201csalary\u201d more specifically as \u201c[a]ny emolument of value recognized by the [s]ystem that is received, actually or constructively, by a member in consideration for services rendered as a teacher.\u201d 80 Ill. Adm. Code \u00a71650.450(a), as amended by 27 Ill. Reg. 1668, 1675 (eff. January 17, 2003). Subsections 1650.450(b) and (c) of Title 80 of the Illinois Code provide specific examples of compensation included and excluded from the calculation of final average salary. 80 Ill. Adm. Code \u00a7\u00a71650.450(b), (c), as amended by 27 Ill. Reg. 1668, 1676-78 (eff. January 17, 2003). Section 1650.450(c)(6) excludes from the compensation of final average salary the following:\n\u201cAny amount paid in lieu of previously nonreportable benefits or reported in lieu of previously non-reported compensation where the conversion occurs in the last years of service and one of the purposes is to increase a member\u2019s average salary.\u201d 80 Ill. Adm. Code \u00a71650.450(c)(6), as amended by 27 Ill. Reg. 1668, 1677 (eff. January 17, 2003).\nThe conversion rule applies where (1) the member receives a pay raise, (2) the raise was received in lieu of previously nonreportable benefits, (3) it occurred in the last years of service, and (4) one of the purposes of the raise was to increase average salary. 80 Ill. Adm. Code \u00a71650.450(c)(6), as amended by 27 Ill. Reg. 1668, 1677 (eff. January 17, 2003). A presumption of conversion applies where, in the last seven years of service, nonreportable benefits exceed those of any subsequent year. 80 Ill. Adm. Code \u00a71650.450(c)(6), as amended by 27 Ill. Reg. 1668, 1677 (eff. January 17, 2003). Where the presumption of conversion arises, the member must prove by clear and convincing evidence that \u201cnone of the purposes of the change in compensation structure was to increase average salary.\u201d 80 Ill. Adm. Code \u00a71650.450(c)(6), as amended by 27 Ill. Reg. 1668, 1677 (eff. January 17, 2003). The regulation then gives three examples of changes that would rebut the presumption of conversion: changes in a collective-bargaining agreement applicable to all similarly situated individuals, change of employer, and change in family status. 80 Ill. Adm. Code \u00a71650.450(c)(6), as amended by 27 Ill. Reg. 1668, 1677-78 (eff. January 17, 2003).\nAgain, where the language of a regulation is unambiguous, it must be given its plain and ordinary meaning. Madigan, 231 Ill. 2d at 380, 899 N.E.2d at 232. On the other hand, where a regulation\u2019s language is ambiguous, this court must resort to other methods of statutory interpretation. County of Du Page v. Illinois Labor Relations Board, 231 Ill. 2d 593, 604, 900 N.E.2d 1095, 1101 (2008). A statute is ambiguous where it is capable of more than one reasonable interpretation. County of Du Page, 231 Ill. 2d at 604, 900 N.E.2d at 1101.\nIn its written decision, the Board wrote that a \u201cchange in family status\u201d was limited to a change in the composition of the family unit. Its examples included marriage, divorce, birth of a dependent child, or loss of a dependent child. It specifically stated that a \u201cchange in the employment of a spouse is not a change in the family status.\u201d The Board argues that this court should defer to its interpretation of \u201cchange in family status\u201d because it is the agency charged with the rule\u2019s enforcement. \u201cIt is generally recognized that courts will give substantial weight and deference to an interpretation of an ambiguous statute by the agency charged with the administration and enforcement of the statute.\u201d Illinois Consolidated Telephone Co. v. Illinois Commerce Comm\u2019n, 95 Ill. 2d 142, 152, 447 N.E.2d 295, 300 (1983). An agency\u2019s interpretation expresses an informed opinion on legislative intent, based upon expertise and experience. Abrahamson v. Illinois Department of Professional Regulation, 153 Ill. 2d 76, 98, 606 N.E.2d 1111, 1121 (1992). However, a court is not bound by an agency\u2019s erroneous interpretation of a statute or administrative regulation, no matter how long the interpretation has persisted. Abrahamson, 153 Ill. 2d at 97, 606 N.E.2d at 1121.\nThe regulation is unambiguous. The regulation\u2019s plain language does not limit the member\u2019s methods of proof to one of the enumerated examples. The examples show the types of proof a member could offer to rebut the presumption of conversion. See Merriam-Webster\u2019s Collegiate Dictionary 402 (10th ed. 2000) (defining \u201cexample\u201d as \u201cone that serves as a pattern to be imitated\u201d). The examples are not the only methods of rebutting the presumption of conversion. The member may prove through any evidence and by any reasoning that none of the purposes of the change in compensation structure was to increase average compensation. Our conclusion leads to two questions: (1) whether the term \u201cchange in family status\u201d includes a change in employment of a member\u2019s spouse; and (2) whether Sartwell has rebutted the presumption of conversion.\n\u201cChange in family status\u201d is ambiguous. It is not defined in the regulation itself, nor is it a term of art. However, it is defined in two other subsections of Title 80 of the Illinois Code to describe events permitting a health-care-benefit election change outside an open enrollment period for state employees. See 80 Ill. Adm. Code \u00a72110.30(a), as amended by 31 Ill. Reg. 352, 357 (eff. December 28, 2006); 80 Ill. Adm. Code \u00a72120.30(a), as amended by 30 Ill. Reg. 15119, 15124 (eff. September 6, 2006). Section 2120.30(a) defines the term as follows:\n\u201c \u2018Change in Family Status means marriage, divorce, death of spouse or dependent, birth or adoption of child, commencement or termination of employment of spouse, significant change in cost or benefits coverage of the [employee] or spouse due to the spouse\u2019s employment, switch from full-time to part-time status of spouse, or from part-time to full-time, or unpaid leave of absence of [employee] or spouse, or any other events that the Department [of Central Management Services] determines constitute a change in family status.\u201d (Emphasis added.) 80 Ill. Adm. Code \u00a72120.30(a), as amended by 30 Ill. Reg. 15119, 15124 (eff. September 6, 2006).\nSection 2110.30 deals with dependent-care-reimbursement plan election changes and defines a \u201cchange in family status\u201d to include the termination of a spouse\u2019s employment, although not the commencement of a spouse\u2019s employment. 80 Ill. Adm. Code \u00a72110.30(a), as amended by 31 Ill. Reg. 352, 357 (eff. December 28, 2006). Many other states have defined \u201cchange in family status\u201d to include a change in the employment status of a covered employee\u2019s spouse. See, e.g., S.D. Codified Laws \u00a73 \u2014 12A\u201428 (Michie 2009) (including spouse\u2019s change of employment status as a \u201cchange in family status\u201d); 805 Mass. Code Regs. \u00a79.04(1) (2009); W. Va. Code \u00a7151 \u2014 1\u20142.1(a) (2009) (adopting attachment including spouse\u2019s change of employment as change in family status). But see Wash. Adm. Code \u00a7182 \u2014 26\u2014 325(l)(b) (2008) (excluding spouse\u2019s change in employment status as change in family status).\nTitle 26, section 1.125 \u2014 4(c), of the Code of Federal Regulations (Federal Code) (26 C.F.R. \u00a71.125 \u2014 4(c) (2008)) also defines change-in-status events upon which the state health-care election change events are based. Change-in-status events permit taxpayers revoking a healthcare plan in a cafeteria-style election system during a period of coverage to exclude from taxable income the full premium. See 26 C.F.R. \u00a71.125 \u2014 4 (2008). Change in status includes a change in legal marital status, number of dependents, residency, and employment status. 26 C.F.R. \u00a71.125 \u2014 4(c)(2) (2008). Employment status changes apply to the employee, his spouse, and his dependents and include \u201ca termination or commencement of employment; a strike or lockout; a commencement of or return from an unpaid leave of absence; and a change in worksite.\u201d 26 C.F.R. \u00a71.125 \u2014 4(c)(2)(iii) (2008). At least two states have defined change-in-status events qualifying for a change-of-benefit election in lockstep with the Federal Code. See Ky. Rev. Stat. Ann. \u00a718A.227(l)(d) (2009); N.J. Admin. Code \u00a717:1 \u2014 13.5(e) (2009).\nIncluding a change in a spouse\u2019s employment status as a \u201cchange in family status\u201d event also furthers the Board\u2019s specific intent in promulgating the conversion rule. As the regulation itself states, conversion is impermissible where \u201cone of the purposes is to increase a member\u2019s average salary.\u201d 80 Ill. Adm. Code \u00a71650.450(c)(6), as amended by 27 Ill. Reg. 1668, 1677 (eff. January 17, 2003). The regulation\u2019s language shows the Board\u2019s intent to exclude illegitimate increases, those designed to circumvent the conversion rule, from the consideration of final average salary. The converse is true as well. Where the parties lacked the intent to artificially increase final average salary, the regulation permits converted benefits to be considered in the calculation of final average salary. The intent to artificially increase salary is based upon an intent to retire, which has no relation to a change in the employment status of a member\u2019s spouse.\nBased upon the state and federal definitions of \u201cchange in family status\u201d and the purpose of the rule, we conclude that a change in the employment status of a member\u2019s spouse falls within the defin\u00edtion of \u201cchange in family status\u201d of section 1650.450(c)(6) (80 Ill. Adm. Code \u00a71650.450(c)(6), as amended by 27 Ill. Reg. 1668, 1678 (eff. January 17, 2003)). Here, Sartwell\u2019s wife took a new job with Carle Clinic with health insurance available at a lower cost than the school board could offer. In response, the school board increased Sartwell\u2019s salary to reimburse him $4,930.56 for the cost of health insurance for the 2005-06 school year. The change in employment was a \u201cchange in family status\u201d and rebutted the presumption of conversion contained in the regulation. The $4,930.56 raise in 2005-06, and any subsequent increases in the annual cost of health insurance over the two following years, should have been included in the calculation of his final average salary. The Board erred when it excluded those amounts as converted.\nTurning to the balance of the 2005-06 raise, $7,499.98, Sartwell wrote in his February 2008 letter that it was meant to compensate him for increased duties as the district superintendent and grade-school principal from the 2005-06 through 2007-08 school years. In the 2004-05 school year, Sartwell worked as the district superintendent and principal of the high school. The Board found that his duties were different, but not increased, as a result of becoming the grade-school principal. Sartwell remained a superintendent of a school district and the principal of a school. His primary duties stated in the February 2004 and August 2005 contracts were exactly the same. Before the Board, Sartwell alleged that he had increased duties starting in the 2005-06 school year, but the record does not show precisely what those duties were. The Board\u2019s factual finding that Sartwell did not have increased job duties was not against the manifest weight of the evidence.\nAccording to the dissent, Sartwell had increased job duties because he had to administer the grade school without the assistance of a grade school principal or high school athletic director. The record does not support those assertions. In 2004-05 Sartwell was the district superintendent and principal of the high school. In 2005-06, he was the district superintendent and principal of the grade school. While the district had fewer administrative staff members, it also had one less school, and Sartwell remained the principal of only one school. With respect to the high school athletic director, the record is devoid of facts showing the functions, if any, that he performed in the grade school. Based upon this record, the Board\u2019s conclusion was not clearly incorrect. Accordingly, the Board did not err when it determined that Sartwell failed to overcome the presumption of conversion with respect to the remaining $7,499.98 by clear and convincing evidence.\nSartwell finally argues that the conversion rule is invalid because it does not reasonably relate to the Pension Code (40 ILCS 5/1 \u2014 101 through 24 \u2014 109 (West 2004)). Specifically, Sartwell contends that the Board does not possess the authority to limit creditable salary increases because the legislature has already done so in the Pension Code. The Board argues that the conversion rule is not unreasonable or arbitrary simply because the legislature has imposed caps on creditable salary increases.\nAn administrative regulation will not be invalidated unless it is arbitrary, unreasonable, or capricious. Begg v. Board of Fire & Police Commissioners, 99 Ill. 2d 324, 331-32, 459 N.E.2d 925, 928 (1984).\nIllinois Code Title 80, section 1650.450, covers different subject matter than Pension Code sections 16 \u2014 133(b) and 16 \u2014 158(f). Sections 16 \u2014 133(b) and 16 \u2014 158(f) of the Pension Code regulate the State\u2019s and employer\u2019s fiscal liability with respect to a member\u2019s salary increase. Section 16 \u2014 133(b) (40 ILCS 5/16 \u2014 133(b) (West 2004)) excludes all salary increases over 20% in any given year from the calculation of final average salary. Section 16 \u2014 158(f) (40 ILCS 5/16\u2014 158(f) (West Supp. 2005)) requires employers to pay contributions to the retirement system for all salary increases over 6% granted to members.\nOn the other hand, section 16 \u2014 121 of the Pension Code directs the Board to define \u201csalary\u201d for the purpose of fixing contributions due to the retirement system. 40 ILCS 5/16 \u2014 121 (West 2004). Section 1650.450 of Title 80 of the Illinois Code (80 Ill. Adm. Code \u00a71650.450, as amended by 27 Ill. Reg. 1668, 1675-78 (eff. January 17, 2003)) defines \u201csalary\u201d pursuant to that directive. Section 1650.450(c)(6) excludes from the definition of \u201csalary\u201d any compensation paid in lieu of previously nonreported fringe benefits, such as health insurance. 80 Ill. Adm. Code \u00a71650.450(c), as amended by 27 Ill. Reg. 1668, 1677-78 (eff. January 17, 2003).\nThe Pension Code sections regulate contributions while the Illinois Code section defines \u201csalary.\u201d For example, an employee might receive both a raise and convert certain benefits, such as health insurance, into salary for the purpose of increasing final average salary. The converted amount does not constitute \u201csalary.\u201d Converted benefits are, by definition, not \u201csalary\u201d and not covered by the cited sections of the Pension Code. Therefore, section 1650.450(c)(6) of Title 80 of the Illinois Code is not unreasonable or arbitrary.\nThe Board erred when it found Sartwell\u2019s appeal untimely and excluded the amount paid to him toward the purchase of health insurance for the school years 2005-06 through 2007-08. Those amounts were paid pursuant to a change in family status and should have been included in the calculation of his final average salary. Because the record does not show the amount Sartwell paid for health insurance in the 2006-07 and 2007-08 school years, we remand to the Board with instructions to hold a hearing to determine the amounts paid toward health insurance premiums in those years, which are to be included in the calculation of his final average salary.\nAffirmed in part and reversed in part; cause remanded with directions.\nPOPE, J., concurs.", "type": "majority", "author": "JUSTICE McCULLOUGH" }, { "text": "PRESIDING JUSTICE MYERSCOUGH,\nspecially concurring in\npart and dissenting in part:\nI respectfully specially concur in part and dissent in part. I agree Sartwell\u2019s request for administrative review was timely and the change in employment was a change in family status. However, the fact Sart-well received a raise resulting in an increase in salary does not prevent Sartwell from overcoming the presumption of conversion. All conversions result in an increase in income. But not all of those increases can overcome the presumption. According to Sartwell\u2019s affidavit, he had increased job duties as grade-school principal and no longer was aided by a principal and athletic director and had less staff support. He also had 200 additional students.\n\u201c4. In 2005, I renegotiated a new employment contract with the Board (hereinafter \u20182005 Contract\u2019), which superceded the 2004 Contract. I renegotiated my employment contract in 2005 because (1) the District was deactivating the high school due to financial problems, (2) I was taking on the additional responsibilities of the Grade School Principal, and (3) I wanted to present the Board with a less costly health insurance option that I had access to through my wife\u2019s new employer.\n5. Before the high school was deactivated, I was responsible for supervising the operations of the high school, which had an enrollment of approximately 100 students. I was assisted in this duty by the high school Principal and the high school Athletic Director.\n6. After the high school was deactivated, I became responsible for supervising the operation of the grade school, which had an enrollment of approximately 300 students, in addition to my duties as Superintendent. The High School Principal, Athletic Director, and Grade School Principal positions were cut as part of the high school deactivation. As a result, I had much less staff support in my administrative role over the grade school than I had at the high school.\n9. It was the understanding between myself and the Board that the only purposes for my salary increase in my 2005 Contract were to compensate me for my new administrative role as Principal for the grade school and to reimburse me for the cost of my wife\u2019s much cheaper health insurance premiums, since her employer could not deduct the amount from my paycheck directly.\u201d\nFurther, Dennis Price, President of the Board of Education, testified in his affidavit, the increase in salary was for the additional duties and the Board did not contemplate retirement before the 2011-12 school year.\n\u201c7. It was the collective understanding of the Board that Sart-well\u2019s salary was increased between the 2004 Contract and the 2005 Contract for the purpose of compensating him fairly for assuming the additional duties of Grade School Principal after the deactivation of the high school, and to reimburse Sartwell for the costs of the health insurance premiums he would be paying to obtain family health insurance coverage through his wife\u2019s employer.\n8. At the time Sartwell\u2019s contract was negotiated in 2005, the Board did not contemplate that Sartwell would be retiring before the 2011-2012 school year.\u201d\nSartwell has clearly rebutted the presumption of conversion as to $12,430.54.\nFor these reasons, I would reverse.", "type": "concurring-in-part-and-dissenting-in-part", "author": "PRESIDING JUSTICE MYERSCOUGH," } ], "attorneys": [ "Stanley B. Eisenhammer (argued) and Debra H. Jacobson, both of Hodges, Loizzi, Eisenhammer, Rodick & Kohn, of Arlington Heights, for appellant.", "Ralph H. Loewenstein (argued), of Loewenstein, Hagen & Smith, EC., of Springfield, for appellee." ], "corrections": "", "head_matter": "CARL SARTWELL, Plaintiff-Appellant, v. THE BOARD OF TRUSTEES OF THE TEACHERS\u2019 RETIREMENT SYSTEM OF THE STATE OF ILLINOIS, Defendant-Appellee.\nFourth District\nNo. 4\u201409\u20140810\nOpinion filed August 12, 2010.\nMYERSCOUGH, PJ., specially concurring in part and dissenting in part.\nStanley B. Eisenhammer (argued) and Debra H. Jacobson, both of Hodges, Loizzi, Eisenhammer, Rodick & Kohn, of Arlington Heights, for appellant.\nRalph H. Loewenstein (argued), of Loewenstein, Hagen & Smith, EC., of Springfield, for appellee." }, "file_name": "0719-01", "first_page_order": 735, "last_page_order": 750 }