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Article updated: 2/1/2013 7:46 AM

Schaumburg District 54 sues over pension penalties

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SPRINGFIELD -- Schaumburg Township Elementary District 54 has sued the state's retirement fund for teachers in an attempt to get back about $97,000 in penalties the district had to pay after giving three consecutive 22 percent raises to an administrator.

The District 54 board also has decided to appeal a similar case involving different school administrators to the Illinois Supreme Court after losing at the appellate level last month, spokeswoman Terri McHugh said.

The latest lawsuit was filed last week in Springfield. The Teachers' Retirement System charged District 54 nearly $97,000 in penalties for raises it gave to former Assistant Superintendent of Business Services Mohsin Dada under a state law that makes local school districts pay the extra pension costs for end-of-career raises over 6 percent.

Mohsin was making $341,747 in 2010 after receiving the 22 percent raises each of the three previous years. At the time, he was the third highest-paid public school employee in the state. He left the district in 2011.

The Daily Herald reported last year that District 54 was hit with $645,320 in pension penalties over two school years, the most in an examination of dozens of suburban school districts.

Lawmakers created the 6 percent raises cap because local districts were giving large pay raises to administrators and teachers nearing retirement, sharply raising the state's pension costs that are based on salaries at the close of their careers.

"They felt that someone else, namely the state, would foot the bill," former state Sen. Jeff Schoenberg, an Evanston Democrat, said at the time.

District 54 said Dada's contract was signed in 2004 -- before the state made its 6 percent law -- and it shouldn't be charged the penalties.

"District 54 believes that Mr. Dada's contract is exempt from TRS penalties," McHugh said.

TRS disagreed, saying the contract had been extended by two years, so the district's appeal to the retirement system was rejected.

That's how the issue ended up in court. The district has already paid the $97,000 and is looking for a refund.

The district's lawsuit over Dada comes as it lost a similar case earlier this month over seven other administrators and about $586,000 TRS charged District 54 for exceeding the cap on their end-of-career pay raises.

McHugh said the district plans to ask the Illinois Supreme Court for a hearing in that case.

TRS spokesman Dave Urbanek argues that District 54's appellate court loss could mean good chances for the retirement fund in the Dada case.

"This new lawsuit comes on the heels on an appellate court opinion that is strikingly similar," Urbanek said.

The lawsuits tie into a major statewide issue this year as state lawmakers continue to do battle over whether local school districts should pay more toward teachers' pensions. The controversial idea could save the struggling state a lot of money, but local school districts could eventually have to pay millions of dollars more every year.

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