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Article updated: 4/4/2013 1:48 PM

District 54 loses Supreme Court appeal over pension penalties

Schaumburg Township Elementary District 54 has lost an Illinois Supreme Court appeal to recoup $586,000 it had to pay the state teacher retirement system in pension penalties.

Schaumburg Township Elementary District 54 has lost an Illinois Supreme Court appeal to recoup $586,000 it had to pay the state teacher retirement system in pension penalties.


Mark Welsh | Staff Photographer

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SPRINGFIELD -- The Illinois Supreme Court has declined to hear a lawsuit from Schaumburg Township Elementary District 54 over $586,000 in penalties the district had to pay for giving end-of-career pay raises higher than 6 percent.

The district had argued that agreements to give the raises were in place before state lawmakers started charging local schools for the pension costs triggered by pay hikes more than 6 percent.

The state's Teachers' Retirement System argued the district owed the money, and an appellate court agreed with TRS earlier this year.

Ultimately, the Illinois Supreme Court did, too, by declining last week to hear arguments in the case.

District 54 has already paid the $586,000, so the court decision doesn't spark any additional payments.

"We're glad this matter has been settled," said TRS spokesman Dave Urbanek.

District 54 spokeswoman Terri McHugh said officials are "disappointed."

"We had existing contracts," she said.

In a separate lawsuit pending in Springfield, the district is seeking a refund of $97,000 in penalties it was charged for giving three consecutive 22 percent raises to former Assistant Superintendent for Business Services Mohsin Dada.

Mohsin was making $341,747 in 2010 after receiving the 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.

As of February, the two cases and an administrative appeal had cost District 54 more than $33,500 in attorney costs, according to documents provided by the district.

The issue of teachers', administrators' and other public employees' pensions continues to be most pressing topic faced by lawmakers this year.

Some top Illinois Democrats have used big salaries and raises in the suburbs to argue local districts -- not the state -- should have to pay for teachers' pension costs.

Workers' final salary helps determine how big their pension is, so end-of-career raises can help boost it. Because districts don't pay much toward teachers' retirements, districts once saw late-career pay raises as a relatively low-cost benefit.

The $586,000 in penalties paid by District 54 cover additional pension costs triggered by raises for seven administrators who submitted their retirement notices in 2006 and 2007.

In 2005, lawmakers wary of growing state pension problems approved the law to have districts pay for any pension costs resulting of raises more than 6 percent.

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