2026 IL App (1st) 232256
No. 1-23-2256
SIXTH DIVISION
October 16, 2026
IN THE
APPELLATE COURT OF ILLINOIS
FIRST DISTRICT
MARK WANCKET, KIMBERLY BEACHY, SALLY ) Appeal from the
CRAY, CARL HOLMAN, ELIZABETH MINDER, ) Circuit Court of
TERALANDUR VENKATESH, AND DENNIS Cook County.
)
WILLIAMS,
) No. 22 CH 11560
Plaintiffs-Appellants, )
)
v. Honorable
) Michael T. Mullen,
STATE EMPLOYEES’ RETIREMENT SYSTEM OF ) Judge, presiding.
ILLINOIS and BOARD OF TRUSTEES OF THE STATE
)
EMPLOYEES’ RETIREMENT SYSTEM OF ILLINOIS,
)
Defendants-Appellees. )
JUSTICE PUCINSKI delivered the judgment of the court, with opinion.
Justices Hyman and C.A. Walker concurred in the judgment and opinion.
OPINION
¶1 I. INTRODUCTION
¶2 This case presents an issue of first impression regarding the meaning of “lump sum salary
payments,” as outlined in section 14-103.10 (40 ILCS 5/103.10 (West 2022)) under the Illinois
Pension Code, in relation to section 14-108 (id. § 14-108). We are asked to determine whether
No. 1-23-2256
bimonthly payments made by respondent for accumulated unused vacation and sick time are
included as compensation in the calculation of a state employee’s final average compensation
used to determine their retirement annuity under section 14-103.12 of the Pension Code (id.
§ 14-103.12) or whether they are excluded as “lump sum salary payments” (see id. § 14-103.10) pursuant to Pension Code section 14-108.
¶3 The amount of retirement annuity that a retiree receives is derived from their final average
compensation. See id. § 14-108. Final average compensation means
“the monthly compensation obtained by dividing the total compensation of an
employee during the period of: (1) the 48 consecutive months of service within the
last 120 months of service in which the total compensation was the highest, or
(2) the total period of service, if less than 48 months, by the number of months of
service in such period; provided that for purposes of a retirement annuity the
average compensation for the last 12 months of the 48-month period shall not
exceed the final average compensation by more than 25%.” Id. § 14-103.12(a).
¶4 Compensation is defined as follows:
“For periods of service on and after January 1, 1978, all remuneration for personal
services performed defined as ‘wages’ under the Social Security Enabling
Act, including that part of such remuneration which is in excess of any maximum
limitation provided in such Act, and including any benefits received by an
employee under a sick pay plan in effect before January 1, 1981, but excluding lump
sum salary payments:
(1) for vacation,
(2) for accumulated unused sick leave,
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(3) upon discharge or dismissal,
(4) for approved holidays.” (Emphasis added.) Id. § 14-103.10(b).
¶5 We find that the bimonthly payments for (i) vacation and (ii) accumulated unused sick
leave are “lump sum salary payments” as installment payments towards a known and definite
sum owing and are thus properly excluded from the meaning of “compensation” under section
14-108. The plural term “payments” entails the possibility that multiple installments are made
toward the enumerated payment categories, which themselves have historically been treated as
lump sums. Petitioners’ interpretation of “lump sum” in isolation, although supported by
dictionary definitions, is unsustainable, as it conflicts with the broader statutory text and
scheme and leads to absurd results. Thus, we affirm.
¶6 II. BACKGROUND
¶7 Plaintiff-appellants Mark Wancket, Sally Cray, Elizabeth Minder, Teralandur Venkatesh,
Dennis Williams, Kimberly Beachy, and Carl Holman are retired former employees of the
Illinois State Board of Education (ISBE). Each plaintiff-appellant receives a pension from the
state through the State Employees’ Retirement System (SERS), administered by the Board of
Trustees (Board). Each of the appellants seeks review of final administrative decisions issued
by the Board that held that accelerated vacation and sick day payments should be excluded
from SERS’ calculation of final average compensation for the purposes of calculating pensions
under section 14-103.10 (id. § 14-103.10).
¶8 The petitioners generally fall into three categories. From least-recently to most-recently
retired: (1) Mark Wancket, Teralandur Venkatesh, and Dennis Williams seek review of agency
decisions reducing their pensions (counts I, VI, VII); (2) Sally Cray and Elizabeth Minder seek
review of agency decisions reducing their pensions and directing them to pay back pension
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No. 1-23-2256
overpayments pursuant to section 14-148.1 of the Pension Code (id. § 14-148.1) (permitting
SERS to seek recovery for overpayment when the error was discovered within three years)
(counts III, V); and (3) Kimberly Beachy and Carl Holman seek a review of agency decisions
that excluded accelerated vacation and sick day payments in the calculation of their pension
benefits (counts II, IV).
¶9 Although the posture between the individual appellants varies, they all raise the same
question: Does the Pension Code exclude compensation for vacation time and accumulated
unused sick leave, made across several payments, from the calculation of an employee’s “final
average compensation” when calculating pension annuities under the Pension Code? SERS
maintains that payments for vacation and accumulated unused sick leave are “lump sum salary
payments” (see id.§ 14-103.10) excluded from the final average compensation calculation
under section 14-103.12 (id. § 14-103.12). Appellants argue that payments for vacation and
sick leave are not excluded “lump sum salary payments” when they are made in installments.
¶ 10 Since each petitioner’s claim implicates the same legal issue, rather than litigate each
retiree’s administrative review claims individually, the parties have briefed and argued the case
based on the facts of Wancket’s case.
¶ 11 Wancket’s Case
¶ 12 Mark Wancket retired from ISBE on December 31, 2011, with 32 years of service. Around
January 2009, Wancket tendered an irrevocable notice of intent to retire in three years, effective
December 31, 2011. By tendering his notice, Wancket triggered the accelerated compensation
plan provision of his employment contract (negotiated through collective bargaining between
Local 3236 of the Illinois Federation of State Office Educators (IFSOE) and ISBE). Under the
accelerated compensation provision, Wancket liquidated 75 of his accumulated, unused
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No. 1-23-2256
vacation days and 58.6 of his accumulated unused sick days, amounting to around a $1,250
increase to his monthly salary. Because SERS determines annuity payments based on the
employee’s final average compensation, this bump to Wancket’s monthly compensation
resulted in an estimated $80,000 in benefits overpayments to Wancket over the course of a
decade.
¶ 13 In late 2021, SERS discovered that ISBE had been reporting payments for accumulated
unused vacation days and sick days as “base pay” on certain employees’ payroll reports to the
State Comptroller and SERS. ISBE explained to SERS that this adjustment was related to the
“vacation liquidation agreement” (a.k.a., the accelerated compensation provision) that
employees may exercise under the collective bargaining agreement. 1 SERS maintained that
this practice improperly reported employee compensation, resulting in SERS overcalculating
pension benefits for certain retirees.
¶ 14 SERS subsequently identified retired ISBE employees whose pensions had been increased
as a consequence of the vacation liquidation agreements and issued letters explaining that their
pensions annuities would be recalculated to exclude sick and vacation leave payments from
the calculation of their compensation. Thus, each of those retirees was advised that their
retirement annuities would be reduced. In cases where the error was discovered within three
years, ISBE directed the retirees to repay the annuity overpayments.
1
Independent of the pension consequences, petitioners suggest that the accelerated compensation
plan provides both the employer and employees benefits. The employees get to liquidate their benefits
earlier, and for ISBE, the provision incentives higher-paid senior employees to retire. The irrevocable
retirement notices are also useful to ISBE in making staffing and hiring decisions. Nonetheless, the
retirees claim that they reasonably believed (and relied on their belief) that the accelerated payments
would increase their pensionable compensation.
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No. 1-23-2256
¶ 15 SERS also realized that it had erroneously withheld pension contributions from the
vacation and sick day payments as a result of how ISBE had reported the compensation. The
letters explained to the retirees that improperly withheld contributions would be refunded. For
Wancket, around $1,800 in additional pension contributions had been withheld.
¶ 16 Wancket sought to challenge the agency’s reduction of his pension. The agency held a
hearing, and a hearing officer ultimately recommended that the Board deny Wancket’s
challenge. In August of 2022, the Executive Committee of SERS’s Board of Trustees (the
“Committee”) adopted the officer’s recommendation, finding that the statutory exclusion of
“lump sum salary payments” entailed the payment of unused vacation and sick days in
installments. The Committee found that it was “the policy of SERS to treat any payment that
represents the cashing out of an unused vacation day or sick day as a lump sum salary payment
excluded from pensionable compensation” and that it was consistent with this policy and the
statute to treat installment payments as “lump sum salary payments” excluded from the
calculation of final average compensation. The Committee analogized to Illinois family law
cases where alimony in gross (i.e., a lump sum payment made in lieu of periodic alimony) was
paid in installments. Thus, the Committee concluded, installment payments are compatible
with the definition of “lump sum” where the installments are paid towards a definite sum. The
Committee also bolstered their decision by citing numerous cases from other jurisdictions
where vacation days and unused sick time were held to be excluded from pension or benefits
calculation under their respective statutory schemes.
¶ 17 Wancket appealed to the full Board of Trustees, filing a brief and exceptions to the
Committee’s decision. At its October 25, 2022, hearing, the Board voted to ratify the decision
of the Committee over Wancket’s objections. On October 27, 2022, the Board issued a final
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No. 1-23-2256
administrative decision denying Wancket’s administrative appeal. On the same day, the Board
issued substantially similar final administrative decisions to the other petitioners.
¶ 18 On November 29, 2022, Wancket and the other petitioners brought an administrative
review action to challenge the Board’s decisions. On November 3, 2025, after receiving
briefing and hearing oral argument, the circuit court denied plaintiffs’ motion for summary
judgment and affirmed the Board’s administrative decision. The court issued an oral decision
in which it explained that the Board’s interpretation of “lump sum salary payments” could refer
to multiple installment payments of the sum total owed for the unused vacation and sick days.
The court also held that plaintiffs’ interpretation was unreasonable and in conflict with the
legislature’s clear purpose in enacting the statute: “to prevent artificially inflating an
employee’s pension by *** using [an employee’s unused vacation and sick leave] to calculate
a pension” or, more briefly, “to remedy the issue of pension spiking.”
¶ 19 Two days later, petitioners filed this appeal.
¶ 20 III. ANALYSIS
¶ 21 Under the Pension Code, “lump sum salary payments *** for vacation *** [and] for
accumulated unused sick leave” are excluded from compensation when calculating the “final
average compensation” to determine retirement annuities. See id. §§ 14-103.10(b), 14-103.12.
Between the parties, there is no dispute that a single payout for unused vacation and sick days,
upon the retirement of an employee, would not be included in that employee’s final average
compensation calculation. But the parties dispute whether payments for unused sick and
vacation days, structured in multiple payments, would be excluded from the final average
compensation calculation.
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¶ 22 In the case at hand, ISBE paid out for unused sick and vacation days to certain employees
in semi-monthly payroll. Pursuant to a provision in the collective bargaining agreement
between ISBE and its employees (originally negotiated in the 1999 to 2001 collective
bargaining agreement and updated in later agreements), employees may elect to enter into a
vacation liquidation agreement. Under this provision, the retiring employee would submit an
irrevocable notice of intent to retire in 24 or 36 months, and, in exchange, the employee would
receive payments for unused, accrued vacation and sick leave in bimonthly salary paychecks
over the final two or three years of employment rather than in a singular payment upon
retirement.
¶ 23 This appeal therefore requires us to decide whether paying accumulated unused vacation
and sick leave through regular payroll installments makes those payments pensionable
compensation or whether they remain excluded “lump sum salary payments.”
¶ 24 A. Standard
¶ 25 Decisions of the Board are reviewable under the Administrative Review Law (735 ILCS
5/3-101 etc. (West 2022)). 40 ILCS 5/14-150 (West 2022). On appeals of the circuit court’s
decision on a complaint for administrative review, we review the administrative decision rather
than the circuit court’s decision. Esquivel v. Retirement Board of the Policemen’s Annuity &
Benefit Fund of Chicago, 2011 IL App (1st) 111010, ¶ 18. On review, we may affirm on any
basis in the record. Wortham v. Village of Barrington Hills, 2022 IL App (1st) 210888, ¶ 25.
The applicable standard of review depends upon “ ‘whether the question presented is one of
fact, one of law, or a mixed question of fact and law.’ ” Cinkus v. Village of Stickney Municipal
Officers Electoral Board, 228 Ill. 2d 200, 210 (2008) (quoting American Federation of State,
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No. 1-23-2256
County & Municipal Employees, Council 31 v. Illinois State Labor Relations Board, State
Panel, 216 Ill. 2d 569, 577 (2005)).
¶ 26 This litigation turns solely on an issue of statutory interpretation. The facts are not in
dispute. We are asked to review only the Board’s interpretation of section 14-103.10 of the
Pension Code. “[A]n agency’s interpretation of the meaning of the language of a statute
constitutes a pure question of law.” Id. Statutory construction is a question of law that is
considered de novo on review. Roselle Police Pension Board v. Village of Roselle, 232 Ill. 2d
546, 552 (2009).
¶ 27 When interpreting a statute, the court’s primary goal is to ascertain and give effect to the
legislature’s intent. Id. The most reliable indicator of legislative intent is the statutory language
itself, given its plain and ordinary meaning. Id. When the statute does not define a particular
word or phrase, “it is entirely appropriate to look to the dictionary to ascertain the plain and
ordinary meaning of the term.” People v. Chapman, 2012 IL 111896, ¶ 24. “Each word, clause,
and sentence of a statute must be given a reasonable meaning, if possible, and should not be
rendered superfluous.” Chicago Teachers Union, Local No. 1 v. Board of Education of
Chicago, 2012 IL 112566, ¶ 15. Our supreme court has advised against “dissecting an
individual word or phrase from a statutory provision and mechanically applying to it a
dictionary definition” when determining legislative intent. Corbett v. County of Lake, 2017 IL
121536, ¶ 28.
¶ 28 “Where the language is clear and unambiguous, we must apply the statute without resort
to further aids of statutory construction.” Krohe v. City of Bloomington, 204 Ill. 2d 392, 395
(2003). A statute is ambiguous where its construction is susceptible to “two equally reasonable
and conflicting interpretations.” Land v. Board of Education of Chicago, 202 Ill. 2d 414, 426
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(2002); see also Krohe, 204 Ill. 2d at 395-96 (“A statute is ambiguous if it is capable of being
understood by reasonably well-informed persons in two or more different ways.”).
¶ 29 The interpretation of a statute by an agency that is charged with administering the statute
is afforded “substantial weight and deference.” Stillo v. State Retirement Systems, 305 Ill. App.
3d 1003, 1007 (1999) (citing Abrahamson v. Illinois Department of Professional Regulation,
153 Ill. 2d 76, 88 (1992)).
¶ 30 Where there is a question as to the legislative intent and clarity of the language of a pension
statute, the statute must be “liberally construed in favor of the rights of the pensioner.” Prazen
v. Shoop, 2013 IL 115035, ¶ 39; Carmichael v. Laborers’ & Retirement Board Employees’
Annuity & Benefit Fund of Chicago, 2018 IL 122793, ¶ 50 (where pension statute found to be
ambiguous, courts must apply liberal construction in favor of the pensioner).
¶ 31 In addition to the plain text, “the court may consider the reason for the law, the problems
sought to be remedied, the purposes to be achieved, and the consequences of construing the
statute one way or another.” Sigcho-Lopez v. Illinois State Board of Elections, 2022 IL 127253,
¶ 28. In construing a statute, we must presume that the legislature did not intend an absurd
result. Carmichael, 2018 IL 122793, ¶ 45 (citing People v. Fort, 2017 IL 118966, ¶ 35).
¶ 32 B. “Lump Sum”
¶ 33 The phrase “lump sum” in section 14-103.10(b) (40 ILCS 5/14-103.10(b) (West 2022)) is
not defined by the Pension Code, and no Illinois court has interpreted its meaning in this
provision. The proper construction of “lump sum” is thus a matter of first impression in Illinois.
¶ 34 1. Petitioners’ Interpretation
¶ 35 Petitioners’ interpretation of the Pension Code is based upon a strict interpretation of the
phrase “lump sum.” According to petitioners, the plain text of the Pension Code provides that
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No. 1-23-2256
one-time salary payments (i.e., payments by “lump sum”) within the enumerated categories
are excluded from pension calculations. Multiple payments, including installments made for
enumerated items (e.g., unused vacation time), are argued to fall outside of the definition of
“lump sum” and, hence, are not excluded under the Code.
¶ 36 Read in a vacuum, petitioners’ interpretation of the isolated phrase “lump sum” is
consistent with how several dictionaries define the term. Black’s Law Dictionary defines
“lump sum” as “A single payment made once, usu. at a particular time, as opposed to a series
of smaller payments.” Sum, Black’s Law Dictionary (12th ed. 2024). The phrase “lump-sum
payment” shares a similar definition, meaning “[a] payment of a large amount all at once, as
opposed to a series of smaller payments over time.” Payment, Black’s Law Dictionary (12th
ed. 2024). The Merriam-Webster Online Dictionary defines “lump sum” as “an amount of
money that is paid at one time : a single sum of money.” Merriam-Webster Online Dictionary,
https://www.merriam-webster.com/dictionary/lump%20sum (last visited Sept. 23, 2026)
[http://perma.cc/8EA7-DL2Q]. The American Heritage Dictionary defines “lump” as “[n]ot
broken or divided into parts” as in “one lump payment.” (Emphasis in original.) American
Heritage Dictionary 746 (2d coll. ed. 1985). And it defines “sum” as “[2] [t]he whole amount,
quantity, or number; aggregate *** [3] An amount of money.” Id. at 1218.
¶ 37 Each cited definition specifically contradistinguishes lump sum payments from
installments or smaller, periodic payments. Petitioners argue that these dictionary definitions
support a plain text reading of the statute that limits the exclusion to one-time, complete
payments for unused vacation and sick time.
¶ 38 For petitioners, this definition effectively ends the analysis. If this restrictive interpretation
of “lump sum” modifies “payments,” then anything other than a single payment per category
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falls outside the exclusion. Although petitioners’ reading has some support in the dictionary
definitions, we do not find it reasonable when the phrase is read in the context of the statute as
a whole.
¶ 39 While arguing that the provision does not implicate the legislature’s interest in preventing
“pension spiking,” petitioners argue that the legislature was concerned with something
approximating it. According to petitioners, “[t]here is a straightforward, rational reason why
the legislature would have limited the compensation exclusion to single, lump sum payments
*** [L]arge, one-time payments would have the most unpredictable impact on the actuarial
assumptions of the pension system.” Despite insisting upon this legislative purpose, petitioners
struggle to justify why the legislature drew the line where it did. Ironically, by attempting to
tie their reading of the statute to this legislative intent, petitioners only demonstrate how
severely underinclusive the exclusion would be under their reading. According to petitioners,
the legislature was concerned with large, singular payments, but apparently was not concerned
if the same payment was split into two or more payments, even if the ultimate effect was the
same.
¶ 40 When challenged on this point, petitioners embrace the arbitrariness, defending the
underinclusiveness as legislative choice: “[L]ines drawn by the legislature tend to be arbitrary,
as lines generally are, but that the government is in the business of drawing them.” See Alamo
Rent A Car, Inc. v. Ryan, 268 Ill. App. 3d 268, 275 (1994). According to petitioners, the
legislature had to draw a line somewhere in deciding what was included in or excluded from
pensionable compensation, and we cannot second guess their policy decision where the statute
is clear even if the line drawn appears to be inadequate for its legislative purpose.
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¶ 41 But there is no obvious reason why the legislature would have drawn the line at one
payment. Even granting petitioners’ point that lawmaking entails the drawing of arbitrary lines,
this line seems particularly arbitrary, and it obviously does not serve the legislature’s purpose
in drafting the exclusion.
¶ 42 First, petitioners attempt to justify the legislature’s choice to limit the exclusion to onetime payments by suggesting they are more disruptive than two or more payments, but there is
no foundation for the assertion that they are or that the legislature believed that they were.
Petitioners attempt to rationalize the assumption in the context of this case where 72 payments
were made over three years, suggesting that SERS had enough lead-up to account for these
payments. But this is also dubious; no briefing is offered as to when or how these actuarial
assumptions are made, nor how much lead time is necessary for the pension system to account
for an inflation in employee pensionable compensation in their final three years. Petitioners’
narrow reading of the legislative intent is built upon an unfounded premise.
¶ 43 Second, the legislature need not have drawn a line here at all: in respondents’ interpretation,
what matters is not the manner of payment, but the source of the payment. That petitioners’
interpretation requires that we make an exceedingly narrow assumption of legislative intent
and accept the exclusion’s ineffectiveness as just a consequence of arbitrary legislative linedrawing is good reason to infer that the interpretation is simply not a reasonable or accurate
construction.
¶ 44 Third, petitioners’ interpretation also places too much weight on how the payments are
made and too little on what they are for. The statute does not exclude lump sum payments
generally. It identifies four categories: vacation, accumulated unused sick leave, discharge or
dismissal, and approved holidays. The specific identification of those categories supports
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SERS’s view that the source of the payment matters. Spreading a payment for one of those
categories over several categories does not change its source.
¶ 45 Petitioners’ ultimate recourse is to Carmichael, and the principle that pension statutes must
be constructed in favor of the pensioner. To the extent that there is any “lingering doubt about
the meaning or effect of the provisions *** we must resolve that doubt in favor of the members
of this State’s public retirement system.” Carmichael, 2018 IL 122793, ¶ 24. Petitioners insist
that, given the dictionary definitions of “lump sum,” their interpretation of the statute is
reasonable. At the very least, the contextual meaning of the terms “lump sum” and “payments”
are ambiguous, so even if the statute is susceptible to SERS’ construction, petitioners assert
that Carmichael requires that we adopt the interpretation in favor of the pensioners.
¶ 46 But petitioners’ construction of “lump sum salary payments” is not reasonable when the
provision is read as a whole. The statute therefore is not ambiguous, and the Carmichael
presumption does not apply.
¶ 47 2. Respondent’s Interpretation
¶ 48 Respondent offers a counter-interpretation that the term “lump sum” entails installment
payments against a definite amount. For respondent, the essential quality of a “lump sum” is
that it corresponds to a known and definite amount of money owed, rather than the manner of
payment. Under this interpretation, the value of unused, accumulated time is a discrete amount
of money—a “lump sum”—owed to retirees distinct from their bimonthly salary (which is
indeterminate and ongoing in comparison). Consequently, the method of payment is irrelevant;
a lump sum may be paid all at once, or payments may be made against the lump sum owed.
¶ 49 SERS argues that the language of the clear legislative intent of the provision was to prevent
“pension spiking.” “Pension spiking” describes the artificial inflation of a retiree’s pension
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annuity that is effected by the disbursement of payments during the final average compensation
reporting period (typically last few years of the retiree’s employment). A retiree’s pension
annuity is calculated using their highest consecutive years of compensation. A pension can be
“spiked” where payments that would otherwise be made outside of the reporting period are
shifted into that period, creating the appearance of a higher average compensation. See Pisani
v. City of Springfield, 2017 IL App (4th) 160417, ¶ 11 (“[R]egardless of what the lump sum is
for, the objective is to make the final rate of earnings artificially large, so as to increase the
amount of the annuity.”). “Because pension spiking *** ‘is likely one of the many causes of
the serious underfunding problem *** in Illinois,’ the General Assembly has passed laws that
are calculated to prevent pension spiking.” Id. ¶ 12 (quoting Illinois Municipal Retirement
Fund Board).
¶ 50 The statutory scheme supports SERS’s interpretation. The provision excludes categories
of payments from being treated as compensation for the purposes of pension calculations. The
categories of payments excluded under section 14-103.10(b) are types of payments for benefits
accumulated over time and typically paid out in a single sum on retirement or termination.
Because these benefits are not paid out regularly, but instead accumulate over time, there is an
inherent risk that employees and employers could shift payments into the final average
compensation reporting period for work done from outside of that period—a classic form of
pension spiking. The statute’s exclusion evinces a clear legislative intent to prevent that type
of pension manipulation.
¶ 51 SERS’s interpretation is also consistent with a construction of the term “lump sum.” Under
SERS’s interpretation, “lump sum” describes a fixed amount attributable to one of the listed
categories; it does not require that the entire amount be paid at once. Payments for sick leave,
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vacation time, holidays, or upon discharge or dismissal are typically for discrete amounts and
are generally not made periodically. So, payments within these categories can reasonably be
characterized as payments of lump sums. Moreover, the statute also contemplates that these
payments might be made earlier. The statute lists “vacation” and “sick leave” payments
alongside payments “upon discharge or dismissal,” suggesting that the legislature intended to
exclude payments for the listed categories even if paid prior to termination.
¶ 52 That SERS treats accumulated unused sick leave and vacation time as non-pensionable
“lump sum” is evident from their historical practice. In 2011 and 2016, SERS issued bulletins
concerning payroll practices to various state agencies including ISBE. The 2011 payroll
bulletin states that the enumerated categories under section 14-103.10(b) (40 ILCS 5/14-103.10(b) (West 2022)) are “lump sum salary payments,” which are “EXCLUDED from any
employee retirement contribution liability.” The 2016 bulletin accorded with this guidance,
advising state agencies to process lump sum payouts of holiday time “using the lump sum
fields within the payroll system.” After quoting the full list under section 14-103.10(b), the
bulletin emphasized that “under no circumstances should they be paid as gross adjustments
allowing retirement deductions to be taken and wages to be falsely accumulated.”
¶ 53 SERS’s guidance reflects its longstanding view that payments covered by the statutory
exclusion should not be processed in a way that allows retirement deductions to be taken and
pensionable wages to accumulate. Although not binding, the “interpretation of a statute by the
agency charged with its administration is generally given deference” unless it is erroneous.
Taddeo v. Board of Trustees of the Illinois Municipal Retirement Fund, 216 Ill. 2d 590, 595
(2005).
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¶ 54 We address, briefly, two additional arguments made by SERS in support of its
interpretation. First, SERS attempts to found a construction of “lump sum” that entails
installments by looking to family law cases. In a number of cases, courts refer to “ ‘lump sum
property settlement[s]’ ” under which maintenance or alimony were payable in installments.
See, e.g., Walters v. Walters, 409 Ill. 298, 299 (1951); Roberts v. Roberts, 90 Ill. App. 2d 184,
186 (1967); Koivun v. Koivun, 45 Ill. App. 3d 39, 41-42 (1977); In re Marriage of Hildebrand,
166 Ill. App. 3d 795, 799 (1988). The use of “lump sum” in these cases fits into a distinction
between awards of alimony or spousal support in gross and periodical support. Alimony made
“in gross” refers to a fixed monetary sum, whereas “periodic” alimony refers to alimony
payments made periodically for an indefinite amount of time. See Koivun, 45 Ill. App. 3d at
41-42. Typically, alimony in gross defines the total amount owed for alimony as a single sum
in a property settlement that is agreed to “in lieu of all alimony,” which, for the parties, has the
added benefit of not being modifiable by a court (e.g., on the occasion of the supported
spouse’s remarriage). Walters, 409 Ill. at 302-03. “Lump sum” settlements are therefore related
to in gross alimony as distinguished from periodic alimony in these cases.
¶ 55 For our purposes, these cases offer little support. First, we note that the phrase “lump sum
payments” is not found in any of the above cases. Instead, the phrase “lump sum” modifies
“award” or “settlement agreement.” This follows from the aforementioned distinction between
in gross and periodic alimony: the award of a lump sum maintenance obligation defines the
obligation as a single, definite sum, in contradistinction to a periodic, indefinite maintenance
obligation. See, e.g., Koivun, 45 Ill. App. 3d at 42 (“[D]efendant agreed to forego receiving
periodic alimony for an indefinite period of time and agreed to a certain lump sum settlement
paid in installments.”).
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¶ 56 First, as we discuss in the following section, we do find that it is consistent with the
definitions of “lump sum” to describe a particular payment obligation as a “lump sum” that
may be payable in installments. See Kroger Co. v. Blumenthal, 13 Ill. 2d 222, 224 (1958).
¶ 57 Second, SERS argues that its interpretation aligns with earlier versions of the statutory
provision and that we ought to consider the history of amendments to the Pension Code to
determine the legislative intent. Prior to the 1978 amendment, the Pension Code defined
compensation as “[s]alary or wages payable on a regular payroll *** to any person for personal
services currently performed.” Ill. Rev. Stat. 1975, ch. 108½, ¶ 14-113 (amended and
renumbered 1978). The limited discussion available regarding the amendment suggests that
the legislature amended the Pension Code as to revise the definition of “final average
compensation to parallel the Social Security Act definition.” 80th Ill. Gen. Assem., Senate
Proceedings, June 24, 1977, at 208 (statements of Senator Egan). SERS emphasizes that the
amendment was introduced as a “housekeeping, clean up type bill” (id.), to argue that the
legislature did not intend that for the amendment to significantly modify the meaning of
compensation. SERS therefore asks that we construe the current text of the statute in a manner
consistent with the prior amendment to exclude vacation and sick time payments.
¶ 58 We do not find the limited legislative discussion, or the prior amendments to the provision,
to be useful in construing the meaning of the operative provision. The current text of the statute
is substantially different from the prior version, and we ought to derive the meaning of the
statute from its plain meaning rather than presume a legislative intent not to have changed the
meaning.
¶ 59 In summary, we do not find petitioners’ interpretation of the statute to be consistent with
its text or purpose. Petitioners’ interpretation of the phrase “lump sum” may be accurate in
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isolation, but this does not end our analysis. We must consider the significance of the phrase
within its specific statutory context. In doing so, we find that petitioners’ interpretation does
not warrant application of the Carmichael principle of liberal construction (2018 IL
122793, ¶ 50). The words lump sum cannot be used in isolation; they are specifically related
to the enumerated categories—vacation and unused sick pay—and must be construed in the
context of the entire statutory provision. That an isolated word can bear more than one meaning
does not make a statute ambiguous when only one meaning remains reasonable after the
provision is read as a whole. Because petitioners’ interpretation conflicts with the specific
exclusion of these categories, we do not find that their interpretation is plausible. Hence, we
do not apply Carmichael.
¶ 60 C. Payments
¶ 61 This construction of “lump sum” does not conclude our analysis. The briefs present a
second ambiguity with respect to the pluralized term, “payments.” The statute excludes “lump
sum salary payments[ ] (1) for vacation, (2) for accumulated unused sick leave” and for two
other categories. (Emphasis added.) 40 ILCS 5/14-103.10(b) (West 2022).
¶ 62 Here, SERS argues that, even if the bimonthly payments do not qualify as a single lump
sum salary payment, they are lump sum salary payments, plural, towards the excluded
categories. As an example of this use case, SERS cites Kroger Co., 13 Ill. 2d at 224 (employer
made separation payment in “two lump sum payments”). 2 The Board noted this in its decision:
“any lump sum included in the regular salary of an employee could be construed to fall within
We note also that the legislature’s use of the phrase “lump sum” elsewhere suggests the possibility
2
of multiple “lump sum” payments. For example, in section 14a of the State Finance Act, the statute
provides that unused time “shall be payable to the employee in a single lump sum payment.” (Emphasis
added.) 30 ILCS 105/14a(c) (West 2022).
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the plain definition of lump sum salary payment, even if the payment is recurring.” Thus, the
payments must still be excluded from final average compensation under section 14-103.10(b).
¶ 63 Petitioners dispute this interpretation, arguing that the plural “payments” could refer to
lump sum payments made across each category. In other words, the term “payments” allows
for the possibility that an employer could make separate lump sum payments for vacation time
and unused sick leave. Under petitioners’ interpretation, the statute would still capture end-ofemployment lump sum payments made separately for each of the enumerated categories, but
it does not and should not capture multiple payments made in any individual category.
Petitioners add that the Board’s interpretation of “payments” would conflict with the meaning
of “lump sum” or otherwise render it superfluous.
¶ 64 Considered alone, “payments” could refer either to multiple payments within a category or
to separate payments for different categories. But we do not determine ambiguity by reading a
word in isolation. We read the statutory language as a whole. When we do so, only SERS’s
interpretation is reasonable. The rule that pension statutes are liberally construed in favor of
pensioners does not require us to adopt a reading that is unreasonable when considered in the
context of the statute as a whole. See Roselle Police Pension Board, 232 Ill. 2d at 552-53 (“The
principle that the language of pension statutes is to be liberally construed in favor of the rights
of the pensioner is no exception to [the rules of statutory construction].”); Salcedo v.
Retirement Board of the Policemen’s Annuity & Benefit Fund of Chicago, 2023 IL App (1st)
220728, ¶ 58.
¶ 65 Ultimately, when “payments” is read in the context of the statute as a whole, petitioners’
construction leads to the unreasonable results discussed next. We accordingly adopt the
Board’s construction.
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¶ 66 D. Absurd Results
¶ 67 Petitioners’ interpretation is unsustainable because it unavoidably entails absurd
consequences.
¶ 68 1. Treating Like Employees Differently
¶ 69 Petitioners’ interpretation of the statute results in the treatment of identically situated
employees differently based solely on the mechanism by which their vacation days are paid
out. Suppose that there are two employees who start and retire in the same year, who occupy
the same role, and who have the same union-bargained compensation package, including the
same number of allotted sick and vacation days. Suppose also that these two employees
accumulate the same number of unused vacation and sick days by the time they retire. The
only difference between these hypothetical employees is how their accumulated days are paid
out: the first receives payment for his unused days on termination in a single payment; the
second receives payment for his unused days in payments over the final two years of his
employment.
¶ 70 There is no obvious legislative purpose for treating these two employees differently. Yet,
Petitioners’ interpretation of the statute would grant the second employee a greater lifetime
annuity, thousands more annually, merely because ISBE structured the payment of these
benefits differently. There is similarly no reason to believe that the legislature intended to
bestow a greater lifetime annuity for employees that stockpiled their vacation or sick time over
employees that used their time off. Employees in both groups receive full compensation for all
accumulated time, whether the time is used or paid out. There is no obvious legislative purpose
in disincentivizing employees not to use time off (particularly since the state is on the hook for
paying out all of that unused time when the employee retires). There is also no clear legislative
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purpose that is served by rewarding employees for taking remuneration for unused time in
multiple payments rather than a single payment. The result of petitioners’ interpretation is a
significant disparity arising from an arbitrary difference.
¶ 71 We are not persuaded by petitioners’ attempt to backfill the legislative purpose to justify
this arbitrary result. Petitioners suggest that the legislature may have been concerned with the
impact of large lump sum payments at the end of employment resulting in “pension spikes” or
unanticipated increases in pensions that would disrupt actuarial assumptions in the
management of the pension. Petitioners further suggest that multiple payments towards unused
leave time would be less disruptive than a large payment on termination. We find this
explanation implausible. For one, as we explain below, the way ISBE structured these
payments constitutes “pension spiking,” since the inclusion of compensation earned in prior
years results in the overcalculation of an employee’s final average compensation and, hence,
an inflated annuity. The practice implicates exactly the same policy concerns as pensionspiking: thumbing the scale on the employee’s later years of compensation for a more favorable
pension calculation. Cf. Pisani, 2017 IL App (4th) 160417, ¶ 12 (observing that the General
Assembly passed laws calculated to prevent “pension spiking”). And that increased pension is
not the result of ISBE increasing an employee’s compensation package—an employee that
opts into the accelerated compensation plan is still earning the same salary the employee would
otherwise earn and receives the same benefits and benefits payments as the employee would
otherwise receive. Without having to account for increased pensionable compensation on its
books, ISBE created an additional burden on SERS’s books.
¶ 72 We do not think there is a material distinction between a single payment and several smaller
payments, where the effect of both is to shift compensation earned over time into the period
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used to determine final average compensation for pension annuities. Although a spike created
by 72 separate payments may not seem as sharp or sudden a spike as a single payment, the
result is the same in either case: a retiree arbitrarily receives a higher pension annuity by
allocating accumulated earnings into payments during the final average compensation
reporting period.
¶ 73 To draw the legislature’s concern with “pension spiking” so narrowly would expose the
statute to unsustainable and unanticipated manipulation of benefits payments to circumvent a
clear legislative purpose. We find it doubtful that the Illinois legislature intended for an
employee’s unilateral choice to result in such a significant windfall.
¶ 74 Our analysis accords with the highest courts in other jurisdictions that similarly rejected
the premise that their respective legislatures intended to allow arbitrary differences between
employees based on vacation use or manner of benefits payments. Longley v. State Employees
Retirement Comm’n, 931 A.2d 890, 904 (Conn. 2007) (finding it “highly unlikely that the
legislature also intended to bestow a substantial annual windfall ***—in essence, a lifetime
annuity—merely because [employees] chose to stockpile their vacation time rather than to use
it”); Amos v. Metropolitan Government of Nashville & Davidson County, 259 S.W.3d 705, 714
(Tenn. 2008) (“In our view, calculating the lump-sum payments with employees’ pensions
would create an unintended ‘windfall’ for employees who did not take vacation.”); see West
Virginia Consolidated Public Retirement Board v. Carter, 633 S.E.2d 521, 528 (W. Va. 2006).
¶ 75 2. The Thirteen-Month Year
¶ 76 Petitioners’ interpretation also results in a conflict with the purpose and text of the final
average compensation provision. To elucidate this conflict, we sketch the following scenario:
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Suppose, for the sake of simplicity, that an employee with 25 years of service has accrued two
full months of vacation and sick time prior to exercising ISBE’s accelerated compensation plan
to retire in two years. Those two months of accrued vacation and sick days are part of
compensation the employee earned and received (in the sense that the employee could have
used those days to take off from work) in his or her first 25 years of service.
¶ 77 Having opted into ISBE’s accelerated compensation plan, rather than receiving a one-time
payout for his unused days on termination of employment, this employee receives
compensation for the two unused months in 24 payments, made over the course of two years.
¶ 78 For the purposes of calculating “final average compensation” to determine a retiree’s
annuity, SERS looks to the total compensation from the highest 48 months of compensation of
the last 120 months of service. 40 ILCS 5/14-103.12 (West 2022). Presumably, the highest 48
months for our hypothetical employee will include his final 24 months (assuming that his final
years are when his salary is highest and granting that the unused day payouts will bump up this
compensation).
¶ 79 The inclusion of the unused days in payments during the final 24 months results in a
peculiar, and rather problematic, result: the total compensation for each of the final two years
amounts to 13 months of compensation each, rather than 12. This is because our employee
receives his twelve months of salary as normal, with an additional month of salary (from
unused days) paid out over the course of each year. Notably, the unused days paid out were
not earned during the 12-month period in which they were paid out; they are not part of that
year’s compensation. Rather, payment for those unused days is compensation from prior years
that has been squeezed into the retiree’s final years of employment.
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No. 1-23-2256
¶ 80 Petitioners’ approach therefore creates an overcalculation of compensation when
determining a retiree’s “final average compensation.” Final average compensation is calculated
using employee compensation over a 48-month period. To include compensation for service
time completed outside of that 48-month period would artificially inflate the “average”
compensation calculation. Petitioners’ interpretation of the lump sum exclusion therefore
results in an irreconcilable conflict between sections 14-103.12 and 14-103.10(b). The
inclusion of unused vacation and sick time from outside of the 48-month period is not
compatible with the 48-month limitation on the average compensation calculation.
¶ 81 The logical inconsistency is also plain when considering the purpose of section 14-103.12.
The fundamental purpose of “final average compensation” is to determine the highest average
salary of the employee in the last 10 years of service. The statute aims to avoid outliers
disadvantaging employees by isolating the 48 consecutive months within the last 120 where
the employee’s compensation was “highest.” At the same time, it avoids outliers in the opposite
direction: for employees with less than 48 months of service, “the average compensation for
the last 12 months *** shall not exceed the final average compensation by more than 25%.”
40 ILCS 5/14-103.12(a) (West 2022); see Pisani, 2017 IL App (4th) 160417, ¶ 12 (making the
same inference with respect to municipal retirement fund statute (40 ILCS 5/7-116(d) (West
2012))). The legislature clearly drafted the statute with the intent to isolate the employee’s
average compensation at its highest for the purposes of determining pension benefits. The
inclusion of unused vacation and sick time from prior years, thumbing the scale during the
employee’s final few years of service, is not consistent with the legislature’s purpose in this
provision, and it is logically inconsistent with the meaning of “average.” The word “average”
implies a representative sampling of employee compensation over a period of time. The
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addition of compensation earned outside of that scope is inconsistent with the goal of
determining the employee’s “average” compensation. Cf. In re Hohensee, 525 N.Y.S.2d 733,
734-35 (App. Div. 1988) (“[H]ad petitioner taken his vacation[,] he would have received his
regular wages during that period. *** [T]he cash equivalent he received *** was in addition
to his regular compensation and thus extraordinary [citations]” and “was properly excluded in
arriving at the amount of petitioner’s final average salary.”).
¶ 82 Our analysis here is consistent with other jurisdictions that regard this scenario as absurd
or otherwise inconsistent with their statutory scheme. See, e.g., Longley, 931 A.2d at 903
(Inclusion of unused days in final year’s compensation “results in a calculation of retirement
benefits that is predicated on an effective period of employment in excess of three years,”
violating statutory temporal requirements.); 3 American Federation of State County &
Municipal Employees Local 2384 v. City of Phoenix, 466 P.3d 1158, 1163 (Ariz. 2020)
(inclusion of “lump-sum payout would effectively include three years and two months of
compensation within the three-year average”); Amos, 259 S.W.3d at 714 (“inclusion of their
lump-sum payment for the maximum vacation accrual would extend the pension calculation
period to sixty-three months” violating the metropolitan code requirement that pensions be
based on a 60 month calculation).
¶ 83 We find the Board’s interpretation of section 14-103.10(b) reasonable and consistent with
the statutory scheme. The plural “payments” allows for multiple lump sum payments toward a
3
Summarizing the state employee retirement commission’s position, the appellate court wrote:
“ ‘[A] lump sum payment for accrued vacation time cannot be factored into the final year’s salary
directly ***. To do so would impermissibly add time to the calculation of a retiree’s three highest paid
years of state service because, under [General Statutes] § 5–154(m), state service is defined as including
“accrued vacation time,” and, under § 5–154(n), a year of state service can include only twelve calendar
months.’ ” (Emphasis in original.) Longley, 931 A.2d at 894 (quoting Longley v. State Employees
Retirement Comm’n, 887 A.2d 904, 906 (Conn. App. Ct. 2005)).
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No. 1-23-2256
fixed amount owed for unused vacation or sick leave. Considered alone, “payments” could
also refer to separate payments for different categories. But that possible reading does not make
the statute ambiguous. When the provision is read as a whole, petitioners’ interpretation
produces the unreasonable results we have described. Only the Board’s interpretation gives
reasonable effect to the provision as a whole.
¶ 84 IV. CONCLUSION
¶ 85 We find that the payments made to petitioners for unused sick leave and vacation time are
lump sum salary payments excludable from the calculation of an employee’s final average
compensation under section 14-103.12.
¶ 86 Affirmed.
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Wancket v. State Employees’ Retirement System of Illinois, 2026 IL App (1st) 232256
Decision Under Review: Appeal from the Circuit Court of Cook County, No. 22-CH11560; the Hon. Michael T. Mullen, Judge, presiding.
Attorneys Stephen A. Yokich and George A. Luscombe III, of Dowd, for Bloch, Bennett, Cervone, Auerbach & Yokich LLP, of Chicago, Appellant: for appellants.
Attorneys Kwame Raoul, Attorney General, of Chicago (Jane Elinor Notz, for Solicitor General, and Leigh J. Jahnig, Assistant Attorney Appellee: General, of counsel), for appellees.
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