"I think the people, everybody in Wabash County - including those in Mt. Carmel - is going to pay," said Charles Sanders, chair of the Wabash County Board of Commissioners following a special meeting held Monday, when officials announced their request to correct records - and possibly re-claim more than half a million dollars in pension funds - had been denied.

A letter dated July 1 from Illinois Municipal Retirement Fund (IMRF) Associate General Counsel Michael B. Weinstein states the IMRF Benefit Review Committee recommended its board dismiss the county's request for a correction to records, calling the request "untimely and barred by the doctrine of laches." The IMRF Board of Trustees later voted to concur with the committee's findings, and dismissed the county's request.

Wabash County officials sought the records correction after learning it was charged over $540,000 more than anticipated to fund the retirement of former state's attorney Terry Kaid.

Kaid, now a resident of Harrisburg, Ill., served as Wabash County State's Attorney from 1992 to 2004, and as Mt. Carmel City Attorney from 1981 to 1992.

The county endured the financial hit after the City of Mt. Carmel entered into an out-of-court settlement with Kaid.

How the recent IMRF decision may impact taxpayers, or whether or not the issue is over, remain to be seen. But on Monday, city officials were breathing a sigh of relief, while county officials were already pondering what to do next.

THE CITY'S REACTION

"This particular stage of the Kaid litigation is behind us," said City Commissioner and local attorney Mike Witters, who talked briefly on the subject at Monday's regular city council meeting - which was going on at the same time county officials convened in special session.

The county "was not successful in its attempt," to change the record and reclaim its pension money, Witters explained, and suggested that may be a good thing for the city: If the county's request had been granted, it would have had a negative impact on the City of Mt. Carmel, Witters said.

The pension dispute involving Kaid's retirement fund service credits - whether regarding work for the city, or work for the county - appeared to drive a wrench in the works of city-county relations. Accusations even flew that a county official was being untruthful on the matter.

Witters said Monday it had "irked" him and others when statements were made suggesting the county did not know how the city's settlement agreement would impact the county. Witters said IMRF determined the "county knew about it," and "chose not to act."

"I feel vindicated," Mayor Tom Meeks commented.

THE CASES

There was never any question whether or not Kaid was eligible for state pension benefits for the time he was county state's attorney. Instead it centered, in both cases, around whether or not Kaid's time as city attorney was eligible for retirement credits. Was Kaid a city employee? Then he was eligible. Or was he contract labor? Then he wouldn't necessarily be.

CASE NO 1: KAID VS. CITY

Kaid initiated court action against the City of Mt. Carmel two years ago, seeking to have the court stop IMRF "from reconsidering, revoking or withdrawing the service credit and pension" benefits he sought.

The city argued that Kaid, as city attorney, was not an employee but contract labor and, as such, was ineligible for service credits through IMRF.

However, the city settled out of court with Kaid in June, 2008, recognizing Kaid's years of service and agreeing to be liable for $92,000 in pension funds for Kaid. Kaid, meanwhile, agreed to pay the city $100,000 over the course of the next 20 years.

CASE NO. 2: COUNTY AND IMRF

Then, in August, 2008, county commissioners received a letter from IMRF informing them that, because of the City of Mt. Carmel's settlement with Kaid, Wabash County's IMRF reserve account had been charged over half a million dollars.

The letter from Louis Kosiba, IMRF executive director, read "the county's reserve account with IMRF was charged $1,191,593.55 as a result of Terry Kaid's retirement. Had the City of Mount Carmel not granted Mr. Kaid service credit as an employee, the county would have been charged $650,602.76, the difference being $540,990.79."

County commissioners responded by retaining the legal services of Lee Polk, litigation attorney for the law firm Barnes and Thornberg of Chicago, in an attempt to challenge that awarding of nearly $550,000 in pension funds.

And even though the city had entered into its settlement with Kaid, when the county filed its request with IMRF the city chose to hire a lawyer in case it found itself back in the middle of a separate case.

THE FINDINGS

The letter the county received from IMRF says the benefit review committee made a determination to dismiss the county's request on grounds it was "untimely."

Written findings from a May 29 IMRF Benefit Review Committee session state, "If the county had participated in the Kaid Litigation (the city's case two years ago), and the subsequent settlement discussions, the outcome might well have been different."

"The City had submitted the sworn joint affidavit of Merle A. Weems and Thomas W. Meeks in which it is asserted that Mr. Weems 'specifically advised Charles Sanders, in his capacity as Chairman of the County Board of the County of Wabash, Illinois, that it would be in the best interest of the County of Wabash and the City of Mt. Carmel if the County of Wabash would join in the 'Kaid litigation' for purposes of sharing attorney's fees and costs as well as because the litigation potentially affected the County of Wabash in addition to the City of Mt. Carmel," the written findings state.

"The affidavit further states that, 'Merle A. Weems specifically remembers explaining to Charles Sanders that the incremental pension cost to the County of Wabash would be substantially increased if the additional IMRF credits sought by Terry Kaid in the 'Kaid litigation' were granted to him by reason of his work for the City of Mt. Carmel in that his incremental pension benefits would be significantly increased.

"In response to the foregoing Affidavit, the County submitted the sworn affidavit of Charles Sanders. Mr. Sanders' affidavit does not directly refute the statements set forth above," the benefit review committee concluded.

WHAT NOW?

Wabash County State's Attorney Cassandra Goldman said the county's next course of action, if decided upon, is to have the matter heard by filing in Circuit Court.

"The county plans to discuss this further," said Goldman. "We have to consider cost - will it be fair to taxpayers."

She added that "these things are just really expensive and they take a long time."

County commissioners plan to further discuss what course of action to take at their next regular meeting, set for 5 p.m. Monday, July 20, at the Wabash County Courthouse.