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SECOND DIVISION
March 30, 2004

PRESIDING JUSTICE WOLFSON delivered the opinion of thecourt:

Does a municipality have the right to participate in apension board hearing when one of its police officers seeks aduty-related disability pension? Or does the board have thediscretion to decide whether there will be participation and, ifso, how much? We address those questions in this appeal.

The Board of Trustees of the Police Pension Fund of theVillage of Stickney (the Board) denied the Village of Stickney's(the Village) request to participate in a hearing on RicheyHare's application for duty-related disability pension. Whenthe Village sought administrative review, the circuit courtfound the Board abused its discretion by preventing the Villagefrom participating at the hearing. The circuit court set asidethe Board's decision and remanded the cause for a new hearing.

On appeal, Hare contends the Illinois Pension Code (Code)gives the Board "exclusive control" of the pension fund andnothing in the Code gives a municipality the right toparticipate. See 40 ILCS 5/3-132 (West 2002). The Villagecontends it has the right to participate as a "party ininterest" (see 40 ILCS 5/1-101.3 (West 2002)) with a financialstake in the Board's decisions. We conclude the Village'sparticipation, in whole or in part, is left to the Board'sdiscretion, which, in this case, was not abused. We reverse thetrial court's order and remand for further consideration.

FACTS

Defendant Richey Hare worked as a police officer for theplaintiff, the Village of Stickney. In 2001, Hare applied forduty-related disability pension. On September 17, 2001, theBoard held a hearing to consider Hare's application.

At the hearing, the Village appeared through its attorneys,Donald Kreiger and Henry Sledz, and requested permission toparticipate as a party. The Village attorneys said they wantedto cross-examine the witness, Hare, and review the evidence tomake sure it was presented properly and was admissible. TheVillage's attorneys argued the Village was an interested partydue to the possible financial impact of any pension awarded bythe Board. They also argued Hare would not be prejudicedbecause Sledz notified Hare's attorney of the Village's intentto participate. The Board unanimously denied the Village'srequest to participate.

During the hearing, the Board accepted several documentsinto evidence. Hare testified, and Board members cross-examinedhim. At the conclusion of the hearing, the Board granted Hare'sapplication for duty-related disability pension.

In the subsequent written order, the Board set forth indetail its factual findings, analysis, and conclusions. TheBoard also reviewed the Village's request to intervene. TheBoard indicated it sent the Village's attorney, Mr. Kreiger, aletter and facsimile on August 24, 2001, advising him asfollows:

" 'If you wish to file a petition tointervene, please advise our office on orbefore August 27, 2001. We will then set upa briefing schedule . . .' "

The Village never responded. The record on appeal does notinclude a copy of the Board's letter.

In its order, the Board reviewed the cases argued by theVillage's attorneys at the hearing and concluded:

"The statute makes no provision forintervention by the municipality in ahearing granting a pension or otherbenefits. The Village attorneys were notpersuasive in their position as to the rightto intervene."

The Village filed a complaint in the circuit court seekingadministrative review of the Board's decision, alleging theBoard wrongfully denied the Village's request to participate atthe hearing. The Village asked the court to set aside theBoard's decision and order a new hearing to allow the Village toparticipate. The Village also asked the court to find theBoard's decision to award duty-related disability pension wasagainst the manifest weight of the evidence.

The Board filed a motion to dismiss, contending the Villagewas not a party to the administrative proceedings and lackedstanding to seek administrative review. Hare joined the Board'smotion.

The circuit court denied the Board's motion to dismiss, andultimately found the Board erred when it prevented the Villagefrom participating in the hearing. The court said:

"The Pension Board's decision to denythe 'Village the right to intervene in thepension benefit hearing' for the reasons setforth in the Decision and Order is notsupported in the record as an appropriateexercise of its discretion in presiding overthe hearing."

The court set aside the Board's decision, remanded thecause for a new hearing, and instructed the Board to allow theVillage to participate. The court specifically stated it wouldnot decide whether the Board's decision to award duty-relateddisability pension was against the manifest weight of theevidence, because such review was not proper until the Villagewas given the opportunity to participate in the hearing.

DECISION

I. Standard of Review

Our review of the Pension Board's decision is governed bythe Administrative Review Law. 40 ILCS 5/3-148 (West 2002). Wereview the final decision of the Board and not the circuitcourt's determination. Martino v. Police Pension Bd. of theCity of Des Plaines, 331 Ill. App. 3d 975, 979, 772 N.E.2d 289(2002). Where there is no question of fact, and the issue issolely one of law, we review the agency's decision de novo. Martino, 331 Ill. App. 3d at 980. The threshold issue before usinvolves a question of law -- whether the Village had the rightto participate in the pension hearing. Therefore, our standardof review for that issue is de novo.

In cases involving an agency's interpretation of a statutethe agency is charged with administering, the agency'sinterpretation is considered relevant, but not binding on thecourt. Branson v. Department of Revenue, 168 Ill. 2d 247, 254,659 N.E.2d 961 (1995).

II. The Board's authority to deny the Village's participationat pension hearing

The Village contends it had a right to participate in thepension hearing based on several provisions of the Code. In thedefinition section, a "party in interest" is defined, in part,as "an employer, any of whose employees are covered by thepension fund or retirement system." 40 ILCS 5/1-101.3 (West2002). Because the Village was Hare's employer, it asserts itwas a "party in interest" with respect to Hare's disabilityproceeding. We find this contention off the mark. The term"party in interest" is present only in one other section of theCode, section 1-110, prohibiting fiduciaries from engaging incertain transactions with respect to a retirement system orpension fund. 40 ILCS 5/1-110 (West 2002). We do not believethe "party in interest" definition section applies to thequestion of whether an entity may participate in a pension fundhearing.

Similarly, the Code provision prescribing the makeup of theBoard as including two members appointed by the president of theVillage board of trustees (40 ILCS 5/3-128 (West 2002)) does notestablish the right of the Village to intervene in hearingsconducted by the Board. Neither do the Code provisions definingthe types of disability pensions that may be awarded to policeofficers. See 40 ILCS 5/3-114.1 (West 2002) (a line of dutydisability pension shall amount to 65% of a police officer'ssalary); 40 ILCS 5/3-114.2 (West 2002) (a non-duty disabilitypension shall amount to 50% of that salary). While the Codedoes assign the Village the duty to finance the pension fund bylevying taxes (40 ILCS 5/3-125 (West 2002)), nothing in the Codesuggests a municipality's duty gives it a right to intervene inpension hearings.

The Village also relies on several cases to support itscontention that it has an interest in pension decisions, therebygiving it the right to participate in hearings.

First, the Village contends it has the due process right tocross-examine adverse parties in administrative hearings, citingPeople ex rel. Klaeren v. Village of Lisle, 202 Ill. 2d 164, 781N.E.2d 223 (2002). In Klaeren, the plaintiffs brought an actionagainst the municipality after they were denied the opportunityto cross-examine witnesses appearing at a public hearing. Thehearing was held in part to deal with a special use permitapplication, which would affect the plaintiffs' property rights.The circuit court ordered a preliminary injunction in favor ofthe plaintiffs, and the municipality appealed. The Illinoissupreme court affirmed the preliminary injunction after findingthe plaintiffs showed a reasonable likelihood the court wouldconclude the plaintiffs had a due process right, as interestedproperty owners, to cross-examine witnesses at the publichearing. Klaeren, 202 Ill. 2d at 185.

Klaeren recognizes an interested property owner's dueprocess right to cross-examine witnesses at a special use permithearing -- a much different factual situation than presentedhere. In its brief, the Village does not offer any argument tosupport its contention that the Village, a governmental entitycharged with levying taxes, is entitled to the same due process as the property owners in Klaeren. Neither Klaeren nor anyother case we have found holds a municipality is able to assertconstitutional due process rights. See City of Evanston v.Regional Transportation Authority, 202 Ill. App. 3d 265, 275-78,559 N.E.2d 899 (1990) (governmental entities do not possess dueprocess rights under federal and state constitutions). We findthe court's decision in Klaeren is bound to the facts in thatcase and is not controlling here.

In Board of Trustees of the Barrington Police Pension Fundv. Village of Barrington Ethics Board, 287 Ill. App. 3d 614, 678N.E.2d 671 (1997), the pension board sought declaratory judgmentto prevent the municipality's ethics board from regulating theconduct of the pension board trustees. This court disagreedwith the pension board, because unlike the powers given to thepension board under Article 3 of the Code, the sectionsgoverning the trustees' fiduciary and ethical obligations didnot give the board exclusive authority. Board of Trustees ofthe Barrington Police Pension Fund, 287 Ill. App. 3d at 620-21.

Here, we are dealing with the Board's exclusive powersunder Article 3 of the Code; therefore, we find little guidancein Board of Trustees of the Barrington Police Pension Fund.

In Peterson v. Board of Trustees of the Firemen's PensionFund of the City of Des Plaines, 5 Ill. App. 3d 180, 281 N.E.2d368 (1971), aff'd 53 Ill. 2d 260, 296 N.E.2d 721 (1973), thecircuit court reversed the pension board's decision to deny theplaintiff's application for disability benefits. When the cityappealed, the plaintiff moved to dismiss, contending the citylacked the legal capacity to bring the appeal. The court heldthe city, as a party in both the original pension proceedingsand the trial court, had a right to appeal the trial court'sjudgment. This court said:

"The interest of the city is moresubstantial than, for example, that of anindividual taxpayer who has been held not aproper party to obtain a review of anadministrative decision. [Citation.] Thenumber of firemen given disability pensionsdirectly affects the duty of the city toprovide its proportion of funds to enablethe pension system to function." Peterson,5 Ill. App. 3d at 183.

The plaintiff in Peterson also contended the pension boarddenied him a fair hearing because the city's attorney wasallowed to participate and had sent a letter to the board at itsrequest regarding the plaintiff's application. Peterson, 5 Ill.App. 3d at 185. The court said, "[s]ince the City had asubstantial interest in the expenditure of pension funds, it hada right to be represented at the hearing." Peterson, 5 Ill.App. 3d at 185. The court did not discuss the extent of thecity's participation at the hearing.

In Karfs v. City of Belleville, 329 Ill. App. 3d 1198,1204, 770 N.E.2d 256 (2002), the Fifth District followedPeterson on the issue of a municipality's standing to seekadministrative review of a pension board's decision. The courtfound the city had standing to seek administrative review eventhough it was not a party in the administrative proceeding. Thecourt based its decision on the city's duty to levy taxes tosupport the pension fund. However, the court warned that a citywill not have standing to seek the review of each pension boardcase, unless the decision directly impacts the municipality'sduty or interest. In Karfs, the court found the city hadstanding to seek review because the pension board used animproper method to calculate the plaintiff's pension. If theboard continued to miscalculate pensions, it could deplete thepension fund, thereby directly affecting the city's duty to levysufficient taxes. Karfs, 329 Ill. App. 3d at 1204; see alsoPeople ex rel. Campbell v. Swedeberg, 351 Ill. App. 121, 126,113 N.E.2d 849 (1953) ("[pension laws] are to be construed toprotect the municipality and the employee, both of whomcontribute to the fund").

These cases do not persuade us that the Village had a rightto intervene in the pension board hearing. Both Peterson andKarfs held the municipality had standing to seek administrativereview, but neither establishes a municipality's right tointervene at the administrative proceeding itself. The Villageof Stickney's right to seek administrative review in this caseis not seriously challenged. Nor do we see it as an issue onappeal.

However, we agree with the trial court that the Board hasthe power to exercise its discretion in deciding whether toallow a party to intervene. While there is no specific sectiongranting that authority, we believe the Pension Code grants theBoard the general authority to conduct hearings and to allow ordisallow full or partial participation in those hearings.

Illinois courts have confronted this issue in the contextof the Illinois Pollution Control Board (pollution board), whichhandles administrative appeals. In County of LaSalle ex rel.Peterlin v. Pollution Control Board, 146 Ill. App. 3d 603, 497N.E.2d 164 (1986) and Land and Lakes Co. v. Pollution ControlBoard, 245 Ill. App. 3d 631, 616 N.E.2d 349 (1993), thepollution board's authority to allow or deny a county's requestto intervene was challenged. As in this case, neither thecontrolling statute nor the agency's rules addressed whether thecounty could intervene in the administrative appeal. In Landand Lakes Co., 245 Ill. App. 3d at 640, the court said, "[i]nappropriate circumstances, such as we find here, the Board hasthe authority to allow State officials who represent the publicinterest to intervene in appeal proceedings before the Board." (Emphasis added.) See also County of LaSalle, 146 Ill. App. 3dat 611 (holding the pollution board "did not err in denying theCounty leave to intervene").

In this case, although the Code is silent as tointervention in administrative hearings, the statute entruststhe Board with establishing and administering a police pensionfund. 40 ILCS 5/3-101 (West 2002). Based on section 3-131, theBoard has specific enumerated powers and duties (40 ILCS 5/3-131(West 2002)), including the power "to control and manage,exclusively, the following:

(1) the pension fund,

(2) investment expenditures and income, *** and

(3) all money donated, paid, assessed, or provided by lawfor the pensioning of disabled and retired policeofficers, ***." 40 ILCS 5/3-132 (West 2002).

"The intention of the legislature as expressed in theIllinois Pension code was to give the board exclusive authorityover issues of eligibility to participate in the police pensionfund." City of Benton Police Dept. v. Human Rights Comm'n, 160Ill. App. 3d 55, 57, 513 N.E.2d 29 (1987). It follows the Boardmust have the authority to hold hearings and establishprocedures for those hearings. We believe this includes theauthority to decide who may participate in the hearings and towhat extent.

This Board must have believed it had some authority toallow Village participation when it sent the letter andfacsimile to the Village's attorney on August 24, 2001: "If youwish to file a petition to intervene, please advise our officeon or before August 27, 2001."

We therefore conclude the Board was not statutorilyprohibited from allowing the Village to take part in thehearing. It has the discretion to allow participation, in wholeor in part. Of course, discretion must be exercised with care. It can be abused.

An administrative agency abuses its discretion when it actsarbitrarily or capriciously. Southern Illinois Asphalt Co. v.Pollution Control Board, 60 Ill. 2d 204, 207, 326 N.E.2d 406(1975); Hanrahan v. Williams, 174 Ill. 2d 268, 272-73, 673N.E.2d 251 (1996) ("[u]nder the Administrative Review Law,courts generally do not interfere with an agency's discretionaryauthority unless the exercise of that discretion is arbitraryand capricious"). We have examined the record to determinewhether the Board acted arbitrarily or capriciously when itbarred the Village from participating at the hearing. We do notfind an abuse of discretion.

In this case, the Board denied the Village's request tocross-examine Hare. The supreme court in Klaeren said, "theright [to cross-examine] is not unlimited and may be tailored bythe municipal body to the circumstances specifically before it." Klaeren, 202 Ill. 2d at 185. An administrative body may imposelimitations on cross-examination, such as requiring notice priorto the hearing or an explanation of the party's interest in theproceedings, beyond that of the general public. Klaeren, 202Ill. 2d at 186 (agencies may also restrict cross-examinationaccording to subject matter, witness, or factual mattersrelevant to the agency's decision). We find nothing improper inthe Board's decision to impose similar limitations here.

Our conclusion is further supported by a line of casesapplying section 3-111(b) of the Administrative Review Law. 735ILCS 5/3-111(b) (West 2002). Section 3-111(b) states:

"Technical errors in the proceedingsbefore the administrative agency or itsfailure to observe the technical rules ofevidence shall not constitute grounds forthe reversal of the administrative decisionunless it appears to the court that sucherror or failure materially affected therights of any party and resulted insubstantial injustice to him or her." 735ILCS 5/3-111(b) (West 2002).

This section applies to parties to administrative hearings. While the Village was not permitted to be a party in the pensionhearing, we find the cases applying this statute instructive.

In Huff v. Rock Island County Sheriff's Merit Comm'n, 294Ill. App. 3d 477, 483, 689 N.E.2d 1159 (1998), and Trettenero v.Police Pension Fund of the City of Aurora, 333 Ill. App. 3d 792,801, 776 N.E.2d 840 (2002), exclusion of a party's evidence,including witness testimony, was considered a technical errorthat did not warrant reversal of the administrative body'sdecision. Similarly, the decision to allow another party tointervene in an administrative hearing, even though against theagency's procedural rules, is a technical error and will notresult in reversal unless the complaining party shows prejudice. LaSalle Partners, Inc. v. Property Tax Appeal Bd., 269 Ill. App.3d 621, 630-31, 646 N.E.2d 935 (1995) (the board's decision toallow a park district to intervene was a technical error thatdid not cause reversible prejudice).

In contrast, an agency's decision to exclude evidence maybe considered reversible error if the party can show, usually byan offer of proof, the decision prejudiced the party. Legan v.Illinois Liquor Control Comm'n, 114 Ill. App. 2d 384, 386-87,253 N.E.2d 1 (1969); see also Kankakee County Board of Review v.Property Tax Appeal Board, 316 Ill. App. 3d 148, 155, 735 N.E.2d1011 (2000) (finding prejudicial error where the administrativehearing officer denied a party the opportunity to make an offerof proof contrary to the Administrative Code).

Comparing this case to Huff and Trettenero, we believe theBoard's decision to exclude any cross-examination conducted bythe Village was not reversible error. Unlike Legan and KankakeeCounty Board of Review, the Village has not shown it wasprejudiced when the Board prevented it from cross-examiningHare.

Here, the Village failed to make, or even attempt to make,an offer of proof before the Board as to what information its cross-examination would have produced. Although the Villageattempted to introduce documents before the trial court, it madeno similar attempt at the administrative hearing. In fact, theVillage's attorneys specifically said they would not beintroducing any evidence. Before the hearing concluded, theVillage's attorney again argued for the Village's participation,and said:

"I think that Commander Hare'stestimony, as gut wrenching as it was,points out why it's unfair to the village. He's made many accusations, 90 percent ofwhich are irrelevant to the issues beforethis board, many of which are based onhearsay against the chief of police andother village officials. We've had noopportunity to rebut."

Without any indication as to what the Village would haveproduced on cross-examination or to "rebut", we cannot say theVillage was prejudiced by the Board's decision, or the Boardabused its discretion by disallowing the Village'sparticipation.

Finally, Hare contends the trial court erred when it failedto decide whether the Board's decision to award duty-relateddisability pension was against the manifest weight of theevidence. The Village contends the Board's finding was notsupported by the evidence and asks this court to affirm thetrial court on that basis. Although the trial court wasprovided a full record of the pension board hearing, it made nofinding on the sufficiency of the evidence, denying review untilthe Village was allowed to participate in a new hearing.

The Village was not entitled to a new hearing; we remandthe cause to the circuit court to complete its review of theevidence presented at the original hearing pursuant to theAdministrative Review Law (735 ILCS 5/3-101 et seq. (West2002)). See Wolfe v. Board of Education of the City of Chicago,171 Ill. App. 3d 208, 213, 524 N.E.2d 1177 (1988).

CONCLUSION

We reverse the order of the circuit court and remand thecause to the circuit court for a determination of whether theBoard's decision to award Hare a duty-related disability pensionwas against the manifest weight of the evidence.

Reversed and remanded with directions.

CAHILL, and GARCIA, JJ., concur.