Former CFO under Alvin Brown used city policy to realize $117,984 gain

[thelakelander]

After Alvin Brown lost his mayoral re-election bid, his chief financial officer, Ronnie Belton, had a choice to make — one with financial implications for both him and the city.

By filling out a form, Belton was able to covert $47,937 — the amount deducted from his paychecks to go toward his future pension ­— into $165,921. On June 30, he switched from the city's general employee pension plan into its 401(k)-type investment plan. Belton's gain was the city's loss; it got nothing in return.

The city allows employees to essentially cash out the value of their future pension benefits and deposit that amount in a 401(k) plan. The arrangement has an upside for the city because it no longer bears the risk of guaranteeing the payout of pension checks to the employee.

But in Belton's case, the city was not on the hook for any pension obligations. He only worked four years for the city, and employees don't qualify for any pensions until they work at least five years.

"No. No. No way," Jacksonville City Councilman Matt Schellenberg said when told what happened. "They are not [allowing this]. He didn't have the years."

Belton is not alone.

The practice has been going on since 2009, when Mayor John Peyton moved to create the option of having 401(k) accounts for the general employees.

full article: http://jacksonville.com/news/metro/2016-02-13/story/former-chief-financial-officer-under-alvin-brown-used-city-policy

[Steve]

I think the easiest solution is to simply end the pension plan for all new employees. Use the 401(k) plan - just make the matching competitive with the private sector so you can recruit talent.

I think you can differentiate Police and Fire in the match structure.

[Steve]

One thing missing from the article: How exactly did $47k become $165k? It doesn't actually say. All it says is Belton filled out a form and it happened. Can I have that form?

I assumed it was from some sort of match, but it doesn't say.

[thelakelander]

Another thing is the article only focuses on Belton, yet says this loophole has been around since the Peyton administration. Given the amount of years that have gone by, it would seem that a lot more people than just Belton have "filled out this form".

[Steve]

^Agreed - he was probably the largest individual Dollar Amount so he got called out.

I emailed the Author of the article for some clarification.

[RWNeal]

^Agreed - he was probably the largest individual Dollar Amount so he got called out.

I emailed the Author of the article for some clarification.

If you get a reply, please share it! I'd love to see what 15+ years of pension contributions would turn into!

[Steve]

I did - David actually sent me a lengthy reply. I'm not going to post it verbatim, but essentially it has to do with the city running a calculation to first understand the future value, then another calculation to determine the present value of the benefit.

It makes some sense....if the employee is eligible for pension (it gets the money off the books now instead of later). The question surrounds the eligibility. Typically I've always understood that pension takes 5 years to vest but it sounds like from the story that the city law conflicts itself.

[mtraininjax]

smoke - no fire...