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Fayetteville council weighs tax-deferred compensation plan for members

Officials say money would not be available until after leaving office

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The Fayetteville City Council wants more information on setting up some form of compensation plan for its members after they leave office.

At its meeting Monday night, the council gave consensus approval to have city administrators research the possibilities of a tax-deferred compensation plan.

The directive was in response to Councilmen D.J. Haire and Chris Davis, who asked for information on “some form of retirement” similar to plans offered to federal, state and county elected officials, according to the councilmen’s written request.

“I just want to get a clarification,” said Councilwoman Shakeyla Ingram. “We are asking staff to bring back what we can and cannot do, correct?”

Mayor Mitch Colvin responded that the intent is to gather more information on the proposal.

Haire and Jones laid out four conditions for eligibility for the plan:

  • Available to a sitting council member who has served 10 years on the council.
  • Participants must be 60 years old to apply.
  • Money would not be received until the official leaves the City Council.
  • Each official would receive $500 per month.

Councilman Johnny Dawkins, who is a job benefits and Medicare consultant, said his suggestion would be to put $500 a month in a tax-deferred compensation plan for each sitting member of the council.

“You cannot touch it while you’re on council,” Dawkins said. “It would not be a retirement plan.”

He said a member of the Cumberland County Board of Commissioners makes about $10,000 more a year, including benefits and pay, than members of the City Council.

“That’s not right,” Dawkins said. “We work just as many hours. To say this is part-time is just not true. Technically, if it were part-time, we could not be on the health insurance plan. But we are allowed to participate on the health insurance plan, which is a federal requirement for 30 hours a week. I can assure you we put in 30 hours a week and more. I know I do; I'm sure most of our other council members do."

Dawkins said he wants the staff to provide more information to the City Council.

According to the city, the salary for a council member is $19,044 per year. The mayor pro tem receives about $20,160 per year, and the mayor takes home $34,833 per year.

Elected city officials are eligible for medical, vision and dental insurance at the same costs paid by city employees.

Cumberland County sets the starting salary for a county commissioner at $23,297 a year. The board vice chairman is paid $25,297 and the chairman, $31,100 a year.

The commissioners are eligible to invest in a 401k-like matching investment plan with the county, including a deferred compensation plan. The county matches up to 4.9% of a board member’s salary for those who opt to participate.

Glenn Adams, chairman of the county Board of Commissioners, said he chose a plan with Nationwide Insurance.

“Those are our funds,” Adams said. “We have to fund it ourselves. If I want to do it, I take it out of my salary.”

But he noted that there is a matching component to the investment plan.

Some cities do offer plans to elected officials to provide retirement and survivor income. Financing for them is by employee contributions, investment earnings and city contributions.

But other cities in North Carolina offer no such plans.

Winston-Salem has no retirement plan for City Council members, according to Frank Elliott, director of communications for that city.

“We do not pay a pension plan for elected officials,” Elliott said Monday. “They receive an annual stipend for their service.”

The stipend ends, he said, when an official leaves office.

A year ago, the annual stipend for council members in Winston-Salem was $18,220. This year, they got a raise and receive $25,700 a year, Elliott said.

“They are not part of the local government retirement system,” he noted.

Members of the Durham City Council are not part of the state employees retirement plan, and the city does not offer a separate retirement plan to them, a city representative said.

“Our commissioners do not have a retirement plan,” said interim communications director Amanda Perry in an email. “Adding a retirement benefit was discussed as part of the 2023 budget process but not adopted."

Michael Futch covers Fayetteville and education for CityView TODAY. He can be reached at mfutch@cityviewnc.com. Have a news tip? Email news@CityViewTODAY.com.

Fayetteville, City Council, D.J. Haire, council pay