Re-election could engender lifetime pension for Coody
Posted on Saturday, July 19, 2008
URL: http://www.nwanews.com/nwat/News/67269/
When Fayetteville Mayor Dan Coody tossed his hat into the mayoral race again, he opened the possibility that the city may have to pay him a pension equal to half of his annual salary at the time he retires.
“ Frankly, I’m not doing this job for the pay or the benefits, ” Coody said. “ If I were doing this for the retirement, I wouldn’t have thought about walking away from it seven months ago.
“ I have known this is the situation since day one. It’s not a surprise to me. That’s not a factor in this decision to remain, to try to run for a third term. ”
He currently earns $ 107, 039 annually as mayor.
If all the legal requirements for the state-mandated pension were to apply today, the city would owe him about $ 53, 000 a year, after age 60, for the remainder of his life.
The amount of the pension will depend on his final pay and how long he lives.
Arkansas Code 24-12-123 says that mayors of firstclass cities who meet certain requirements “ shall be entitled to retire at an annual retirement benefit during the remainder of the person’s natural life, payable at the rate of one-half (1 / 2 ) of the salary payable to the mayor at the time of retirement. ”
Fayetteville is a first-class city.
There are, however, qualifications that must be met before that applies to Fayetteville and Coody.
If Coody is re-elected and reaches 10 years of service as mayor, and then retires and reaches age 60, he will have met the service and age requirements for the pension.
Coody, 55, first assumed office in 2001. He is finishing his eighth year as mayor of Fayetteville. If he gets reelected for four years and serves it all, he will have been mayor for 12 years.
“ The important part is 10 years, upon reaching the age of 60, is entitled to draw an annual retirement benefit during the remainder of the person’s natural life payable at the rate of one-half of the salary retirement, ” said City Attorney Kit Williams, referring to the state code.
Even if Coody meets all of those requirements and even though it is a state requirement, there is yet another factor.
“ The other half of the equation is I already participate in a retirement program that the city has, ” Coody said.
As a city employee, Coody invests a percentage of his salary in the merit employee retirement plan, which is similar to a 401 K.
The city donates 12 percent of a merit employee’s salary into the retirement program for each employee who participates. To participate, an employee must dedicate at least 3 percent of his or her salary. This does not apply to fire and police.
According to Williams, the mayor could not take funds from the retirement plan and the pension.
“ He can’t have both, ” Williams said. “ The Supreme Court said that’s double dipping. ”
So, if the time comes that Coody meets all of the code requirements, he will have to choose between the two.
Coody said he has not thought about that choice.
“ The reason I’m running for office is exactly what I’ve stated, ” he said.
When he announced that decision, he said he wanted to continue the progress and programs that have been begun under his leadership.
“ I walked away from my career to do this job. I would have made more money in the private sector. I haven’t done this job for the money, ” Coody said.
Williams said if Coody chose to take the pension, the money that has gone into his retirement account from the city would probably be returned to the city’s general fund to help fund the pension, he said.
“ For 11 years, the city would have been putting money into his retirement account. All that money would normally be his. So that certainly is a big offset to any pension, ” Williams said.
The money to pay the pension, if that occurs, would come out of the city’s general fund per the state code.
Marsha Hertweck from the city’s accounting offices said the city is not paying anyone a pension under the state statute. Both she and Williams said they were not aware of anyone ever getting a pension from Fayetteville because of the code.
Williams pointed out, too, that for a long time the city was ruled by a Board of Directors and did not have a mayor.
Fred Hanna was the city’s first mayor after the form of government was changed and he did not serve 10 years, Williams said.
The state code has similar provisions for the City Clerk. Fayetteville’s City Clerk, Sondra Smith, has worked for the city since October 2002. She became city clerk in February 2003. Her term ends this year, which would be five years.
If she chooses to run and is re-elected, she will have served nine years at the end of her next term. The pension plan in the code would not apply unless she were to be re-elected and serve yet another term.
City attorneys are also covered by the state law.
Williams has been city attorney for 7. 5 years.
“ The difference for attorneys, who are evidently not well-loved by the legislature, is that only if a city council chooses can a city attorney get a pension. I ain’t banking on that, ” Williams said.