Scottville owes employees thousands in pension payments

November 21, 2022

Scottville owes employees thousands in pension payments

By Rob Alway, Editor-in-Chief

SCOTTVILLE — Full-time employees of the City of Scottville recently found out that the city owes their retirement pensions thousands of dollars. City Manager Jimmy Newkirk said he found the discrepancy when he started to research benefit packages for the newly created community development director position and also for the vacant police chief position. 

During the April 5, 2021 regular meeting of the City Commission, commissioners passed resolution 21-07 offering city employees a “457 plan” from the Municipal Employees’ Retirement System. The plan offered a 6% match from the city of what the city’s full-time employees contributed to the plan. This special program was in addition to contributions already made to MERS. 

The plan was brought to the Commission by Acting City Manager Matt Murphy, who was also the police chief. Murphy had been in the position of acting city manager since December 2020 when city manager Courtney Magaluk had gone on medical leave and then later resigned. The resolution called for the plan to be offered to city employees retroactive to March 2020, when Murphy was hired as police chief. Murphy resigned in September of this year.

Newkirk said while investigating the program, he became aware that the acting city manager had only offered the program to the full-time police officers and not the rest of the city’s full time employees, as instructed by the commission. Newkirk, who was hired in early May 2021, said that he was aware of the 457 plan because it was written into his contract.

“This is something that I thought was a benefit that was already being offered to all the city’s full-time staff,” Newkirk said. “I had sent an email to an account representative at MIRS inquiring about the program when I was setting up benefit packages for the new community development director position and also for a future police chief. That’s when I found out that it had not been offered to all the staff.” 

The resolution authorized the acting city manager, Murphy, to begin offering the benefit to city staff. 

In a Nov. 10, 2022 email to Newkirk from Sonia Elahi, a benefit plan coordinator from MERS, Elahi stated, “In this case the City failed to inform the employees about their eligibility to 457 and since the employees never had a chance to make an election and because of this error they missed out on employer contribution and the market returns, the employer is responsible for making up for the 100% of the missed employer contribution, 25% of the missed employee contribution (if the error persists between 3 months to 3 years the employer is responsible for 25% of the missed employee contributions, and if the error persist for more than 3 years that the employer has to make up for the 50% of the missed contributions), and the employer is also responsible for making up for the loss gains (market returns).”

Newkirk said the error will cost “tens of thousands of dollars” to the city’s taxpayers. The issue impacts five full time employees; Newkirk and Police Sgt. Katrina Skinner have been receiving the benefit.

“Looking over paperwork and correspondence, there is nothing I see that limited this to just the police department,” Newkirk said. “I just don’t understand why there would have been that exclusion in the first place. The City Commission trusted that its city manager at the time would have followed its instructions.” 

Newkirk said he is waiting from MERS to find out how much the city owes its employees and what kind of payment arrangements can be made. 

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