Customers of the Sangamon Valley Public Water District will see an option to vote to elect trustees to the SVPWD board on the primary ballot (June 28). That measure was championed by two current and two former board members who were appointed to the board for decades. Answering questions about why they want trustees elected now produced information about a non-profit retirement plan that members benefitted from.
Several members, both current and former, have much to lose by not being reappointed to the Sangamon Valley Public Water District Board. Some of the benefits board members received over the decades they held their seat are difficult to figure out, but during the Feb. 2022 board meeting, member Mike Melton made his stake known.
Melton held a 457b retirement account through the non-profit Sangamon Valley Public Water District. According to the IRS, 457b retirement plans are available for certain state and local governments and non-governmental entities (civil servants, municipal employees, law enforcement officers and public safety personnel) tax exempt under IRC Section 501.
Plans eligible under 457(b) allow employees of sponsoring organizations to defer income taxation on retirement savings into future years.
Board members with SVWPD receive an annual stipend (currently $1200 annually, $1800 for the chair) which is reflected in the non-employee compensation tax form they receive each year.
Beginning in 1984, SVPWD established the 457b plan,although no vote on the plan can be found. In 1993 that plan was split into an employee plan and a board plan with Lincoln Financial, then that was updated in 2005. The district or Lincoln Financial does not have documentation related to the board member’s 457b plan.
In Jan. 2022, SVPWD discontinued the 457b plan for the board members who participated in it. Since 1984, there have been seven board members. Names were not available via FOIA, but we know that board members Monte Cherry, Michelle Grindley, Meghan Hennesy, Mike Larson and Colleen Schultz did not participate in the retirement plan.
It was disclosed through FOIA, though, that on Jan. 1, 2021 the aggregate trustee investments were $316,699.20. Withdrawals in 2021 were $115,721.09 and the year ending balance as of Dec., 31, 2021 was $259,936.90 for three trustees. The annual average gain over the time the plan was in place is 7.5-percent.
Melton has been vocal about the losses he has suffered by the elimination of the 457b plan for the trustees. Aside from airing his grievance in the Feb. 2022 board meeting, an email obtained via FOIA shows that Melton wrote, “Changing a board member retirement program with Lincoln Financial without any contact with the board member from deferred compensation to annuities to an IRA.These changes cannot be reversed with Lincoln.The annuity was taken by me @ $1000 a month but the IRA is valued at $200,000 and any disbursements must be in total, taxes would be 25% or $50,000.”
Oversight of the plan was at the sole discretion of the plan manager and changes did not require board discussion or approval.
Melton has also taken to the NextDoor app to air his grievance. According to one post, Melton says that he used the $1,000 a month to pay his bills. “Look what happens if you put your whole yearly SVPWD salary in the stock market for 40+ years. And people like you (GM Kerry Gifford) b*$&h about me receiving a pension when I invested my SVPWD salary wisely until someone like you had trust in moves your money into other accounts without my approval and I lose all the salary from 40 years but still have the income from the investment!”
Melon is one of two current board members (Bob Buchanan) and two former board members (Bud Parkhill and Mike Larson) who initiated a measure on the June 28, 2022 ballot that asks voters to elect SVWPD board members as opposed to appointing them.
Parkhill spent 50 years on the board, Melton 40, Buchanan 30 and Larson 12.
