Comptroller DiNapoli outlines employees ineligible for benefits

A dozen people who thought they were set to receive a pension from the state when they retired were stripped of some or all of their credits in the system, the state comptroller's office informed them in a letter this week, representing the most recent development in a two-year battle over how, exactly, to classify quasi-governmental employees at quasi-governmental agencies.

Comptroller Thomas P. DiNapoli contends that employees of so-called local development corporations, or LDCs, aren't eligible for the state's pension system. But the officials say they're actually employees of the Jefferson County Industrial Development Agency, and as such, they're entitled to the benefits.

One employee lost 17 years of work that had accrued in the system. The 12 employees, whose years of invalidated credit were outlined in a memo provided by the comptroller's office Wednesday, can challenge the ruling. Several said that they plan to.

“Our review indicated these twelve individuals were de facto employees of the LDCs, which are not for profit corporations, ineligible to be participating employers,” Eric L. Sumberg, a spokesman for Mr. DiNapoli's office, said in an email.

Mr. Sumberg said that an IDA official was informed more than two decades ago that LDC employees couldn't get into the system.

“In 1989, Don Alexander raised a question on behalf of the Jefferson County Economic Development Corporation regarding the Corporation's eligibility to become a participating employer in the Retirement System,” Mr. Sumberg said. “We correctly informed them that not-for-profit corporations are not eligible.”

Mr. Alexander, JCIDA's CEO, declined comment Wednesday.

JCIDA has written agreements with the LDC workers, but the comptroller's office says that JCIDA has no standing to make those agreements. Plus, the comptroller's office argues, the work of the employees is controlled by the LDC, not JCIDA.

The review only included current employees. The comptroller serves as the state's watchdog over the pension system.

“I guess all I can say is that it's devastating,” said Jay M. Matteson, who heads the Jefferson County Agricultural Development Corp., an LDC. “That's huge. I was hired by the IDA with the understanding that I would qualify for state retirement benefits, and that's just a huge, devastating impact on myself and my family, not through anything that I did of my own accord.”

Mr. Matteson, who will lose 11 years of credit in the system, said he's likely to appeal the ruling.

The ruling could have broad ramifications around the state, which is host to a plethora of LDCs and IDAs. The alphabet soup of agencies has been dubbed New York's “shadow government,” and the agencies' role in the state's affairs has been a point of contention and debate in Albany. Reform-minded legislators have successfully pushed for increased scrutiny of the affairs of LDCs.

One official who lost time in the system said the state is “contradicting itself” by requiring these LDCs to file audits with the state while not allowing those who do work with them to be a part of the retirement system.

“They're changing the rules midstream,” said David J. Zembiec, the deputy CEO of the JCIDA.

Asked if he'd consider appealing the ruling, Mr. Zembiec said: “Most definitely. There's a number of errors in there.”