Attorney General Cuomo Finds That Health Benefits For Public Authority Board Members Are Illegal Compensation

NEW YORK, NY (February 28, 2007) — Attorney General Andrew M. Cuomo today issued a legal opinion to the New York State Housing Finance Agency (“HFA”) and State of New York Mortgage Agency (“SONYMA”) stating that these public authorities did not have the right to pay health insurance premiums for current or retired board members. The Attorney General held that past contracts entered into by the agencies that required them to pay retired board members’ health insurance premiums were illegal, null and void. The agencies had requested an opinion on the legality of those contracts.

HFA and SONYMA have been paying health insurance premiums of board members since 1998. In 2006, both agencies also entered into individual contracts with board members to provide them with health insurance benefits when they retired.

The Attorney General concluded that this activity was illegal, noting that the enabling acts that empower HFA and SONYMA were specifically amended in 1992 to prohibit board members from receiving “salary or other compensation”— and that this includes health insurance premiums.

The Attorney General disagreed with the position previously taken by HFA and SONYMA that the 1998 amendments to Civil Service Law § 167(2) — which specifically allowed unpaid board members of public authorities to participate in the New York State Health Insurance Program (NYSHIP) — implicitly authorized agencies to pay for the premiums.

The Attorney General cited the 1992 ban on compensating board members of public authorities and noted that the Department of Civil Service does not interpret Civil Service Law § 167(2) as authorizing public authorities to pay health insurance premiums of unpaid board members.

Cuomo said, “New Yorkers are demanding reform, integrity and accountability from government agencies across the board. Public authorities are no exception. Here, two public authorities previously misinterpreted a provision of the Civil Service Law and consequently violated a direct statutory ban on compensating board members. This is another example of why we need to bring openness and accountability to public authorities.”

Cuomo also praised HFA and SONYMA President and CEO Priscilla Almodovar for her integrity and thoughtfulness in requesting an opinion as to the propriety of the payment of health benefits to board members. He also noted that Almodovar had frozen the payment of benefits to retired board members when she assumed office in 2007.

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