Comptroller criticizes SCWA directors’ perks

08/12/2010 12:00 AM |

For more than 30 years the Suffolk County Water Authority gave its directors unauthorized fringe benefits, ranging from cars for personal use to health insurance and dental coverage, according to the state comptroller’s office.

A study of 20 local public authorities around the state released early this year by the comptroller’s office and recently obtained by The Suffolk Times found that the SCWA was one of five that paid their board members in excess of what their respective county legislatures had authorized.

In the SCWA’s case, the unauthorized benefits represented nearly 40 percent of the total compensation received by its board members during the audit period, which covered from Jan. 1, 2007, through March 31, 2008.

“The practice of providing unauthorized payments dates back to 1976,” said a spokeswoman for state Comptroller Thomas P. DiNapoli, referring to the authority.

The report found that the SCWA terminated the fringe benefits, except for life insurance, to board members during the audit period. The SCWA officials subsequently ended that exception and directors now pay for benefits that the authority offers to its employees.

“Nobody takes benefits now unless you want to pay for them,” said James Gaughran, the authority’s new chairman.

During the 15-month audit period, the SCWA directors as a group received authorized compensation of $127,400 and unauthorized compensation of $49,531, which included personal use of authority vehicles, health and life insurance, dental and vision coverage.

The authorized compensation for the directors consists of the chairman’s annual salary of $32,000 and the $18,500 annual salary of each of the other four directors. Board members are appointed for five-year terms.

The comptroller has no legal authority to determine whether an action is criminal, said Mr. DiNapoli’s spokeswoman. “We can only make recommendations,” she said.

The SCWA is a public benefit corporation that by law must reinvest any profits in its operations. It has no shareholders and pays no dividends. The Oakdale-based authority, which had revenues of approximately $153 million in its latest fiscal year, claims to be the largest provider of groundwater — water taken from underground aquifers — in the U.S. It’s directors are appointed by the Suffolk County Legislature, which also sets their compensation.

The comptroller’s report has been widely circulated among foes of the authority’s plan to build a three-mile-long water main from East Marion to Orient’s Brown’s Hills community. One opponent forwarded a copy of the report under the heading “Compensation of Suffolk County Water Authority Board members — The Gravy Train.”

Some critics of the authority view its directorships as political plums awarded by the legislature to people who once held elective office. Melanie Norden, a Greenport resident and activist who opposes the Orient project, is blunt.

The SCWA, she wrote recently, “is where all good politicians go to die — in style.”

Not surprisingly, some SCWA directors and former directors don’t take kindly to such criticism.

“I happened to be the county executive of Suffolk County for four years,” Democrat Patrick Halpin said in an interview. “I ran a $1.2-billion corporation with 12,000 employees. To the credit of the county Legislature, they’ve worked very hard to appoint people who they think are capable of running one of the best water companies in the country.”

For his part, Michael LoGrande, a Cutchogue resident and also a former Republican county executive who retired in May after two decades as SCWA chairman, said, “I went to MIT. I was a Harvard University Loeb Fellow. I was the commissioner of planning and development in the Town of Islip. I was the chief planner of Suffolk County. And I also devised the system of preserving the Pine Barrens. Now, if you want to call that a political payoff, you don’t understand.”

Current SCWA directors have more than a nodding acquaintance with the county legislature. Three of them — Mr. Gaughran, Jane Devine and Mr. Halpin — have served there. A fourth, Errol D. Toulon Jr., who joined the board in June, ran unsuccessfully last fall to represent the 12th District in Smithtown.

All are Democrats, as is the other director, Frank J. Pellegrino, business manager of Plumbers Union Local 200, which covers Suffolk and Nassau Counties. The political affiliations reflect the Democrats’ takeover of the legislature in 2005.

“It’s the right of the majority” to appoint directors of the same party, noted Ms. Devine.

Politics was not an issue when the Democratic board challenged the Democratic comptroller’s findings, although the SCWA board voluntarily ended health, vision and dental insurance benefits in 2007 and terminated paid life insurance benefits last year. SCWA cars are no longer given to directors for personal use, although one is available to the chairman if he needs it for authority business.

In a letter to the comptroller’s office contesting its findings, the authority’s then-CEO Stephen Jones wrote that “the Suffolk County Legislature acknowledged and ratified the provision of benefits to SCWA board members over the years. Thus, the SCWA board members were legally entitled to receive such benefits.”

The comptroller’s office says, however, that resolutions passed by the legislature that the authority contends provide detailed explanations of annual compensation to SCWA board members contain no such information.

Although the SCWA ceased giving free fringe benefits to its current directors, the comptroller’s report said the SCWA continued to “inappropriately” provide health insurance to a former board member, whom Mr. DiNapoli’s spokeswoman identified as Dr. Melvin Fritz.

The legislature last August authorized SCWA to pay insurance benefits to three former directors, including Dr. Fritz, and their spouses as well as to the widow of an ex-board member.

“It was a matter of compassion,” a spokesman for the Legislature’s presiding officer, William Lindsay, said of the lawmakers’ action. “They are elderly, and they had been promised the benefits.”

Even as seasoned an administrator as Mr. LoGrande didn’t always get his way with legislators. They failed, for example, to support his 2007 request for a $4,500 increase in annual compensation for the other SCWA directors and an $8,000 hike for himself.

The salaries for the SCWA’s directors and chairman were raised to their current respective levels of $18,500 and $32,000 in 1999. The previous increase, according to Mr. LoGrande, occurred in 1973.

The SCWA was one of three water authorities in the state cited by the comptroller’s office for providing unauthorized compensation to their directors. One of the other authorities, which is far smaller than the SCWA, offered its board members unauthorized benefits that were more than double its approved compensation.