Shadow Agencies

One of the perceived threats of privatization comes from an ongoing shift of jobs from state agencies to "shadow agencies." The term "shadow agency" is really a catchall term that covers the various quasi-public entities that provide services that were or could be done by PEF members. These entities include public authorities, public benefit corporations, and not-for-profit corporations. In fact, the term public authority generally encompasses public benefit corporations.

Each "shadow agency" has special enabling legislation, distinct missions, different administrative structures, and diversified funding streams. For the most part, these entities do not receive money from the State General Fund. Rather, they receive revenue from federal grants, state grants, corporate grants, private donors, estate bequests, and revenue derived from bonding activity.

Almost all of the "shadow agencies" are outside of the classified service and, as such, are not covered by Civil Service Law. Most employees of shadow agencies do not have Union representation nor, do they have the protections and benefits that stem from representation.

Finally, shadow agencies such as the SUNY Research Foundation and Health Research Inc., are private not-for-profit corporations and, as such, are not necessarily subject to the NYS Freedom of Information Law ("FOIL"). Thus, information on shadow agencies is limited and obtaining useful information about them is difficult, just like any other private corporation.

As stated above, "shadow agencies" can be: public authorities, public benefit corporations, or private not-for-profit corporations. The Office of the State Comptroller defines public authorities as:

Corporate instruments of the State created by the legislature to further public interests. They are legally and administratively autonomous from the State. A separate board of directors governs each public authority, with the majority of directors appointed by the Governor and/or Legislature.

Though created by the State, public authorities are subject to neither the State Constitutional limits on the incurrence of debt, nor legislative budget approval process.

Public authorities vary in their degree of fiscal autonomy from the State. Some public authorities are completely self-supporting while others rely on State grants to fund their operations. Much of the long-term debt for which the State is responsible has been issued by a variety of public authorities with a contractual promise from the State to fund the debt service payments.

Snapshots of three of the more well know public authorities are as follows:

• The NYS Environmental Facilities Corporation (EFC), a public benefit corporation, derives its statutory authority from Chapter 744, Laws of 1970, Public Authority Law, Article 5, Title 12, Sec. 1280-1298. The EFC is authorized to plan, finance, construct, operate, and maintain a wide range of environmental pollution control facilities. The Corporation is also involved in resource recovery facilities as well as industrial hazardous waste treatment, storage and disposal. The EFC has approximately 100 employees. None of the employees has union representation. The EFC received approximately $2 million is grants from NYS in 1997.

• The NYS Urban Development Corporation (UDC), a public benefit corporation, derives its statutory authority from Chapter 174, Laws of 1968, Unconsolidated Laws, Title 16, Chapter 24, Section 6251-6285, Also 6301-6325, and 6341-6360. The UDC provides financing and technical assistance for various civic, industrial, commercial or residential development purposes, Since 1975 UDC has shifted its emphasis from residential to economic development, expanding its economic development program in 1981 to stimulate activity in distressed areas. The UDC has approximately 311 employees. None of the employees has union representation. The UDC received approximately $27 million in state grants in 1997.

• The Dormitory Authority of NYS (DASNY), a public benefit corporation, derives its statutory authority from Chapter 524, Laws of 1944, Public Authorities Law, Title 4, Article 8, Sec. 1675-1694. DASNY’s purpose is to finance, design, construct, purchase, reconstruct, and/or rehabilitate buildings for use by educational and other not-for-profit institutions. It is also authorized to make and purchase loans to students enrolled at participating institutions of higher education in the State, and finance the purchase of equipment and various short-term capital projects. In 1995, the Medical Care Facilities Finance Agency and the Facilities Development Corporation were merged into the Dormitory Authority. DASNY has approximately 485 employees a portion of which are represented by CSEA.DASNY, which had assets of approximately $27 billion in 1997, has received no State assistance in the form of grants or advances during the past five years.

Some private not-for-profit corporations are included in the term "shadow agency" because their employees perform functions that are similar to those of state employees. Frequently, the not-for-profit employees work side-by-side with state employees.

Snapshots of two of the better known private not-for-profits, the SUNY Research Foundation (RFSUNY) and Health Research, Inc. (HRI) are as follows:

• RFSUNY is a private, not-for-profit educational corporation chartered by the NYS Board of Regents to further the educational purposes of SUNY. The Foundation is primarily responsible for the fiscal administration of grants, contracts, and gifts supporting research, training, public service, and related programs carried out by, or under the supervision of, faculty or staff members of the state-operated campuses of SUNY.

• RFSUNY has approximately 7,000 employees. None have union representation. RFSUNY receives the majority of its funding from Federal revenue and the remainder consists of state and corporate grants and endowment funds.

• HRI is a not-for-profit corporation affiliated with the NYS Department of Health. HRI’s mission is to assist DOH to effectively solicit, and administer financial support for DOH projects, and to disseminate the benefits of DOH expertise through programs such as technology transfer. HRI receives its funding from Federal agencies, state agencies, not-for-profit foundations, and commercial firms, individual donors, estate bequests, and court settlements. At this time, we do not have HRI employment figures. However, some of the employees are represented by CSEA.

 

Privatization Task Force

 

Michael Savery, Task Force Leader

Division 257, OMRDD Central Office

 

Martin C. O'Connor, Supervisor of Budget Policy

Public Employees Federation

 

Kathleen Fitzmaurice, Field Representative

Public Employees Federation

 

Stephen Connolly, Research Assistant

Public Employees Federation

 

Debra Greenburg, Associate Counsel

Public Employees Federation

 

Don McGrath, Training Specialist

Public Employees Federation

 

PEF Privatization Committee