The Virginia Retirement System is weighing in on whether or not employees at the Virginia Highlands Small Business Incubator can receive state benefits.
Last month, questions were raised after it was revealed the town of Abingdon facilitates the wages and benefits of Incubator employees.
Washington County, Virginia supervisor Vernon Smith sent us a copy of the letter issued by the VRS, on Friday. It reads, "VHSBI's employees are not eligible to receive VRS benefits, despite having been reported in through the Town of Abingdon."
Smith said he first noticed the problem, while looking at the Incubator's request for county funds. He said Incubator employees are on Abingdon's payroll, even though it's a non-profit. Smith said he was concerned about a possible misuse of taxpayer dollars. That is why he asked the VRS for its opinion.
Some background about the Incubator: some form of the Incubator has existed since 1999. It was a government entity before becoming a non-profit in 2001. Abingdon facilitates the pay for its employees. Then, the Incubator pays the town back, each quarter.
The Incubator's Executive Director, Cathy Lowe, is also the mayor of Abingdon. We talked to Lowe and Abingdon town manager Greg Kelly. They said they filed requests for a legal opinion to the VRS, separate of Smith's request.
Kelly explained, the IRS changed the rule in 2011, but the town wasn't notified about that until now. So they agreed it was a mistake, and the town should not have been handling the Incubator's payroll since then.
Kelly said the town is now working with the VRS and Lowe to set things straight. Lowe said she will request a third party to take over the Incubator's payroll and bookkeeping.
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