Federal officials last year ruled that the families were ineligible for about $300,000 each in benefits because the slain volunteers, Eugene Marshalik and partner Nicholas Todd Pekearo, were not full-fledged peace officers.
At a Manhattan news conference, Schumer and Kelly said federal officials had misinterpreted provisions of a program benefiting police officers, firefighters and other emergency workers who die in the line of duty.
The decision was done "on the cheap, not just financially, but morally and ethically," Schumer said.
Added Kelly: "The denial of benefits is simply wrongheaded."
The Justice Department had no immediate comment.
The victims were killed on March 14, 2007, in a confrontation with gunman David Garvin, who was trying to escape after killing a bartender in a restaurant. Other officers then killed Garvin.
Marshalik, a 19-year-old college sophomore, and Pekearo, an aspiring writer who was 28, were members of the city's force of 4,500 part-time auxiliary officers, who provide extra uniformed police presence but do not carry weapons.
The pair were lauded as heroes for confronting the gunman, even though they were not required to put themselves at risk.
"The selfless acts of these officers, which I believe prevented many other deaths, are precisely the type of conduct that the (benefits program) is intended to compensate," Kelly said.
A closed hearing on the families' appeal of the decision was set for Wednesday at Police Headquarters. Kelly was expected to attend.
Earlier this year, federal officials dropped efforts to prevent a volunteer firefighter from Long Island who was killed in the Sept. 11, 2001 terror attacks from receiving the same death benefit. The victim, Glenn Winuk, had rushed into the World Trade Center wearing medical gear before the skyscrapers collapsed.
In the Winuk case, the government had argued the benefit was intended only for active-duty public safety officers, and that Winuk didn't qualify because he hadn't been on regular duty with the Jericho Volunteer Fire Department since 1998.
But the family prevailed after a federal ruled that the denial of the benefit had been arbitrary.
