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Governor Andrew Cuomo has announced the creation of a new task force to investigate executive and administration compensation levels at not-for-profits “that receive taxpayer support from the state”. The announcement came just one day after The New York Times published a front-page article focusing on excessive compensation packages paid to Joel and Philip Levy who until recently had headed Young Adult Institute (YAI). The two brothers had each received annual compensation of approximately $1 million or more, including a wide range of perks. Emblematic of what many saw as extreme abuse was $50,400 to cover the down payment on a co-op apartment in Greenwich Village for Philip Levy’s daughter when she was attending graduate school.
"Not-for-profits that provide services to the poor and the needy have a special obligation to the taxpayers that support them," said Governor Cuomo. “Executives at these not-for-profits should be using the taxpayer dollars they receive to help New Yorkers, not to line their own pockets. This task force will do a top-to-bottom review, not only to audit current compensation levels, but also to make recommendations for future rules to ensure taxpayer dollars are used to serve and support the people of this state, not pay for excessive salaries and compensation."
The task force will be led by the New York State Inspector General Ellen Biben, Secretary of State Cesar A. Perales, the Medicaid Inspector General Jim Cox, and the Superintendent of the Department of Financial Services Benjamin Lawsky. Commissioners from the Department of Health, the Office of Mental Health, and OPWDD will also serve on the task force.
Nonprofit leaders responded with mixed emotions. They recognized that instances of abuse, while rare, do occur and that these needed to be addressed. At the same time, they expressed concern that the nonprofit sector was being unfairly singled out for an investigation in which the sins of a very few could taint the entire charitable sector.
“NYCON supports IRS and state enforcement efforts to root out those relatively few and often large institutional nonprofits, especially in health care and higher education, where charitable resources are used for the private and personal gain of executives,” said Doug Sauer, CEO of the New York Council of Nonprofits. “Such abuses are a stain on the sector and the Governor is right, public trust is integral to the mission and work of our state’s charities.”
“We support the Governor’s effort to establish clear policies and procedures regarding how much State government will support executive compensation,” said Peter Pieri, Executive Director of the InterAgency Council of Developmental Disabilities Agencies. “This will help guide local board of directors in their decisions on these matters. I am particularly heartened that the Governor has decided to include DOH and OMH along with OPWDD in this initiative to ensure there are consistent guidelines across state agencies.”
“We have values around public service,” said Philip Saperia, Executive Director of the Coalition of Behavioral Health Agencies. “In instances of fraud or betrayal of the public trust, those individuals and those agencies should be investigated.”
At the same time, however, nonprofit leaders expressed concern that a few instances of abuse were leading to a wholesale indictment of the sector.
“It needs to be emphasized that that these cases are very much the exception,” said NYCON’s Doug Sauer. “The vast majority of community-based nonprofit employees are doing hard and challenging work at compensation levels that are far below public employees and often the for-profit sector.”
“This is taking one bad apple and using it to measure the whole bushel,” said Saperia.
Nonprofit executives also took issue with the Governor’s description of the sector as “taxpayer supported nonprofits”. “The phrase is misleading,” said NYCON’s Doug Sauer. “The State government contracts to buy services from nonprofits just as it contracts with the for-profit sector; except that the nonprofit is often expected to unfairly perform at below the actual cost of doing business. Perhaps it is also time to order an extensive review of the executive compensation of ‘taxpayer supported for-profit businesses’.”
The Governor’s announcement noted that “there are currently no state rules governing executive and administrative compensation for not-for-profits that receive state support.” However, it went on to point out that the State’s Office of the Medicaid Inspector General (OMIG) “has the authority necessary to exclude providers from participation in the Medicaid program if it is found that they have engaged in fraudulent or abusive practices.”
Agency executives responded by noting that there are a range of legal, regulatory and funding restrictions which effectively limit executive compensation.
“The Internal Revenue Service already provides compensation guidelines as set forth in the federal tax code and we believe those guidelines should be upheld,” said Sauer.
“This is dealt with through limitations on administrative overhead contributions,” said another executive director.
“NYCON asks the Governor to take this opportunity to go beyond the immediate executive compensation issue and take a comprehensive look at how the state’s overall regulatory and business relationship with the nonprofit sector can be improved in the interest of all concerned,” said Sauer.
This will not be the first time that the State has undertaken a broad based examination of executive compensation levels at nonprofit agencies with contracts to provide human services. Last year, the Commission on Quality of Care and Advocacy for People with Disabilities (CQCAPD) released a study of compensation based on survey data obtained from 658 nonprofits which contract with the State’s Mental Hygiene (OMH, OPWDD and OASAS).
The Governor’s announcement cited a January 2010 analysis by the Division of Budget of not-for-profit employees at agencies with OMH, OPWDD and OASAS contracts. It found that there were approximately 1,926 employees with annual salaries greater than or equal to $100,000. The total value of their salaries was $324.6 million, with an average salary of $168,555.
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Comments
I agree that compensation is too much, and folks more money does not mean more performance,
"Hispanic," on grant applications and then use the money for everything
else but what was on the paperwork. Or, even more interesting, are the organizations/agencies that have to pay for multiple lawyers because
they haven't quite grasped the concept of NYS mandated reporting or
that worker retaliation is not a, "good thing," to do.