Cuomo Sets $199,000 Salary Cap For Contractors
Associated Press January 18, 2012
ALBANY, N.Y. – Gov. Andrew Cuomo has signed an executive order to limit spending for administrative costs and executive pay at state-funded service providers including a $199,000 salary cap.
The order signed Wednesday notes the government funds many tax-exempt organizations and for-profits that provide critical services to New Yorkers in need, but it has an obligation to use taxpayer money effectively. It says some state money has been used to pay “for excessive administrative costs and outsized compensation for their senior executives.”
State agencies are ordered within 90 days to issue regulations and amend agreements to limit reimbursable costs of service providers, with at least 75 percent going to direct care or services instead of administration and limiting individual executive compensation to $199,000 “to the extent practicable.
Governor Cuomo Signs Executive Order to Reform Excessive Compensation at State-Funded Service Providers
Albany, NY (January 18, 2012)
Governor Andrew M. Cuomo today signed an Executive Order to limit spending for administrative costs and executive compensation at state-funded service providers.
“We must make sure that taxpayers’ dollars are always used efficiently and effectively to improve the lives of New Yorkers,” Governor Cuomo said. “This Executive Order will prevent public funds from being diverted to excessive compensation and unnecessary administrative costs, and will ensure that taxpayer dollars are being used to help New Yorkers in need.”
Below is the text of the Executive Order signed this afternoon:
E X E C U T I V E O R D E R
Limits on State-Funded Administrative Costs & Executive Compensation
WHEREAS, State Government in New York directly or indirectly funds, or authorizes reimbursements with other taxpayer dollars to, a large number of tax exempt organizations and for-profit entities that provide critical services to New Yorkers in need; and
WHEREAS, State Government in New York has an ongoing obligation to ensure that taxpayers’ dollars are used properly, efficiently, and effectively to improve the lives of New Yorkers and our communities; and
WHEREAS, in certain instances providers of services that receive State funds or State-authorized payments have used such funds to pay for excessive administrative costs and outsized compensation for their senior executives, rather than devoting a greater proportion of such funds to providing direct care or services to their clients; and
WHEREAS, such abuses involving public funds harm both the people of New York who are paying for such services, and those persons who must depend upon such services to be available and well-funded;
WHEREAS, to curb such abuses in executive compensation and administrative costs and ensure that taxpayer dollars are used first and foremost to help New Yorkers in need;
NOW, THEREFORE, I, Andrew M. Cuomo, Governor of the State of New York, by virtue of the authority vested in me by the Constitution and laws of the State of New York, do hereby order as follows:
1. Within ninety days of this Order, the commissioner of each Executive State agency that provides State financial assistance or State-authorized payments to providers of services, including but not limited to the Office for People with Developmental Disabilities, Office of Mental Health, Office of Alcoholism and Substance Abuse Services, Office of Children and Family Services, Office of Temporary and Disability Assistance, Department of Health, Office for the Aging, Division of Criminal Justice Services, and the Office of Victim Services shall promulgate regulations, and take any other actions within the agency’s authority including amending agreements with such providers, to address the extent and nature of a provider’s administrative costs and executive compensation which shall be eligible to be reimbursed with State financial assistance or State-authorized payments for operating expenses.
2. Each such agency’s regulations shall include but not be limited to requirements that providers of services that receive reimbursements directly or indirectly from such agency must comply with the following restrictions:
a. No less than seventy-five percent of the State financial assistance or State-authorized payments to a provider for operating expenses shall be directed to provide direct care or services rather than to support administrative costs, as these terms are defined by the applicable state agency in implementing these requirements. This percentage shall increase by five percent each year until it shall, no later than April 1, 2015, remain at no less than eighty-five percent thereafter.
b. To the extent practicable, reimbursement with State financial assistance or State-authorized payments shall not be provided for compensation paid or given to any executive by such provider in an amount greater than $199,000 per annum provided, however, that the commissioner of each agency shall have discretion to adjust this figure annually based on appropriate factors and subject to the approval of the director of the budget, but in no event shall such figure exceed Level I of the federal government’s Rates of Basic Pay for the Executive Schedule promulgated by the United States Office of Personnel Management.
3. A provider’s failure to comply with such regulations established by the applicable state agency shall, in the commissioner’s sole discretion, form the basis for termination or non-renewal of the agency’s contract with or continued support of the provider. Each agency’s regulations shall provide that, under appropriate circumstances and upon a showing of good cause, a provider may be granted a waiver from compliance with these or other related requirements in whole or in part subject to the approval of the applicable state agency and the director of the budget.
4. The commissioner for each such agency shall regularly obtain the data from providers that are needed to monitor the providers’ compliance with these requirements and shall report to the director of the budget on an annual basis the impact of these requirements on the use of public funds to support excessive executive compensation and administrative costs among providers.
G I V E N under my hand and the Privy Seal of the State in the City of Albany this eighteenth day of January in the year two thousand twelve.
BY THE GOVERNOR
Secretary to the Governor
City & State: Hospital CEO’s Looking To Circumvent Cuomo’s Non-Profit Pay Cap
By City & State NY Press January 18,2012
Gov. Andrew Cuomo’s plan to cap nonprofit executive compensation at $200,000 may hit some New York hospital CEOs directly in the pocketbook – unless they can show good reasons for taking home their six- and seven-figure salaries.
The cap came out of recommendations from an executive compensation task force Cuomo formed last August, after the New York Times revealedthat executives heading the disability service provider Young Adult Institute received more than $1 million per year in Medicaid-funded salaries.
The task force, led by Department of Financial Services Superintendent Ben Lawsky, has been gathering information since its formation and may yet issue a report of its findings, said spokesman Josh Vlasto. The task force’s meetings have not been conducted in public.
The compensation cap would likely apply to all CEOs of nonprofit service providers in the state, including hospital CEOs, who receive some of the largest compensation packages in the realm of nonprofit service providers. The cap only applies to state funds, State Budget Director Bob Megna said, so organizations could pay their executives more by using a source other than state money.
But hospital CEOs might be able to circumvent the cap, if they can provide good cause.
According to a memo circulated to hospital CEOs by Greater New York Hospital Association President Ken Raske, “Agency commissioners would have the discretion to adjust this figure annually subject to the budget director’s approval within certain defined parameters.”
“The budget language allows providers a waiver from compliance with these requirements for good cause subject to the approval of the State agency and budget director,” the memo states. “GNYHA has long worked on executive compensation issues on behalf of our members, and will continue to do so throughout the budget process.”
The cap proposed by Cuomo is notable because of how low it is, health experts say. Legislation proposed by Assemblywoman Deborah Glick to cap executive compensation proposed a ceiling of $250,000. A plan proposed by the Commission on the Public Health System’s Judy Wessler would have put the cap at $1 million.
Wessler initially assumed the cap would not apply to hospitals, which have long argued that in order to be competitive, they must provide high compensation packages to their leaders. She said she thought the $199,000 compensation figure was low, and wondered if the Department of Health might provide broad waivers to hospital CEOs in general.
“I appreciate the fact that the governor’s budget also appears to apply to hospitals in terms of the executive compensation,” she said, adding that it would be curious to see what would happen to some of the state’s prominent hospital CEOs.
For example, Linda Brady, the CEO of Kingsbrook Jewish Medical Center, receives more than $4 million a year. Other hospital CEOs in the state draw similar compensation packages, Wessler noted.
“Even though they say they can’t get people if they don’t pay them $5 million, there are hospitals all over the place that don’t pay that kind of money,” she said, “so I think it’s wonderful that this cap appears to include hospitals as well.”
For a look at the GNYHA memo New York State Budget 2012, head to City & State.