Awaiting, debating Cuomo's compensation abuse remedy

The Times Union gave an update on the Governor's Nonprofit Executive Compensation order:
Check NYCON too for info this issue.

In mid-January, Gov. Andrew Cuomo gave all his agencies stark orders to stop letting public dollars pump up excessive salaries of "providers of services" to the state. Within 90 days, Cuomo's commissioners were supposed to set up regulations that ban state funds from being used to pay executives of such entities more than $199,000 annually.

As the April 18 deadline to abide by the directive approaches, agencies have not promulgated anything one can read and don't seem ready to widely disclose a word, according to key agency officials.

Instead, the Cuomo administration has been trying to finesse the terms of the directive. It may privately divulge proposals soon that get to the point of Executive Order 38 while making it possible for some big partners of the state, such as New York City hospitals, to continue to pay seven-figure compensation packages to CEOs without facing consequences, according to some parties pursuing the matter.

Representatives of some affected nonprofits say Cuomo's staff has assured them that accommodations will be made; how that happens may be made clear as soon as this week. Cuomo's order would not only cap executive pay of providers that could be reimbursed with state money: He also ordered that at least 75 percent of state financial assistance or state-authorized payments be used for direct services and care rather than administrative costs. Agency commissioners are supposed to be able to use discretion to adjust the $199,000 figure annually based on "appropriate factors," subject to the approval of the director of the budget. The gubernatorial order states that if a contracting provider fails to satisfy the executive compensation and administrative spending caps, its relationship with the state could be severed.

Cuomo's aides have been looking at making the order stick only if a heavy percentage of a provider's overall revenues come from the state, perhaps 40 percent or more. Cuomo's press office declined to discuss how the regulations are developing. Agency officials say the regulations are in progress.

"The governor's office and agencies involved have been spending a tremendous amount of time on this," said James W. Lytle, a lawyer with Manatt, Phelps & Phillips, which represents several not-for-profit organizations. "There will be some briefing as early as (this) week on where they are in this process." Lytle and others said it was too bad that all service providers were coming under scrutiny because a few "bad apples" had abused guidelines such as the IRS' reasonable compensation standards for tax-exempt organizations. Several said the attorney general's office could keep track of compliance with such standards. A spokeswoman for Attorney General Eric Schneiderman had no comment.

New York has about 27,000 registered nonprofits; 22,000 have active state contracts.

Carl Marcellino, chairman of the Senate Committee on Investigations and Government Operations, said he'll introduce a bill dealing with the matter in a different way. His bill won't be a one-size-fits-all remedy and will allow employers to use the market, experience and other factors to set fair and reasonable compensation, using the IRS procedures. He said Senate Republicans wanted to resolve differences over the pay matter in legislation as part of the new budget deal, but they didn't win that argument.


Read more: http://www.timesunion.com/local/article/Awaiting-debating-Cuomo-s-compensation-abuse-3451555.php#ixzz1qtaPnHX2