DDAWNY LEGISLATIVE PROGRAM 2012

Oppose Administrative Caps and Limits on Executive Compensation

DDAWNY OPPOSES Part H of S.6256/A.9056, which seeks to arbitrarily restrict administrative costs and would limit the ability of not-for-profit entities to attract and retain qualified senior managers, without regard for special circumstances, the size of the operation, years of service, or the comparable salary ranges for similar professionals in peer organizations Administrative costs are being driven by a plethora of unbending rules, regulations, policy memoranda and agency directives on issues as diverse as billing and documentation requirements, health and safety, quality assurance, incident reporting and investigation, staff training, restrictions on program design and other requirements not directly related to providing people with developmental disabilities with the supports and services they need to live fulfilling and meaningful lives Well-documented academic research indicates administrative cost controls and limits on leadership compensation suffocate organizations and lead to higher turnover, poorer leadership and lower quality service Federal tax law already limits nonprofit executive compensation. Compensation must be commensurate with the duties and responsibilities of the person being compensated. The IRS defines reasonable compensation as the amount that would ordinarily be paid for like services by like enterprises, whether taxable or tax-exempt, under like circumstances The bill fails to address special circumstances, for example where the executive receiving the higher compensation has special knowledge, experience or relationships that would be difficult to replace or the executive has received a competing offer at a comparable level or has special qualifications relevant to recovering from mismanagement or to allow the nonprofit to grow into new and different areas. (For example, managed care responsibilities required under the proposed People First Waiver) In 2010 over 2,500 public employees in New York State earned more than the compensation limits being proposed in the budget bill, yet the bill does not apply to these public employees Public employees also receive generous health and pension benefits, an important component of total compensation, yet many nonprofit agencies provide far less in terms of employee benefits to senior managers

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DDAWNY LEGISLATIVE PROGRAM 2012

Oppose Administrative Caps and Limits on Executive Compensation
The Executive Budget proposes to spend more than $500 million on economic incentives to encourage job growth and development in New York, yet the budget bill does not seek to limit the compensation of the leaders of GlobalFoundaries in the Capital Region or Amneal Pharmaceuticals on Long Island or GEICO in Western New York and Long Island, leaders who have all benefited from some form of state funding or tax break The proposal is discriminatory and the wrong approach to ensuring the costeffective and quality driven delivery of necessary services and supports for people with developmental disabilities

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