|Andrew M. Cuomo
|Benjamin M. Lawsky
Department of Financial Services
Task Force Chairman
August 25, 2011
Benjamin M. Lawsky, Superintendent of the Department of Financial Services, announced today that Governor Andrew M. Cuomo’s Task Force on Not-For-Profit Entities sent a data request to not-for-profit organizations seeking detailed information about compensation for their executives and board members. Superintendent Lawsky chairs the Governor’s Task Force.
“Our task force is conducting a top-to-bottom review, not only to audit current compensation levels, but also 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,” Superintendent Lawsky wrote. “Not-for-profits that provide services to the poor and the needy have a special obligation to the taxpayers that support them,” Lawsky’s letter states.
The letter is being sent on a rolling basis to the boards of trustees of organizations selected based on an analysis of funds received from the State of New York. They include Medicaid providers, other health services providers, many types of social service providers, hospitals and others. A copy of the letter follows this release.
Governor Cuomo created the Task Force following reports of startlingly excessive salaries and compensation packages for executives at not-for-profits that depended on state Medicaid funding through the Office of People With Developmental Disabilities (OPWDD) and other State agencies.
In addition to seeking detailed compensation and other financial data, the Task Force letter also asks the organizations' boards to explain the basis for their not-for-profit status and whether it is appropriate to recoup any excessive compensation.
Besides Superintendent Lawsky, the task force includes Senator Carl Marcellino, Assemblyman Steve Englebright, New York State Inspector General Ellen Biben, Secretary of State Cesar A. Perales, Medicaid Inspector General Jim Cox and Commissioners Michael F. Hogan, Courtney Burke, Arlene Gonzalez-Sanchez and Nirav R. Shah from the Office of Mental Health, OPWDD, the Office of Alcohol and Substance Abuse and the Department of Health, respectively.
Senator Carl L. Marcellino, Chairman of the Senate Investigations and Government Operations Committee, said, “As the Task Force works to get a firm grasp on compensation at our taxpayer supported not-for-profits, we need detailed information to better understand the scope of the issue. By working with the not-for-profits, we will be able to craft solutions that protect those that are doing business the right way and address those that are wasting taxpayer dollars for personal gain.”
Assemblyman Steve Englebright said, “For the first time in history New York State is developing a comprehensive database regarding the compensation, services, and governance structure of the not-for-profit entities that it contracts with. This is a good and necessary first step towards both such reform as may be necessary and a reassurance to the public that their tax dollars are being wisely invested.”
According to the Department of the Budget's January 2010 preliminary analysis of not-for-profit employees contracting with the mental hygiene agencies (Office of People With Developmental Disabilities, Office of Mental Health, and Office of Alcohol and Substance Abuse Services), 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 $168,555.
|Andrew M. Cuomo
|Benjamin M. Lawsky
Department of Financial Services
Task Force Chairman
August 25, 2011
BY FIRST CLASS MAIL
Board of Directors of
[City], [State] [Zip]
Re: New York State Not-For-Profit Task Force
Dear Members of the Board:
As you may be aware, the Governor announced earlier this month that he has created a task force to investigate the executive, administrator and board compensation practices at not-for-profits that receive taxpayer support from the State of New York.
Our task force is conducting a top-to-bottom review, not only to audit current compensation levels, but also make recommendations for future rules to ensure taxpayer dollars are used to serve and support the people of this state, not pay for excessive salaries and compensation. Not-for-profits that provide services to the poor and the needy have a special obligation to the taxpayers that support them.
Pursuant to this inquiry, we are collecting information from the not-for-profit organizations throughout the State, which were selected based on an analysis of funds received from the State of New York. To this end, we request that [Not-For-Profit Name] provide us with the following annual information between 2007 and June 2011 by no later than September 15, 2011:
1. Federal Employer Id. (EIN)
2. NY State registration no.
3. NTEE classification no.
4. Annual total revenue (in US$)
5. Annual total government grants/contracts (in US$)
6. Annual total government grants/contracts from New York State (in US$)
7. Annual total program service revenue/fees for services(in US$)
8. Annual total expenses (in US$)
9. Annual total salaries, other compensation, and employees benefits (excluding work related reimbursements) (in US$)
10. Annual total number of employees
11. Annual total number of employees with base salaries over $100,000
12. Annual total number of executives
13. Annual total base salaries (in US$)
14. Annual total bonus (in US$)
15. Annual total other compensation (in US$)
16. Annual total deferred compensation (in US$)
17. Annual total work related reimbursements to employees (in US$)
18. List of any distributions and/or grants to any other not-for-profit and the amounts of such distributions and/or grants
a. Name of distribution/grant recipient
b. Recipient’s Federal Employer Id (EIN)
c. Annual total transferred to the recipient (in US$)
19. List of State funds received, including but not limited to, all grants, contracts and fees for services or program service revenue.
a. Name of government agency provided fund or paid fees
b. Nature of the fund (G-Grants/C-Contracts/F-Fees for services or program service revenue/O-Others)
c. Annual total amount received (in US$)
In addition, for each individual who is an executive/administrator/board member or received total compensation of over $100,000 from [Not-For-Profit Name] in 2007 to June 2011, please provide the following annual information:
20. Last name
21. First name
22. Number of income/compensation/reimbursement generating positions
23. From the reporting organization
a. Job title
b. Is this an executive/administrator/board member position (E-Executive; A-Administrator; B-Board member)
c. Start date of employment
d. End date of employment (if applicable)
e. Annual base compensation
f. Annual bonus
g. Annual other compensation including, but not limited to, incentive compensation, benefits of any kind, and/or perks such as cars, travel and hotel expenses of any type, apartments, tickets to games/events and/or club memberships
h. Annual deferred compensation
i. Annual total compensation (e+f+g+h)
j. Annual reimbursement received
k. Average hours per week
24. From other organizations (please repeat item “a” through “p” if engaged in more than one other organization.
a. Name of organization
b. Is this organization a not-for-profit organization (Y/N)
c. Is this organization affiliated with the reporting organizations stated above (Y/N)
If answer (Y) for question 24.c, please provide responses to 24.d through 24.p
d. Federal Employer Id. (EIN)
e. NTEE classification no.
f. Job title
g. Is this an executive/administrator/board member position (E-Executive; A-Administrator; B-Board member)
h. Start date of employment
i. End date of employment (if applicable)
j. Annual base compensation
k. Annual bonus
l. Annual other compensation including, but not limited to, incentive compensation, benefits, (of any kind), and/or perks such as cars, apartments, tickets to games/events and/or club memberships.
m. Annual deferred compensation
n. Annual total compensation (j+k+l+m)
o. Annual reimbursement received
p. Average hours per week
25. A description of your executive and administrator compensation program, including, base pay, bonuses, annual incentive pay, sales incentive pay, long term incentive pay, supplemental incentive pay, and any other incentive plans.
26. A description of your bonus program, including, cash and other incentive breakdowns, vesting periods, claw-back provisions and any other provisions to tie compensation to performance.
27. A description and chart of the compensation awarded to executives and administrators for each year.
28. A description and chart of all bonuses awarded to executives and administrators for each year.
29. Identify the number of employees who receive any compensation, bonus and/or incentive pay with a combined value equal to or greater than $200,000. Identify each employee receiving any compensation, bonus and/or incentive pay equal to or greater than $200,000.
30. Identify all compensation consultants retained as part of the compensation process.
31. Provide a list of the top twenty-five (25) highest paid executives, administrators and/or board members.
32. A description and chart of the board compensation including compensation for each board member. Please provide a summary of how the compensation was derived for each board member.
33. A description of all policies, procedures and protections the board has instituted that will ensure board review of all such company expenditures going forward. Please provide the task force with an accounting of the actions the Board plans to take that will protect taxpayer funds.
34. Do you believe that recoupment and/or claw-back of executive and/or board compensation is necessary?
35. What is your view regarding recoupment and/or claw-back of executive and/or board compensation?
36. Given current economic conditions and information, is the board or management considering any recoupment and/or claw-back for past salary and/or benefits?
37. What are your comparables in determining executive, administrator and/or board compensation?
38. What justified the compensation to executives?
39. What justifies you being a not-for-profit?
The task force believes that the Board of Directors is most appropriately positioned to respond to these requests as the not-for-profit’s top management likely has a significant interest in the size of their compensation. In this era of responsibility, boards of directors must prevent wasteful expenditures of funds on outsized executive and administrator compensation.
Please provide information for questions (1) to (24) to our office in Microsoft Excel spreadsheet in conformance with those included on the enclosed CD. On the CD, you will find an Excel Workbook containing two spreadsheets, denoted by separate tabs at the bottom. The first spreadsheet, entitled “Organization,” requires information responsive to requests (1) through (19). The second spreadsheet, entitled “Individuals,” requires information responsive to our requests twenty (20) though twenty-four (24). After exporting your data into conforming spreadsheets, please send the spreadsheets to us in electronic form, along with your response to requests twenty-five (25) through thirty-nine (39) by overnight mail to my attention at the New York State Insurance Department, 25 Beaver Street, New York, NY, 10004. Please identify with your submission a person at [Employer Short Name] who may contact in the event we need further information. If you have any questions, including if you require technical assistance, please contact our office at [(212) xxx-xxxx] and reference this letter.
Thank you for your attention in this matter.
Very truly yours,
|Benjamin M. Lawsky|
|Department of Financial Services|
|Chairman, Task Force on Not-For-Profit Entities|
|cc: Task Force on Not-For-Profit Entities|