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On May 16th, Governor Cuomo announced the issuance of proposed
regulations by several New York State agencies which limit
administrative costs and executive compensation for entities
receiving State funding or State-authorized payments. The proposed
regulations arise from Executive Order No. 38, which generally
restricts covered organizations from spending more than $199,000 in
State funds on executive compensation.
The draft regulations, which would become effective January 1,
2013, are of particular interest to large non-profit organizations
supported by State funding. With limited exceptions, entities which
receive 30% of its annual funding from the State and have received
at least $500,000 in State subsidies for the current year and the
prior two years will be subject to the regulations.
The compensation limit for covered executives includes cash and
noncash payments or benefits, such as wages, bonuses, housing,
cars, below-market loans, educational benefits, family travel and
use of an organization's property. Mandatory benefits, such as
health insurance premiums and pension contributions, are excluded.
Covered organizations may request a waiver from the $199,000
compensation limit, provided that it meets certain prerequisites,
including approval of the compensation by a board consisting of at
least two independent directors and performing a review of
comparability data.
Going forward, employers subject to these requirements will face
mandatory annual reporting. The required disclosures include amount
of public funds received and the compensation of its executives and
highest-paid employees.
The proposed regulations are open for public comment. As the
higher paying non-profit jobs are typically in the fields of health
and higher education, this set of administrative rules should be
followed with keen attention in those industries. We will provide
further guidance as these regulations are finalized.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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