Since 2013, nonprofits have been dealing with the provisions of Executive Order 38 (EO-38), which among other things, placed a limit on the executive compensation of certain State-funded nonprofits. Effective October 30, 2019, November 6, 2019, and November 20, 2019, OASAS, OPWDD, and OMH, respectively, adopted some of these provisions into their regulations to conform with the matter of LeadingAge N.Y., Inc. V. Shah, an October 8, 2018 decision issued by the New York State Supreme Court. Pursuant to the new regulations, a covered provider cannot use State funds or State authorized payments for direct or indirect payments to a covered executive in excess of $199,000 per year. However, unlike EO-38, the state-funded automatic waiver if an executive’s salary is in the bottom 75% percentile of comparable executives in other providers of the same size and within the same or comparable geographic area as established by an appropriate compensation study has been removed from the new regulations promulgated by the various State agencies due to the above Court decision.
If executive compensation from State funding does exceed $199,000, the organization can request a waiver from the applicable State funding agency, or it’s designee and the Director of the Division of Budget. The waiver must show that the organization would be unable to provide the program services reimbursed with State funds or State-authorized payments at the same levels of quality and availability without obtaining reimbursement for executive compensation in excess of the $199,000 threshold. The provider must show good cause and provide all necessary support for its position. Providers will be notified within 60 calendar days if their waiver request has been granted.
Impacted organizations should consider applying for a waiver as soon as possible.