State cap on executive pay moves forward

New York Gov. Cuomo on Wednesday signed an executive order, directing state agencies to place caps on nonprofit executive pay to no more than $199,000 annually that come from public dollars.

Following recent scrutiny of providers' use of state funds, Cuomo last year launched a taskforce to examine executive pay, including that of hospitals.

His executive order requires that at least 75 percent of every public dollar go to services and not to administration, a figure that will go up to 85 percent by 2015, The New York Times reported.

"This Executive Order will prevent public funds from being diverted to excessive compensation and unnecessary administrative costs, and will ensure that taxpayer dollars are being used to help New Yorkers in need," Cuomo said in a statement, New York Daily News reported.

However, even with the pay cap that will likely apply to all CEOs of nonprofit services, hospital CEOs could circumvent it, according to City and State. Hospitals committed to paying generous compensation packages could draw on private revenue and other non-public funds, the Times Union noted.

Still, the executive order sends the message to limit exuberant executive pay, such as million-dollar CEO bonuses at New York City's biggest nonprofit medical centers.

Although some critics say the $190,000 maximum will limit talented leadership, supporters praise the order in setting parameters for hospital executive compensation.

"Even though they say they can't get people if they don't pay them $5 million, there are hospitals all over the place that don't pay that kind of money," Commission on the Public Health System's Judy Wessler said in the City and State article, "so I think it's wonderful that this cap appears to include hospitals as well."

State agencies have 90 days to craft rules that govern compensation for providers who receive state funds including those from the health department, according to the Times Union.

For more information:
- read the Times Union article
- read the City & State article
- here's the NYT article
- read the executive order on NY Daily News

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