Q&A
Council member Julie Won questions executive compensation practices of shelter providers
1:42:08
·
4 min
Council Member Julie Won initiates a discussion on executive compensation in nonprofit shelter providers, citing examples of high salaries from a DOI report. She questions DSS Commissioner Molly Wasow Park and MOCS Special Counsel Charles Diamond about oversight and evaluation of these salaries.
- DSS explains they don't directly pay or approve executive compensation, as it's part of the indirect cost rate.
- MOCS describes their role in collecting information but not directly approving salaries.
- Both agencies acknowledge the complexity of the issue and express openness to further discussions on improving oversight.
Julie Won
1:42:08
I wanna shift gears to talk about executive compensation as many of my colleagues has brought up.
1:42:14
The DOI report points to 5 nonprofits where executives rate them more than $700,000 annually and another 8 where executives earn more than half a $1,000,000.
1:42:24
The report flagged 2 such nonprofits in striking executive pay, CAMBA, CAMBA Incorporated, where president Joanne Apostol earned more than $750,000 in fiscal year 22, an Acacia Network, where president Raul Roussy took in 935,391 that year, almost $1,000,000.
1:42:46
And these providers also have shelters in my district currently.
1:42:50
A spokesperson for Acacia referred to the nonprofit's response in a footnote of the DOI report, which stated that its executive salaries were based on combined revenue, budget, and assets like we discussed, and noted that 3rd party consultants and found its pay meets the standard of reasonableness established by the IRS.
1:43:07
So my question is, were the salaries at were the salaries at CAMBA and Acacia Network flagged as excessive during any audits or evaluations by DHS?
1:43:15
If not, why?
1:43:17
And how does Mox coordinate with IRS to verify that nonprofits are adhering to the standards of, quote, reasonableness for executive pay?
Molly Wasow Park
1:43:28
Thank you, council member.
1:43:29
As I've discussed, we are not directly paying and and therefore, the yeah.
1:43:37
Executive compensation, right, is not paid directly through our contracts.
1:43:41
We are paying, an indirect cost rate that that that not for profits then use to pay for a variety of overhead costs including executive compensation.
1:43:52
So the short answer is is no.
1:43:54
We were not signing off on those those figures.
1:43:57
I have I've certainly heard loud and clear, the concerns raised here around executive compensation.
1:44:04
As we've discussed, it's a a complicated landscape both with respect to what DSS can do unilaterally within the the larger infrastructure of of city agencies and then also within the legal structure that has happened before, but it is something that we are happy to continue conversations, both with Max and with the council to figure out, you know, what is is viable.
1:44:25
But I'll allow Max to chime in.
Charles Diamond
1:44:28
Yes.
1:44:28
Absolutely.
1:44:28
So as part of the, what used to be called the Vendex process and now is housing passport with vendor integrity, one, one service that Max provides is kind of being a central clearing house for various types of information.
1:44:40
So in that regard, certainly, I your IRS tax forms, your state, required charitable forms, these are all aspects.
1:44:46
And I think the commissioner mentioned before things like document vault and passport are all meant to be able to bring those together and provide a faster review.
1:44:53
In terms of reasonableness, as as the commissioner said, we do not directly approve or disapprove of any executive director or or kind of leader of a nonprofit salary.
1:45:01
That's not the insight we have into those costs because we don't pay those costs.
1:45:05
I think as you've said, Sharon, I think most of the council here has said has said today and as we've said, it's clearly an issue that we are, curious about and need to find a way to, to make sure we're getting the best value for the city.
1:45:17
And we've tried to address that with the tools that we do have, such as related party transactions, conflicts of interest, anti nepotism.
1:45:24
However, we do need to be mindful of the wider regulatory landscape.
1:45:28
And the I would also highlight, Sherry, you asked before about building the portfolio of providers here.
1:45:33
And as you know, we usually have larger portfolios.
1:45:36
But this the DHS portfolio in sheltering is a very difficult job even compared to the other things the city asks to do.
1:45:42
So it is also important to note, you know, the idea of, we're always mindful of potentially limiting competition when and sticking to the key criteria, which is delivering value to the city for what we are contracting for, whereas dictating exterior measures that are not directly there and that are not maybe, immediately in our tool chest is going to be a lot less effective and end up limiting the ability limiting that pool of potential vendors even more.
1:46:07
We think we can mitigate that same risk more effectively through those other, directives that I've mentioned.
1:46:14
But finally, I would note, these issues are absolutely still under active consideration, by all stakeholders, including the vendor compliance cabinet.
1:46:22
So there's no period at the end of that of of of this.
1:46:25
We're continuing to look at every way that we can do to get the best value for the city.
