Q&A
Debate on capping executive compensation for shelter providers
0:51:55
·
4 min
Council Member Diana I. Ayala and city officials engage in a debate about the possibility and challenges of capping executive compensation for shelter providers. The discussion highlights the complexities of implementing such a cap and the legal obstacles involved.
- Council Member Ayala argues for a cap on executive compensation, especially for providers solely contracting with DHS
- Officials explain the challenges of implementing a cap due to indirect cost rates and multiple funding sources
- Discussion of past attempts to regulate executive compensation at the state level and legal challenges faced
- Emphasis on addressing inappropriate behavior and misuse of funds through other means, such as related party transaction policies
Diana I. Ayala
0:51:55
But I would argue that if a first of all, I mean, having worked in the nonprofit world, 10% indirect rate seems very minimal, but it it does have an impact on the ability to program and and to run things because it's money that essentially could be going to programming that is not going to salary.
0:52:10
However, if a if a if a provider is is just contracting with DHS, right, then there should be a cap.
0:52:19
And even when a provider is is is contracting with multiple agencies, I don't I don't see how it would hurt that on the DHS and there's some language that stipulates that only a certain percentage of, you know, that grant can be used for salary for I mean, because the truth is and I and I get it.
0:52:39
Listen, most most, nonprofit organizations work really hard to provide, you know, good resources and and housing for families that are, you know, currently unhoused.
0:52:50
But there are people, and I and I know this and I know that a lot of my colleagues, you know, would probably agree to this.
0:52:55
They come to us, like, all of the time just begging to build more and more shelters because it's a lucrative it become it's become a lucrative business for them.
0:53:03
And so in those cases, I think that, you know, it does alarm me, right, that folks are getting paid $400,000, $500,000, whatever it is, you know, 700,000 just to, you know, to run these these these sites, these facilities.
0:53:16
And so I and I get it.
0:53:17
If they're running they have multiple contracts, it becomes difficult, and they can pay what themselves whatever they want.
0:53:23
But on the DHS and if we if those those contracts, is there the ability to cap on the DHS and in those cases?
Molly Wasow Park
0:53:33
Well, because we aren't paying directly, right, where there is no line item in the contract that says this is the executive director salary.
0:53:42
Right?
Diana I. Ayala
0:53:42
No.
0:53:42
No.
0:53:42
No.
0:53:42
I'm not telling you that.
Molly Wasow Park
0:53:43
I'm not telling you that.
0:53:44
It is all coming out of that indirect rate.
0:53:47
So, I and I will I'll ask Pedro to chime in.
0:53:51
There were some attempts to to regulate, executive compensation at the state level that ran into legal challenges.
0:53:59
So, this is I hear where you are coming from.
0:54:02
Absolutely.
0:54:03
It is it's definitely a place where that is very challenging for us, but, let me ask my colleagues to add on to that.
Bedros Boodanian
0:54:11
Yeah.
0:54:12
Just to fit further illustrate the complexity on this, in 2012, then governor Cuomo did institute a cap on certain providers statewide nonprofit providers.
0:54:21
That cap was mired in litigation and the court of appeals eventually stripped, some of the substantive authority associated to that executive order.
0:54:30
And our current governor, only a couple of years ago, overturned that cap and removed it.
0:54:36
So it does sort of illustrate the complexities.
0:54:39
It's not such a cut and dry issue on having an executive cap.
Diana I. Ayala
0:54:44
Yeah.
0:54:46
Yeah.
0:54:46
I think and
Charles Diamond
0:54:47
I think this is a as as you can tell, Cher, it's a complex issue that we don't have a direct tool on, but that doesn't mean we're gonna stop stop focusing on it.
0:54:54
And I think that's where we say, what can we do?
0:54:57
We can address clear issues of inappropriate behavior, like like the related party transactions, the conflicts of interest.
0:55:03
Those things that are they're not literally executive compensation.
0:55:06
But when we talk about the issues surrounding executive compensation, they're very similar.
0:55:10
How are you know, some if someone's misusing our money, if someone is not using our money correctly and and the way that we told them to in the contract, and the way that they have to, then that's a responsibility issue.
0:55:20
And that will absolutely become a contract issue, whether or not whatever the executive compensation is.
0:55:26
And I would finally say I think it's
UNKNOWN
0:55:27
very important that indirect cost rate is so important, and we've
Charles Diamond
0:55:27
spent the last few years really trying important.
0:55:28
That indirect cost rate is so important, and we've spent the last few years really trying to improve not just the policy behind it, but the operation of it.
0:55:35
So I think it's also, in order to effect effectively reach that, we'd have to go into the indirect cost rate.
0:55:40
I think we're very conscious of, of again, balancing the idea of can we mitigate the risk a different way, rather than going into what is already a process that's hard for these providers.
0:55:50
They really need that indirect cost rate.
0:55:52
So it's always that balancing.
Molly Wasow Park
0:55:54
I I'd also just add one more thing that the the particularly egregious examples that were called out in the report were actually, really related to related party transactions, related party transactions that we have shut down and shut down well before the report was released.
New York City Council
·
Committee on Oversight and Investigations
·
Dec 17, 2024
Debate on capping executive compensation for shelter providers
0:51:55
·
4 min
citymeetings.nyc