August 25, 2011 / 8:30 PM / in 6 years

NY state to scrutinize pay at not-for-profits

NEW YORK (Reuters) - Pay packages awarded to leaders of not-for-profit organizations in New York, which are partly funded by the state’s taxpayers, will be scrutinized to see if any funds should be recouped, the state’s Department of Financial Services said on Thursday.

Hospitals and other health outfits are among the organizations that will be probed by a task force to see if they overpaid top executives and board members.

The task force also will ask “the organizations’ boards to explain the basis for their not-for-profit status and whether it is appropriate to recoup any excessive compensation,” Benjamin Lawsky, superintendent of the Department of Financial Services, said in a statement. Lawsky will chair the task force.

Governor Andrew Cuomo set up the task force in response to newspaper reports that revealed “startlingly excessive salaries and compensation packages for executives at not-for-profits that depended on state Medicaid,” the statement said.

About 1,926 people who worked at New York not-for-profits that received taxpayer money from state mental health agencies, were paid yearly salaries of $100,000 or more, according to the state’s budget department. The average salary was $168,555, and all the salaries added up to $324.6 million.

Cuomo, a Democrat, is the former state attorney general, and his investigation of the not-for-profit world could reverberate around the nation.

Some of the probes by the former “Sheriff of Wall Street” were mirrored by other states and the federal government. They include Cuomo’s probe of the state’s pension fund, which led to criminal convictions and millions of dollars of settlements, and investigation of auction rate securities transactions, which prompted big bank settlements.

Cuomo’s spokesmen were not available to comment on whether he next would scrutinize the often-criticized rich compensation paid to some leaders of the state’s numerous public authorities.

For example, the transit workers union has bashed the Metropolitan Transportation Authority for giving Chairman Jay Walder a salary of $350,000 and other incentives, according to local media reports. Walder is leaving the authority, which runs New York City’s buses, subways and commuter lines, for a much higher-paying post in Hong Kong.

Reporting by Joan Gralla; Editing by Leslie Adler and Dan Grebler

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