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New York State Executive Order 38

On January 18, 2012, Governor Cuomo signed Executive Order 38, which limits excessive executive compensation at New York State-funded entities.  The order became effective July 1, 2013. See below for who the order effects and its impact on executive compensation and administrative expenses.


Who does Order 38 apply to? 

Any not-for-profit who receives on average more than $500,000 a year from one or more of the 13 New York State agencies either directly or through an agreement with another state or local entity or other organization

What limits does Executive Order 38 place on executives’ compensation? 

An executive’s total compensation will be limited to $199,000 paid out of state funds. Organizations may use non-state funding to pay compensation in excess of $199,000 only if they 1) obtain a waiver from the state or 2) the compensation is both equal to or less than 75% of compensation given to comparable executives in a similar organization and the compensation was reviewed and approved by the board of directors.

Note: Waiver must be filed within 180 days of the end of the reporting period.

What limits does Executive Order 38 place on administrative expenses? 

Reimbursed administrative overhead costs are limited to 25% of New York State funding in 2013, 20% in 2014, 15% in 2015, and so on.  

The New York State's Executive Order 38 website includes a 147-page guide, waiver forms and other material.
 
Human Services Council has guidance: Practical Guidance on Regulations to Implement Executive Order #38 


Lawyers Alliance for New York also has guidance: New Regulations on Executive Compensation and Administrative Costs for State Contractors.

 

Timothy Schroeder is a Not-for-Profit Services Group Manager with expertise in audits of financial statements and employee benefit plans, including the preparation of Form 990.

Contact Timothy

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