Fla. May Cap Salaries at State-Funded Nonprofits

January 27, 2012; Source: Jacksonville Business Journal | Recently, state governments across the country, including New York and New Jersey, among others, have been itching to limit the salaries of nonprofit executives. It’s an easy target, and it resonates with those who think that nonprofits are really volunteer organizations, as well as those who think that nonprofit execs shouldn’t make big (usually defined as six-figure) salaries. But it is the equivalent of taking a baseball bat to hunt houseflies—a pursuit Florida may soon undertake as well.

Last week, a State Senate committee in Florida approved a bill to cap salaries at state-funded nonprofits at a rate no higher than the salary of Florida’s highest-paid elected official. The bill, SB596, would cap the execs’ salaries at $129,972, and is apparently a reaction to information that salaries at the state’s 20 lead community-based care organizations (CBCs) ran as high as $307,977 in 2008 (while bonuses as high as $28,024 were paid to CBC directors at the same time that the state was cutting funding for services in 2010). The “bonus pool” for Our Kids, Inc. in Miami, for instance, was $352,327 in 2010.

Florida’s system of community-based care (CBC) is the result of an attempted fix to the state’s longtime miserably run child welfare system. Designed by former Gov. Jeb Bush, the community-based care initiative outsourced foster care services and related services to locally based designated nonprofit CBC agencies

The bill’s sponsor, Republican State Sen. Rhonda Storms, explained to the press, “If you don’t take a dime of taxpayer’s money, you don’t have to worry.” The exact wording of the Storms bill covers any “nongovernmental organization, quasi-governmental entity, or not-for-profit organization [that] receives two-thirds or more of its budget from state-appropriated funds, including state-appropriated federal funds, unless that organization or entity receives approval from the Legislative Budget Commission.” That would mean that the executives of educational institutions, health care nonprofits, and others would also be impacted.

Other legislators, such as State Sen. Evelyn Lynn (R), would be happier with a bill that clearly targeted CBC agency executives. However, one wonders why Florida would want to single out CBC agencies for this action when other state-funded nonprofits might also warrant attention to excessive compensation.

The head of the Florida Coalition for Children suggested that the legislature consider capping CBC agency administrative costs rather than executives’ salaries, a “compromise” that might strike some nonprofits as even worse than the salary idea.

Why not SB596? Why doesn’t the state simply provide some good, critical scrutiny of its agencies to determine where the executives are earning their salaries and where they aren’t and go after those who don’t deserve their pay and/or lucrative discretionary bonuses? Choose the fly swatter to go after the flies, not the baseball bat. —Rick Cohen