April 25, 2010; Source: The Star-Ledger | On Friday, the Nonprofit Newswire linked to a Washington Post column by Paul Light where he suggested a pay cap for nonprofit CEO’s, suggesting that no nonprofit CEO be paid more than the $223,500 salary of the chief justice. Now New Jersey Gov. Chris Christie declares that pay for running a nonprofit in his state funded with public dollars should be capped at $141,000. The Star-Ledger has obtained a draft memo from the Department of Human Services that describes plans to limit the pay of nonprofit heads, beginning July 1.
The new plan would set new ceilings, based on budget size, for how much the state pays to CEOs or executive directors. Individuals running state-financed nonprofits with budgets over $20 million would be limited to $141,000. For groups that receive between $10 million and $20 million, pay would be capped at $126,900; $119,800 for agencies with budgets between $5 million and $10 million, and those who head nonprofits with budgets below $5 million couldn’t be paid more than $105,700.
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For many, these limits would result in a pay cut, although the new rules would allow them to raise money for additional compensation from outside sources. A spokesperson for the Human Services Department says the salary caps, along with reduced expenses for travel, education, severance, and vehicle expenses for all nonprofit employees, would save the state $5 million a year. The Star-Ledger reports that in New Jersey, private community agencies serve more than a million needy families and people with mental illness and developmental and physical disabilities, and almost all their funding comes from the state.
The newspaper says the new salary restrictions would be similar to pay limits for contractors that work for the Department of Children and Families, New Jersey’s welfare and mental health agency. Agencies that would be affected by the new rules hope to negotiate what they think are better terms before July 1. Unless they are allowed to pay more, some fear state-funded nonprofits will have a hard time attracting quality employees. The head of the state’s largest mental health provider in New Jersey, Richard Mingoia, president and CEO of Youth Consultation Services, questions why the state is limiting pay caps only for nonprofits. He says rules should apply “across the board” and “include for-profits that do business with the state.”—Bruce Trachtenberg