August 7, 2014; Capital New York

On Wednesday, a Suffolk County Supreme Court justice ruled that Governor Cuomo’s salary cap on nonprofit providers is legal. The decision comes a few months after a state court ruling that said the cap, instituted by executive order, violated state law.

The sixteen-page ruling authored by Judge Emily Pines found that the health department has the authority “to regulate the financial assistance provided by the State in connection with public health care activities.”

The cap limits executives’ salaries to no more than $199,000/year, but only at nonprofits that get more than $500,000 and 30 percent of their revenue from the state. These providers also must commit to spending 75 percent of the government funding they receive on services; by 2015, that proportion will be 85 percent.

In her decision, Pines wrote that the limit isn’t a true cap because it only applies when the money is coming from state sources.

“It must be emphasized that the regulations at issue in this case only limit the amount of State funds or State-authorized payments that can be used for executive ompensation and administrative expenses. They do not in any way restrict or limit the use of other funds or payments for executive compensation or administrative expenses.

“Thus, the regulations do not truly cap executive compensation or administrative expenses of entities that receive State funds or State-authorized payments. They only limit the amount of State funds or State-authorized payments that entities can use for such purposes.”

—Ruth McCambridge