UPDATE: Mass Legislature Passes Budget Without Measure To Restrict Nonprofit Leader Compensation
Last week, the Massachusetts Legislature approved a $32.5 billion state budget bill to fund its operations for the next year. We have been following the MA budget process closely because of provisions in both the House and Senate that would place limitations on compensation for the leaders of nonprofit organizations. However, the budget that was finally passed by both chambers left out these provisions, so there will be no more action on this in the budget process. We will continue to follow any action there in the future as parts of other legislative proposals, executive proposals, or otherwise.
Since we last reported on this, the Massachusetts House passed its budget bill and included this amendment to limit nonprofit executive compensation, albeit changed. The budget passed by the state House calls for a feasibility study to be completed by the Investigator General by the end of 2012 before implementing these limitations on compensation could go into affect. Read the text of the full amendment here. Depending on the results of the feasibility study, the limitations could then follow.
We will keep you posted on any developments that occur in the Senate budget process.
We at ACR are always keeping an eye on things happening at the state level that could impact philanthropy and the nonprofit sector. This year, there have been various bills in different states that have looked at addressing nonprofit executive compensation from organizations that accept government funding. Most of these bills have applied to organizations that receive a majority of their funding from the state. However, there is some recent action in the Massachusetts state legislature that would affect nonprofits receiving smaller amounts of government funding.
Even more noteworthy, this latest attempt to address compensation is attached as an amendment to the state’s FY13 budget bill rather than as a stand-alone bill. The amendment to the state budget bill, filed by Rep. Peter Durant (R-Spencer) and Rep. Keiko Orrall (R-Lakeville), would cap executive compensation for any organization receiving at least 30% of their yearly budget from government funds. Compensation would include salary and all other benefits and would be based on the annual budget size of the organization. The maximum total compensation allowed would be $208,985 for a CEO or director.
We are always watching for legislative or administrative efforts that seek for increased government involvement in nonprofit governance. We will be following this and other proposals in Massachusetts to limit compensation as they move through the state legislature.
Enjoy this post? Share it with others.