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June 30, 2012 | By | Posted in General News

Execs at some taxpayer-supported welfare nonprofits earn over six-figures

By Eric Boehm | PA Independent

HARRISBURG – Executives and top employees at several nonprofits that receive state taxpayer dollars to assist the poor, elderly and disabled through the Department of Public Welfare are making annual salaries that stretch well into six figures.

PA Independent reviewed publicly available tax documents for a sampling of some 50 nonprofit service-providers that receive tax dollars through DPW.  Our sample focused on welfare providers that operate in Philadelphia, Pittsburgh and areas surrounding those cities.

Within the sampling, 24 nonprofits had at least one employee that made more than $100,000.

At Melmark, Inc., a state-supported nonprofit that provides residential, educational, therapeutic and recreational activities for children and adults with disabilities, the 14 top employees earn more than $2.8 million in combined compensation, according to 2011 tax filings.

Leading the way is Joanne Gillis-Donovan, president and CEO of the organization.  She was paid more than $460,000 in that year, according to the tax filings.  (See full list of employees making more than $100,000 from our sample here)

Donovan was unavailable to comment on Friday.

Chris Tabakin, spokesman for Melmark, said the majority of the organization’s $53 million annual budget comes from the state, though there are also private donations.

More than 700 people are employed by the Delaware County nonprofit.

Meanwhile, lawmakers decided Thursday that this year’s state budget will not contain a new provision requiring the DPW to collect and report information on nonprofit welfare providers – including the pay of top employees. Instead, a bipartisan joint legislative committee will examine the issue later this year.

State Rep. Bill Adolph, R-Delaware, chairman of the House Appropriations Committee, wanted to include language in the state’s fiscal code that would require DPW to track executive pay and the pay of top employees, along with association dues, lobbying expenses, administrative costs and the indirect or direct costs of providing services.

State Rep. Bill Adolph, R-Delaware

 

Nonprofits that receive state dollars to cover intellectual disabilities, child welfare, community-based mental health services and drug and alcohol services would be targeted by the new rules.

Adolph believes it is necessary to compile the information so the General Assembly can assess whether state taxpayer dollars are being spent correctly within the $10 billion budget of the department.

Gov. Tom Corbett said Wednesday that he believes it would be a good move.

“I think that we should take a look. It’s not inappropriate to know where state tax dollars are going and how they are being spent,” he told PA Independent.

But the potential reporting requirement has ruffled feathers.

The nonprofit sector is already very transparent and much of the information targeted in the proposed rule is already available, said Gabrielle Sedor, communications director for the Pennsylvania Advocacy and Resources for Autism and Intellectual Disabilities, or PAR, which represents more than 100 welfare service providers in the state.

The IRS imposes stiff penalties (in the form of intermediate sanction taxes) on nonprofit organizations and top officials within these organizations if their compensation is deemed excessive, Sedor said.

In some cases, state contracts with service providers even spell out what percentage of tax dollars can be used for compensation, she added.

Joe Geiger, executive director of the Pennsylvania Association of Nonprofit Organizations, said the state’s nonprofits were alarmed to hear of alleged abuse of executive salaries, but the truth of the matter is that nonprofits deliver services more efficiently and at a lower cost than the state can afford.

But comparisons to state employees are inappropriate, he wrote in an op-ed distributed this week by his organization.

“Nonprofits enter partnerships with the state, but this contracting relationship does not make that nonprofit an arm of government,” Geiger wrote.

Hundreds of nonprofits provide services on behalf of the state through the department, and most receive private funding as well.

Providers are also concerned about the next possible step.

New York and New Jersey recently approved laws to limit pay at nonprofits that receive tax dollars, and many providers see Pennsylvania’s attempt to collect that data as a first step toward such limitations, said Bernadette Bianchi, executive director of the Pennsylvania Council of Children, Youth and Family Services, which represents more than 100 nonprofit service providers at the local level.

Nonprofit CEOs who work with the intellectually disabled in the Keystone State earned an average of about $101,000 in 2009, the most recent year available, according to data from PAR.

Pennsylvania nonprofit CEOs earned less, on average, than those in similar positions in neighboring states. Source: PAR

 

By comparison, executives of similar nonprofits in New York made an average of more than $139,000 and in New Jersey more than $132,000, according to the data from PAR.

But the salaries and benefits afforded top employees at some of the state-supported nonprofits included in our review are certain to raise some eyebrows.

At COMHAR, Inc., a Philadelphia-based nonprofit that works with the mentality disabled and those struggling with addictions, CEO Matthew Elavumkal pulled down $214,000 in compensation in 2011, according to tax filings.

Including Elavumkal, the organization’s seven highest paid staffers collected a combined $1.1 million in direct compensation in 2011.

The nonprofit has an overall budget of more than $38 million.  Messages left for COMHAR staff on Friday were not returned.

In Pittsburgh, Regis Champ made more than $289,000 in 2010 as president of the Allegheny Valley School, a nonprofit that works with children who have intellectual and developmental disabilities.

State Rep. Matthew Baker, R-Tioga, said gathering information on executive pay and other administrative costs of nonprofits made sense.

“I think most people recognize that tax dollars should be used for the mission and the underlying purpose for which they are appropriated,” he said Friday.

If nonprofits do not like the rules set by the state, they always have the option to stop accepting tax dollars, Baker added.

Anne Bale, spokeswoman for the Department of Public Welfare, said this week that the department is not seeking the new reporting requirement, but is prepared to carry out the requirements if they are enacted into law.

The provisions will not be included in the state budget, but lawmakers will pass a resolution later this year to empower the Legislative Budget and Finance Committee, a bipartisan joint committee that reviews and audits governmental activities, to collect the data and issue a report, according to Mike Stoll, Adolph’s spokesman.

Representatives of nonprofits said they preferred to have the committee handle that process.

PA Independent intern Jared Sichel contributed to this report.

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Eric Boehm is a reporter for PA Independent. He can be reached at Eric@PAIndependent.com or at (717) 350-0963.

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