Taking an idea from the White House, New York Gov. Andrew Cuomo signed an executive order Wednesday limiting how much contractors can charge the state for executive compensation.
The order limits the maximum contractors can charge New York state agencies for their executive’s’ compensation to Level I of the federal government’s executive pay schedule, about $200,000.
“In certain instances providers of services that receive state funds or state-authorized payments have used such funds to pay for excessive administrative costs and outsized compensation for their senior executives, rather than devoting a greater proportion of such funds to providing direct care or services to their clients,” the order reads.
The Obama administration proposed a similar change last year regarding federal contractors but was unsuccessful in getting it through Congress.
The Office of Management and Budget has said the current federal cap of $693,951 is excessive. The federal cap, which is calculated annually based on compensation rates in the private sector, is expected to increase to $750,000.
Cuomo’s order also requires agencies to ensure that at least 75 percent of the money paid to contractors is spent on direct care or serivces, not administrative costs. That percent will increase 5 percentage points for the next two years so that by 2015 at least 85 percent of contractor payments will have to go to services.