AAM-22-12-00013-P Compliance with Executive Order No. 38 of 2012

5/30/12 N.Y. St. Reg. AAM-22-12-00013-P

NEW YORK STATE REGISTER

VOLUME XXXIV, ISSUE 22

May 30, 2012

RULE MAKING ACTIVITIES

DEPARTMENT OF AGRICULTURE AND MARKETS

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. AAM-22-12-00013-P

Compliance with Executive Order No. 38 of 2012

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed Action:

Addition of Part 400 to Title 1 NYCRR.

Statutory authority:

Agriculture and Markets Law, section 18

Subject:

Compliance with Executive Order No. 38 of 2012.

Purpose:

To limit administrative costs and executive compensation to ensure that services to New Yorkers are available and well-funded.

Substance of proposed rule (Full text is posted at the following State website:www.agriculture.ny.gov):

These regulations, which are required by Executive Order No. 38, will ensure that State funds or State-authorized payments paid by the New York State Department of Agriculture and Markets (Department), to providers covered by the regulations are used predominantly to provide direct care and services. In order to achieve this goal, the Department is proposing a new Part 400 with the following provisions:

Section 400.1 sets forth the entities that are covered by the proposed rule.

Section 400.2 sets forth the definitions that are applicable to the proposed rule.

Section 400.3 sets forth the limits on administrative expenses, including the percentage of state funds and state authorized funds that must be used to cover program services; applicability of the rule to subcontractors of covered providers; and requirements that the Department's responsibilities relating to the covered provider's reporting under and compliance with the proposed regulations.

Section 400.4 sets forth limits on executive compensation, including how executive compensation will be limited and what methods will be used to determine that compensation limit. Section 400.4 also lists the factors that will be considered when determining the limits on executive compensation.

Section 400.5 sets forth the factors and procedures under which waiver of the executive compensation limits and waiver of the reimbursement for administrative expenses will be considered, as well as the procedure to be followed in the event a request for a waiver of the executive compensation limits and/or reimbursement of administrative expenses is denied.

Section 400.6 describes the reporting procedures for covered providers and potential penalties for the failure to report.

Section 400.7 sets forth the procedures and potential penalties for non-compliance with the rule. This section describes the steps that will be taken if non-compliance is suspected, including a preliminary determination of non-compliance, a corrective action period, the filing, review and acceptance of a corrective action plan, the consequences of a failure to cure the non-compliance, and the appeal procedure.

Text of proposed rule and any required statements and analyses may be obtained from:

Frederick Brian Arnold, Esq., NYS Department of Agriculture and Markets, 10B Airline Drive, Albany, New York 12235, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

45 days after publication of this notice.

This action was not under consideration at the time this agency's regulatory agenda was submitted.

Regulatory Impact Statement

1. Statutory Authority:

Section 18 of the Agriculture and Markets Law provides, in part, that the Commissioner may enact, amend and repeal necessary rules which shall regulate and control the transaction of business by the Department and provide generally for the exercise of the powers and performance of the duties of the Department as prescribed in the Agriculture and Markets Law and the laws of the State and for the enforcement of their provisions and the provisions of the rules that have been enacted.

2. Legislative Objectives:

The statutory provision pursuant to which these regulations are proposed is intended to authorize the Department to promulgate rules necessary to properly exercise its powers and duties.

3. Needs and Benefits:

The proposed amendments implement the requirements set forth in Executive Order #38, which states that New York State directly or indirectly funds or authorizes reimbursements with other taxpayer dollars to contractors that provide critical services to New Yorkers in need; and expresses concern that such monies are being used for excessive administrative costs and executive compensation. The Executive Order directs that State agencies, including the Department, promulgate regulations to prevent excessive payment of taxpayer dollars for administrative expenses and executive compensation for these contractors.

The proposed regulations restrict administrative expenses for contractors to 25 percent and eventually 15 percent of the State's financial assistance or State-authorized payments. The proposed regulations also limit the annual compensation paid from State financial assistance or State-authorized payments to executives of contractors to $199,000. The regulations provide that contractors may make an application to the Department for a waiver of these requirements. Recordkeeping requirements are also included in the proposal to ensure compliance with these requirements. Finally, the proposed regulations set forth measures in response to failure to comply with these requirements.

The proposed amendments benefit the State by ensuring that the most State and taxpayer monies possible are allocated to delivery of services to the people of the State rather than to excessive funding for administrative costs and executive compensation. The proposed amendments also benefit the people of the State by not only ensuring the proper, efficient and effective use of taxpayer dollars, but also ensuring that those taxpayer dollars are used, to the extent possible, to help New Yorkers in need.

4. Costs:

(a) Costs to private regulated parties: Contractors would incur minimal costs in complying with the reporting requirements in the rule since most, if not all, of the information to be reported is likely already collected or reported by the contractor for other purposes. Contractors would be limited in the dollar amounts they could allocate from State contracts for their administrative costs and executive compensation. However, the overall State funding award amounts would not decrease.

(b) Costs to the department, State and local governments: The cost to the Department is expected to be minimal and consist, in part, of developing a reporting form. The State and local governments will not incur any expenses.

(c) The cost analysis is based upon the requirements for agencies in the proposal.

5. Local Government Mandate:

None.

6. Paperwork:

Contractors would need to complete and file a reporting form, and a waiver application as needed. To the extent feasible, such reporting will be made electronically to avoid unnecessary paperwork costs.

7. Duplication:

This proposed rule does not duplicate, overlap, or conflict with any State or federal statute or rule. However, the proposed rule seeks to minimize the reporting requirements faced by providers by building upon those requirements in the federal internal revenue code that require certain tax-exempt organizations to report information concerning their executive compensation and administrative costs.

8. Alternatives:

Since Executive Order #38 of 2012 directs State agencies to promulgate this regulation, there is no alternative to proposing this rule.

9. Federal Standards:

These amendments do not conflict with federal standards.

10. Compliance Schedule:

This rule takes effect January 1, 2013.

Regulatory Flexibility Analysis

A Regulatory Flexibility Analysis for Small Businesses and Local Governments is not being submitted with this notice because the proposed rule will not impose any adverse economic impact on small businesses, nor will it impose new reporting, recordkeeping or other compliance requirements on small businesses or local governments.

Rural Area Flexibility Analysis

A Rural Area Flexibility Analysis is not being submitted with this notice because the proposed rule will not impose any adverse economic impact on rural areas.

Job Impact Statement

A Job Impact Statement is not being submitted with this notice because it is evident from the subject matter of the regulation that it will have no impact on jobs and employment opportunities.