AGE-22-12-00011-P Limits on Administrative Expenses and Executive Compensation

5/30/12 N.Y. St. Reg. AGE-22-12-00011-P

NEW YORK STATE REGISTER

VOLUME XXXIV, ISSUE 22

May 30, 2012

RULE MAKING ACTIVITIES

OFFICE FOR THE AGING

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. AGE-22-12-00011-P

Limits on Administrative Expenses and Executive Compensation

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

Proposed Action:

Addition of Part 6656 to Title 9 NYCRR.

Statutory authority:

Elder Law, section 201(3); and Executive Order No. 38

Subject:

Limits on Administrative Expenses and Executive Compensation.

Purpose:

To implement guidelines regarding placing limitations on Administrative Expenses and Executive Compensation.

Substance of proposed rule (Full text is posted at the following State website:http://www.aging.ny.gov/Index.cfm ):

The State of New York directly or indirectly funds with taxpayer dollars a large number of tax exempt organizations and for-profit entities that provide critical services to New Yorkers in need. The goal of this proposed rule is to ensure that taxpayers' dollars are used properly, efficiently, and effectively to improve the lives of New Yorkers. It is imperative that New York State and the New York State Office for the Aging ensure that state funds and state authorized funds are optimized for the purpose of providing services to those individuals who are in need of them. Utilizing state funds and state authorized funds primarily for the provision of direct care and services helps to guarantee that such funds are providing the greatest benefit to older New Yorkers. 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 Office for the Aging to providers are used predominantly to provide direct care and services to older New Yorkers. In order to achieve these goals, the New York State Office is proposing a new Part 6656.

Section 6656.1 of the regulations sets forth the entities that are covered by the proposed rule.

Section 6656.2 sets forth the definitions that are applicable to the proposed rule.

Section 6656.3 outlines the limits on administrative expenses. Specifically, this section details the percentage of state funds and state authorized funds that must be used to cover program services. This section also details the fact that subcontractors of covered entities are also subject to these proposed regulations. Section 6656.3 also enumerates the fact that the New York State Office for the Aging is responsible for the covered provider's reporting under and compliance with the proposed regulations.

Section 6656.4 details the limits on executive compensation. Subsections (a) and (b) of section 6656.4 outline how executive compensation will be limited and what methods will be used to determine that compensation limit. Subsections 6656.4 (c), (d) and (e) further detail the factors that will be considered when determining the limits on executive compensation.

Section 6656.5 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. Subsection (c) of section 6656.5 details 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 6656.6 enumerates the reporting procedures that must be followed by the covered entities. This section also outlines the potential penalties for the failure to report.

Section 6656.7 provides the procedure for penalizing and the potential penalties for non-compliant covered entities. This section details the steps that will be taken if non-compliance is suspected. These steps include a preliminary determination of non-compliance, a corrective action period, the filing, review and acceptance of a corrective action plan, the ramifications of a failure to cure the non-compliance issues and the appeal procedure.

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

Stephen Syzdek, New York State Office for the Aging, Two Empire State Plaza, Albany, NY 12223, [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.

Regulatory Impact Statement

1. Statutory Authority – Section 201(3) of the New York State Elder Law allows the Director of the New York State Office for the Aging with the advice of the advisory committee for the aging to promulgate, adopt, amend or rescind rules and regulations necessary to carry out the provisions of Article II of the Elder Law.

Governor Cuomo's Executive Order #38 directs each state agency to promulgate regulations to address the extent and nature of administrative costs and executive compensation that providers of NYSOFA programs are reimbursed with State financial assistance or State-authorized payments for operating expenses.

2. Legislative Objectives – It is the objective of the New York State Legislature to ensure that NYSOFA administer programs and utilize program funds in the most effective and efficient manner possible for the benefit of older New Yorkers. This proposed regulation seeks to meet that legislative objective.

3. Needs and Benefits – The New York State Office for the Aging is proposing to adopt the following regulation because the State of New York directly or indirectly funds with taxpayer dollars a large number of tax exempt organizations and for-profit entities that provide critical services to New Yorkers in need and the goal is to ensure that taxpayers' dollars are used properly, efficiently, and effectively to improve the lives of New Yorkers. It is imperative that New York State and the New York State Office for the Aging ensure that state funds and state authorized funds are optimized for the purpose of providing services to those individuals who are in need of them. Applying state funds and state authorized funds primarily to providing direct care and services helps to guarantee that such funds are providing the greatest benefit to older New Yorkers. 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 Office for the Aging to providers are used predominantly to provide direct care and services to older New Yorkers.

4. Costs – The costs of implementing this rule to affected providers is anticipated to be minimal since most, if not all, of the information that must be reported by such providers is already gathered or reported for other purposes. The costs to the agency of implementation are expected to be very limited as well, and efforts to ensure efficient centralization of certain aspects of such implementation are underway.

5. Paperwork – The proposed regulatory amendments will require limited additional information to be reported to the agency by providers receiving State funds or State-authorized payments. To the extent feasible, such reporting shall be made electronically to avoid unnecessary paperwork costs.

6. Local Government Mandates – The proposed rule does not impose any new program, service, duty or responsibility upon any city, county, town, village, school district or other special district.

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 – Executive Order #38 and Executive Order #43 requires the adoption of this proposed regulation.

9. Federal Standards – This rule does not exceed Federal standards.

10. Compliance Schedule – This rule takes effect January 1, 2013.

Regulatory Flexibility Analysis

This proposed rule will not have an adverse economic impact on small businesses or local governments nor will it impose new reporting, recordkeeping or compliance requirements on small businesses or local governments. This proposed rule is designed to address executive compensation and administrative costs of those providers of program services that receive State funding or State-authorized payments paid by the New York State Office for the Aging.

Rural Area Flexibility Analysis

This proposed rule will not have an adverse economic impact on public or private entities in rural areas nor will it impose new reporting, recordkeeping or compliance requirements on public or private entities in rural areas. This proposed rule is designed to address executive compensation and administrative costs of those providers of program services that receive State fund or State-authorized payments paid by the New York State Office for the Aging.

Job Impact Statement

The New York State Office for the Aging has determined that this proposed rule will not have a substantial adverse impact on jobs. This proposed rule is designed to address executive compensation and administrative costs of those providers of program services that receive State fund or State-authorized payments paid by the New York State Office for the Aging.