Nonprofit CEOs have a variety of responsibilities, from hiring new employees to executing the mission of the organization. One particular group of nonprofit executives has recently been under fire for failing one especially important task: handling and justifying their own salaries.
Nine Florida nonprofit organizations in contracts with the Department of Children and Families have been found to be overcompensating their executives in a preliminary report by the Inspector General. According to Florida state law, these nonprofits have overpaid their executives by a total of more than $3 million annually.
However, the nonprofits allegedly involved are pushing back against the accusations.
On Feb. 20, 2020, Gov. Ron DeSantis, R-Fla., signed an executive order requiring state agencies to review and report the financial statuses of organizations receiving state and federal funding.
This executive order was issued in the wake of a legislative investigation into the mismanagement of more than $7.5 million by the Florida Coalition Against Domestic Violence. Rather than supporting domestic violence shelters, the funds were allocated to executive officer Tiffany Carr.
DeSantis gave state agencies 45 days to determine all sole-source contracts with private nonprofits as well as all nonprofits that receive 50% or more of their annual budget from state funds or a combination of state and federal funds.
According to Florida law, agencies in either of these situations cannot pay their executives over 50% more than the salary of the DCF secretary, which is currently $220,880. Thus, any salary greater than $331,320 is a violation of state law.
Each agency was also instructed to review the IRS Form 990 and ascertain whether or not the salaries for executive leadership teams were greater than the limits set forth by federal and state law.
If the salaries were higher than the executive pay cap, agencies were required to submit a plan to correct any errors. These agencies must now go through the process of reallocating public funds or replacing the funds with money from other resources.
Of the 12 nonprofits exceeding the executive pay cap, nine were found to have contracts with DCF, which took over the responsibilities of the Florida Coalition Against Domestic Violence after reports of its dysfunction surfaced early last year.
At the top of the list was Lakeview Center, an affiliate of Baptist Health Care, with $1 million in salary payments to various executives, including the CEO.
Allison Hill, the Lakeview President and CEO, has stated that the initial report “contains significant errors in the interpretation of the information provided to the governor’s office.”
Big Bend Community Based Care is another of the nine Florida nonprofits with a DCF contract found to be dramatically overcompensating its executives. Mike Watkins, the CEO of the nonprofit since 2005, has been receiving an annual salary of $577,573.
Watkins’s salary was first flagged in a state Auditor General report in 2019 when he ran to represent Sanford and northern Orlando in the Florida Legislature. At the time, he told the Tallahassee Democrat, “I am not going to apologize for my success.”
Reginald Johns, chair of the NW Partnership for Better Communities, a support agency for Big Bend Community Based Care, argued that “The preliminary report is not accurate.” Johns’s statements have indicated that due to the diversity of the corporation as well as its immense budget, he believes the current executive salaries are justified.
Big Bend has discovered a loophole in the statute that allows an executive’s salary to exceed the pay cap if it does not come from the publicly funded community-based care contract. The community-based care initiative contracts with nonprofit agencies to supply child welfare services to local neighborhoods.
Chief Inspector General Melinda Miguel has clarified that no official investigation has begun, but that various documents are under review.
“Just to be clear, the intent for the preliminary report is to show where we may receive a request for further review or verification,” Miguel said.
The next step will be for Miguel and her team to meet with each agency and explain the review procedures. Further action will be taken later this year after a final report is released this summer.
Featured image: Ron DeSantis in 2016. Public domain image by the House Committee on Oversight and Government Reform.
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