A Chittenden County senator wants to cap salaries for employees of nonprofits that receive $1 million or more from the state.
A bill introduced by Sen. Chris Pearson, P/D-Chittenden, would limit pay for employees of nonprofit companies that receive significant state funding to the current level of compensation for the governor.
Gov. Phil Scott will earn $166,046 this year, according to state data.
Pearson said he was spurred to propose S.178 by a VTDigger report about significant increases in nonprofit hospital executive pay. This year, the salary of UVM Medical Center CEO Dr. John Brumsted exceeded $2 million.
“These numbers are just eye popping to working class, middle class Vermonters who haven’t seen their wages grow significantly in the last decade,” he said.
Pearson says the high executive pay at organizations that are substantially subsidized by taxpayers is particularly problematic. Hospitals receive money from Medicare, the federal health program for the elderly, and state and federal funding from Medicaid, which ensures that low-income people receive care.
“I think people find it really troubling to see our tax money spent that way,” Pearson said.
He believes the state should examine how public money contributes to wealth inequality in Vermont, he said.
In addition to hospitals, the proposal would likely limit the pay of administrators at Vermont’s mental health agencies, state colleges and the University of Vermont, Pearson said.
Pearson said using the state CEO’s salary as the ceiling is appropriate because the position of governor involves management of a large workforce and the state budget. It also is a practical benchmark, because the governor’s salary increases regularly with the pay act, keeping up with inflation and other factors, he said.
Lauren-Glenn Davitian of Common Good Vermont, which works with nonprofits around the state, says a small portion of organizations in the state have financial resources at the level Pearson is targeting.
More than 85 percent of nonprofits in Vermont take in less than $500,000 in total income, she said.
“It would be a mistake to view the entire sector in light of these high salaries,” she said.
According to U.S. Department of Labor statistics, the average nonprofit employee in Vermont earned $44,882 annually in 2012, the last year for which data is available.
Average pay for the executives of Vermont organizations is $83,154, according to a 2016 survey by Common Good Vermont.
Vermont does not monitor the wages of nonprofits, according to the state Department of Labor.
Davitian said some types of nonprofits, like higher education and health institutions, have high levels of compensation for executive positions because they face intense competion for executive talent.
“We think it can be valuable to understand the thinking that goes into the compensation policies of nonprofits such as our hospitals and colleges that compete nationally for their leaders,” Davitian said. “It is not clear that a legislated waiver process is necessary in order to have that conversation. That could take place when the organizations come to the Legislature for their appropriation.”
Discussions about the finances of nonprofit organization could be part of the legislative budgeting process, Davitian said.
Disclosure: Lauren-Glenn Davitian is married to VTDigger reporter Mark Johnson.
