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Allegheny Valley president: School's sale led to $3 million in deferred compensation

| Sunday, Aug. 30, 2009

Don't cry in your Terrible Towel, but Regis Champ, president and CEO of Allegheny Valley School, made nearly $4 million last year, making him perhaps the highest-paid nonprofit employee in the state.

Champ defended his pay, saying his actual salary was just $300,000, the same as in 2007. Another $3 million was deferred compensation for his eventual retirement, and $600,000 was payment for unused vacation and sick days, both lump sums triggered by the sale of Allegheny Valley in 2008.

B. Scott Finnell, chairman of the board of the Alliance for Children and Families, a Milwaukee-based group of 300 nonprofits providing $5 billion worth of services across the country, said as far as he knows Champ's compensation is unmatched in his group.

"I would probably be thinking about retirement if I had a package like that," said Finnell, executive director of Pressley Ridge in the North Side, an agency that serves 2,900 children with behavioral or developmental problems.

Since 1996, Allegheny Valley has made more than $2.5 million in royalties from The Terrible Towel. The late Steelers broadcaster Myron Cope gave the trademark of the towels to the school because his autistic son Daniel lives in one of its facilities. Champ assured that none of the towel revenue went for his package.

Champ, 61, of Kennedy has worked 37 years for Allegheny Valley School. Based in Coraopolis, its 125 facilities in nine counties provide residential, therapeutic, educational and social programs for more than 900 people with severe or profound retardation or other medical complications. Champ became executive director in 1974, CEO in 1978 and then president and CEO.

Allegheny Valley School gets the bulk of its money from federal Medicaid payments distributed by the Pennsylvania Department of Public Welfare. The school has a two-year contract with the state through June 30, 2011. Stacey Witalec, spokeswoman for the department, said it is withholding comment until it researches Champ's compensation package.

Champ made $3,987,355 in fiscal 2008, according to the school's federal Form 990, the informational tax filing of nonprofit groups. That would make him the state's top-paid nonprofit employee in the database of GuideStar, the independent group that maintains these records, but it is awaiting some tax filings from the Internal Revenue Service for that year.

"You got to have a good justification for that," Finnell said. "I would suppose that they do, but I don't know what it is."

Nationally, 37 nonprofit officials made at least $4 million in the past two fiscal years, according to GuideStar. The highest paid was Jeffrey L. White, senior vice president and chief financial officer of Beaufort County Memorial Hospital in South Carolina, at $25.4 million.

The extent of Champ's compensation package stuns Peggy M. Outon, executive director of the Bayer Center for Nonprofit Management at Robert Morris University. The center provides technical assistance to nonprofit groups and conducts a wage and benefits survey every two years.

"The source of their revenues," Outon said, "are citizen dollars from taxes and philanthropy from individuals and foundations. So when there is a very large settlement made like this one, it makes me wish that the board of directors and executive management had addressed issues of retirement concerns and fair treatment of employees much earlier in their history so we would not see a very large sum of money being disbursed in any year."

His $300,000 salary was below the average of $476,383 for an executive running an organization with a budget exceeding $50 million, according to GuideStar. Allegheny Valley's budget in 2008 was $124.5 million.

In explaining his pay from vacation and sick days, Champ said all employees get 12 sick days and four weeks of vacation a year. If they don't use any sick days in a year, they earn an extra week of vacation.

He said he takes a couple weeks of vacation a year and cannot remember the last time he used a sick day.

"I'm blessed with real good health," he said. "It's never been a problem for me."

Outon was surprised by the school's compensation policy for sick days.

"Every nonprofit I've worked for, you were not compensated for sick leave," she said.

Pressley Ridge does not pay employees for unused sick days. Its employees can be paid for up to five weeks of unused vacation.

Finnell said Pressley Ridge frowns on unused vacation days because they become a liability on its balance sheet.

"It makes your net worth go down," he said. "The weaker position makes you a bigger risk, and a bigger risk pays a higher (interest) rate."

Champ said his board hired Hay Group, a Philadelphia-based management consulting firm, three years ago to study his compensation. The firm recommended his salary and a package for retirement or separation in the event of an acquisition or merger.

On May 31, 2008, Northwestern Human Services Foundation Inc. in Lafayette Hill bought Allegheny Valley School for $62 million, money that paid for Champ's compensation package.

Ken McCrory, a principal of McCrory & McDowell, a Downtown accounting firm that works with nonprofit groups, was not surprised by how much Champ made.

"I don't find the amount to be extraordinarily large for an organization of that size and scope, and for an individual that has been there the length of time he has and with that base salary," McCrory said. "The fact that they did this just three years ago means that instead of building it up over time, they had to play catch-up."

During his tenure, Champ said Allegheny Valley grew from 60 to 2,500 employees. Its fiscal 2010 budget is $130 million.

"They were in very serious financial straits when I came aboard," he said. "I built it into one of the largest providers of mental retardation services in Pennsylvania."

Champ said Northwestern Human Services has asked him to stay at Allegheny Valley for five more years before retiring.

Besides Champ, Allegheny Valley has six other board members, four of whom are executives of Northwestern Human Services. None was available for comment. Guy Squillante, a local board member, died in April.

Allegheny Valley sponsors the Pittsburgh Vintage Grand Prix. Dan DelBianco, executive director of the Grand Prix, said he did not know about Champ's package.

"Rege is a wonderful person and does wonderful things," he said.

Allegheny Valley uses money from individuals, foundations, corporations and community groups for programs, equipment, property and renovations, according to the school's Web site.

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