Report: Bennett's pay atypical, not illegal ** Consultant finds nonprofit made a "good faith effort' to set an

appropriate salary.

Author: Darryl R. Isherwood and Josh Drobnyk Of The Morning Call

Article Text:

A consultant hired by Properties of Merit to evaluate how the organization set director Sam Bennett's salary has
found that the nonprofit erred in overstating its size but made a "good faith effort to determine an appropriate salary."

In the report, consultant Steven Langer said Bennett's salary should have been based on the current status of the
organization, not on its anticipated growth, which board members had factored in when spending more than 30
percent of the organization's budget on Bennett's pay.

The findings are in a six-page report ordered and paid for by the nonprofit after The Morning Call questioned the
process its board used to determine Bennett's $110,000 salary in fall 2006.

The board slashed Bennett's salary in half in July. This year, it cut her salary to $21,000 because time constraints
have forced her to cut back on work with the organization, which rewards homeowners who take excellent care of
their properties. Bennett is a Democratic candidate for Congress, challenging U.S. Rep. Charlie Dent, R-15th District.

The report, which cost $1,000, concludes that the procedures followed by Properties of Merit's compensation
committee were appropriate for a committee that didn't include "a professional in the field of human resources
management, employee compensation, or statistics."

It also said board members "met all [Internal Revenue Service] requirements in their deliberations." That finding,
however, seemed to contradict Langer's own conclusion that it was "inappropriate" for the organization to include its
projected 100 volunteers as employees when researching nonprofits with which to compare.

In 2007, Properties of Merit had two full-time employees, including Bennett, and a budget of $351,000.

Among the guidelines the IRS recommends organizations follow when setting nonprofit salaries, as noted in the
report by Langer Human Resources Group, is to obtain and rely upon "appropriate data" from comparable agencies.

Addressing the board's decision to count volunteers as employees, Langer said in the report, "This is felt to be an
inappropriate decision."

In a follow-up interview, Langer said the IRS requires only that organizations make a good faith effort in setting a
salary, something he felt the organization did.

"They used the wrong factors. I would do it very differently," he said. "But I can't say that they didn't make a good faith
effort. They did."

Board President Jim Molchany, in an interview last week, stood by the decision to include volunteers in the employee
head count.

"Our organization is all volunteers," he said. "As we expand we have even more volunteers that come and go each
year. There are hundreds of them that have to be trained -- they have to be contacted and kept abreast. That had to
be a part of the compensation process because the volunteers are very important to the organization."

The Morning Call also had questioned Properties of Merit's decision to exclude the size of its budget when
researching salaries at similar organizations.

Bennett and Molchany have defended that decision, saying that Properties of Merit was expected to grow rapidly
after receiving a state grant in 2006 and should, therefore, have looked at nonprofits much larger then itself when
setting the director's salary.

Langer said the board should have offered Bennett incentives for growth and annual adjustments rather than setting
her salary on projected growth.

Langer's report did not assess whether it was appropriate for Bennett to help determine what nonprofits would be
considered similar to Properties of Merit. But the report did say "it was not felt to be inappropriate" for her to sit in on
the board's discussion of her salary before it voted because she did not participate.
Bennett said the report exonerated her and Properties of Merit in any wrongdoing in setting her salary.

"All of the individuals involved were scrupulous in trying to make sure that every guideline was followed," Bennett
said. "We are happy that the consultant has confirmed that for us and we are very much looking forward to getting on
to the business of what the governor has asked us to do."

In a memo presented to The Morning Call accompanying Langer's report, Properties of Merit said its board "sincerely
regrets this incident happened, has learned a great deal from it, believes it has acted diligently and appropriately in its
reaction [and] has taken steps to prevent a recurrence."

It said it will call upon Langer for advice concerning future compensation decisions. It will also seek to appoint a
human resources representative to the organization's board, and will bar candidates for positions from serving on the
compensation committee or providing information that would help set that person's salary.

darryl.isherwood@mcall.com