Minneapolis Head Start director's salary exceeds federal cap

Minneapolis Head Start executive director Alyce Dillon started at the agency 45 years ago making $3.10 an hour.

Now at $250,451 a year, Dillon's pay is well over the federal limit for directors of Head Start organizations.

The salaries of Head Start leaders came under intense federal scrutiny after a wave of criticism of executive pay and financial mismanagement since 2000. Congress enacted salary limits in 2005 after revelations that a Head Start director in Kansas City made as much as $300,000 and used agency money to lease a Mercedes SUV. Closer scrutiny found a dozen Head Start directors making higher salaries than the cabinet secretary of Health and Human Services, which oversees Head Start.

"Alyce's salary is not beyond or out of order in any way, shape or form," said Phyllis Sloan, chairwoman for Parents in Community Action, the north Minneapolis nonprofit that runs Minneapolis' Head Start.

The rules adopted after that pay flap forbid the staff of Head Start agencies using any federal money to exceed $181,500 a year, a limit that includes sick and vacation payouts.

Dillon said her base pay is $183,500, but she augments her salary every year by cashing out unused sick time, vacation pay and personal days.

"It's very labor-intensive and you need to be there," Dillon said of her organization, which promotes school readiness for low-income children. She declined a more expansive interview about her salary.

Dillon, 70, has become nationally known as a fierce advocate for the Head Start organization she runs in Minneapolis and much of Hennepin County. The north Minneapolis nonprofit took in $25.1 million in 2012, nearly all of it in state and federal taxpayer grants.

She is by far the highest paid Head Start director in the state. Her pay also ranks well above peers who run similarly sized social service organizations in Minnesota, according to an annual Star Tribune ranking of nonprofit finances and executive compensation.

Dillon's salary was almost $50,000 more than the next highest among the seven social service agencies with budgets between $20 million and $30 million.

Ed Sisola, Parents in Community Action's board treasurer, said he was not aware of the federal limits and said he was surprised it never came up in audits. "I think we should look at that," he said.

Dillon said her longevity is one factor contributing to her compensation, which rivals that of outgoing Minneapolis schools Superintendent Bernadeia Johnson.

"It's way too high in my opinion," said Patrick McFarland, who has directed Anoka County Community Action Program and is paid about $111,000. His program includes a smaller Head Start program, along with offering housing, energy, crisis and senior programs.

"I make a good living. I'm happy with it," McFarland said.

The leaders of Dillion's organization described the process for determining her salary in a federal tax filing, saying her pay is based on her performance and wages at similar agencies in the community.

The agency that runs programs for low-income residents in Ramsey and Washington counties, however, said it uses a similar labor market gauge and imposed a salary cap of $144,087 for the director of its smaller Head Start program.

Dillon said she rejects the idea of limiting salaries at organizations that use tax dollars.

Over the years, Dillon has built an unblemished record for helping children and teaching their parents to advocate for family needs. Her agency has also earned high marks in federal reviews.

Dillon was described in a 1993 Mother Jones magazine article as living in a public-housing project on welfare before she was empowered by Head Start in the late 1960s. She helped found Parents in Community Action as an independent nonprofit and rose to director in 1977.

"She's a fierce advocate for the families and children she serves," said Cindy Boman, who directs the Head Start program serving Wright and western Hennepin counties.

Legislative Auditor James Nobles said nonprofit boards are responsible for setting executive salaries, and that state officials have no say. He noted that Dillon's salary is higher than the heads of state agencies.

Her pay is double what Gov. Mark Dayton makes each year.

State Senate Minority Leader David Hann, R-Eden Prairie, said he thinks legislators need more oversight of salaries of nonprofits that get part of the $1 billion the state doles out to social services agencies. He said the issue is something legislators should address this legislative session, which is just getting underway.

Dillon has no plans to change course, saying she will stay "as long as I'm doing a good job, as long as the board feels I'm doing a good job."

Steve Brandt • 612-673-4438