Budget impasse cost nonprofits thousands
Services slashed for 17,000 clients in all of Pa.’s 67 counties
Between a loan, tapping a line of credit, freezing salaries for employees and cutting extras such as a holiday party, Every Child Inc., an Uptown agency that places at-risk children in foster care, was able to make it through the state’s months long budget impasse.
“Because of the fragile state of the consumers we work with, we couldn’t cut services,” said Laura Maines, the agency’s executive director.
A new survey illustrates just how hard-hit Pennsylvania nonprofits were by the budget impasse.
Among the findings: 45 organizations will need to pay back a collective total of $532,000 in interest, and the equivalent of more than 380 full-time employees were laid off, furloughed or had their hours, pay or benefits eliminated or reduced, according to the survey, which was jointly conducted by the Pennsylvania Association of Nonprofit Organizations, the United Way of Pennsylvania and the Greater Pittsburgh Nonprofit Partnership.
The survey also found 17,100 clients served by 22 organizations in all 67 counties received no or reduced services as a result of the impasse, and 135 organizations had to borrow money, whether it was from their own cash reserves, borrowing from banks or “borrowing” from their vendors by delaying payments.
Bridgeway Capital, a Downtown-based nonprofit fund that typically lends money to small
development initiatives, made $2.1 million in emergency loans available during the budget impasse.
The funds went to nonprofits that were “almost exclusively human services providers that dealt with the most vulnerable populations,” said Adam Kenney, Bridgeway spokesman.
Of 18 loans it made, nine have been paid back in full.
Among them was a $100,000 loan to Every Child Inc. Besides the loan from Bridgeway it secured several months into the budget crisis last fall, Every Child tapped $450,000 from a $500,000 existing line of credit it has with PNC Bank, said Ms. Maines.
“We were kissing the top of that line of credit by the time January rolled around,” she said.
She expects the PNC credit line to be paid off in July.
But the agency incurred between $11,000 and $12,000 in interest costs that won’t be reimbursed.
“That’s a big chunk,” she said. “Our operating revenue is around $3.8 million annually, so to have $12,000 going to literally nothing is really disheartening.”
By borrowing money, Every Child avoided service and staff reductions. Instead, the agency froze salaries for its approximately 56 employees, nixed holiday parties for staff and clients, and saved on operating costs when it downsized to new office space.
Looking ahead to the next fiscal year, Every Child has already increased its line of credit with PNC to $700,000.
“We’re cautiously optimistic we won’t need to tap it and the budget will be close to on time,” she said.
After last year’s impasse, however, “Some trust was broken between the provider community and state government, and we can’t count on them to do what they need to do by June 30.”
From July of last year until the end of December, the state’s Republican-led Legislature and Democratic Gov. Tom Wolf could not agree to a state spending plan; the governor signed a partial budget into law in late December that allowed funds to flow to cashstarved schools and social service agencies. The impasse dragged on for several more months before the governor allowed the remainder of the budget to become law without his signature.
There have not been any legislative or policy changes put in place that would prevent nonprofits from being harmed in the event of another budget impasse.
All sides say they are hopeful they are can reach an agreed-to budget on time, but it’s not clear yet if disagreements over taxes and level of education spending will again prevent an agreement from being reached by June 30.
“Nobody wants a repeat of last year,” said Steve Miskin, a spokesman for House Republicans.
“We recognize the stress that this [impasse] put on our communities last year,” said Jennifer Kocher, a spokeswoman for Senate Republicans.
Jeffrey Sheridan, a spokesman for Mr. Wolf, said the tone of the ongoing budget meetings is positive.
However, he noted, “The governor’s priorities haven’t changed.”
Kate Giammarise: kgiammarise@post-gazette.com or 412-263-3909. Joyce Gannon: jgannon@post-gazette.com or 412-263-1580.