Non­prof­its seek $100M from sur­plus

The News-Times - - BUSINESS - By Keith M. Pha­neuf

With Connecticu­t’s cof­fers flush with cash for the first time in a decade, long­suf­fer­ing non­profit so­cial ser­vices want a share of the wealth.

The Connecticu­t Com­mu­nity Non­profit Al­liance re­cently wrote to Gov. Ned La­mont, ask­ing that he and law­mak­ers set aside $100 mil­lion to as­sist those who pro­vide the bulk of state­spon­sored so­cial ser­vices.

But de­spite the rosy out­look for the rainy day fund, Connecticu­t still has tens of bil­lions of dol­lars in pen­sion and bonded debt that dwarf its bud­get re­serve. And La­mont and the Leg­is­la­ture still face more than $3 bil­lion in pro­jected deficits in the next two-year bud­get cy­cle.

“Simply put: com­mu­nity non­prof­its have taken the hit when bud­get times were bad,” wrote Gian-Carl Casa, pres­i­dent and CEO of the al­liance, which pro­vides ser­vices to more than a half-mil­lion peo­ple. “It is im­por­tant that the peo­ple they serve ben­e­fit as the bud­get im­proves. “

Since ex­haust­ing its re­serves dur­ing the last re­ces­sion — which ended in Jan­uary 2010 — state gov­ern­ment has strug­gled with deficit fore­casts for much of the past decade.

But surg­ing income tax re­ceipts over the past 18 months helped Gov. Dan­nel P. Mal­loy and the last Leg­is­la­ture amass a $1.2 bil­lion emer­gency re­serve.

And con­tin­ued growth in tax re­ceipts has La­mont and the cur­rent Gen­eral Assem­bly an­tic­i­pat­ing more than 2.6 bil­lion in the rainy day fund by the end of Septem­ber.

“It is im­por­tant to un­der­stand that this sur­plus comes af­ter more than 10 years of bud­get cuts that have fallen dis­pro­por­tion­ally on the state’s safety net and im­pacted qual­ity of life,” Casa said. “Com­mu­nity non­prof­its house the home­less, work with in­di­vid­u­als with in­tel­lec­tual and de­vel­op­men­tal dis­abil­i­ties, treat peo­ple with sub­stance abuse and other behavioral needs, man­age food pantries, pro­vide ther­a­peu­tic arts and cul­tural op­por­tu­ni­ties and much more, even as de­mand has in­creased.”

But while $100 mil­lion out of a po­ten­tial $2.6 bil­lion re­serve might seem rel­a­tively mod­est, it’s not that simple.

Non­profit agen­cies would not want to lose the fund­ing af­ter next fis­cal year ends. And the gov­er­nor and leg­is­la­ture can­not count on a sur­plus ev­ery year.

In other words, if law­mak­ers fund a $100 mil­lion rate in­crease us­ing one­time dol­lars now, they would be ex­pected to con­tinue to pay for it in fu­ture years. That would mean ei­ther rais­ing new rev­enues, cutting other pro­grams, or both.

“We ap­pre­ci­ate the Al­liance and want to re­main a part­ner in help­ing them achieve their im­por­tant goals of help­ing vul­ner­a­ble com­mu­ni­ties when they need it most,” said Mari­bel La Luz, La­mont’s com­mu­ni­ca­tions di­rec­tor. “How­ever, the sur­plus is not a longterm fund­ing source for any statewide op­er­at­ing ex­pense. It’s not fea­si­ble or sus­tain­able to use sur­plus or rainy day funds to sup­port non­prof­its.”

La Luz said “we will con­tinue to sup­port the non­profit ser­vice providers through the ex­ist­ing op­er­at­ing and cap­i­tal ex­pen­di­tures and other creative ways.”

Presently, more than a half dozen state de­part­ments col­lec­tively spend roughly $1.4 bil­lion to hire pri­vate, non­profit agen­cies to pro­vide so­cial ser­vices, health care, job train­ing and other gov­ern­ment func­tions.

Though these re­sources are scat­tered among more than 1,200 con­tracts, in­volv­ing hun­dreds of non­prof­its, to­gether these pay­ments rep­re­sent more than

7 per­cent of the Gen­eral Fund.

In terms of dol­lars, that’s larger than the de­part­ments of Trans­porta­tion, Correction and Mo­tor Ve­hi­cles com­bined.

Non­prof­its employ close to 190,000 peo­ple in Connecticu­t, about two-thirds of whom work in the hu­man ser­vices field.

But from 2002 through

2017, state spend­ing for non­prof­its grew just 9 per­cent in to­tal.

Leg­is­la­tors gave non­prof­its that serve the de­vel­op­men­tally dis­abled a 5 per­cent rate hike last year, while oth­ers re­ceived a 1 per­cent bump. But both came with re­stric­tions.

Most non­prof­its were man­dated to al­lo­cate all of those ex­tra dol­lars to wages. In other words, any cost in­creases tied to main­te­nance, tech­nol­ogy, debt ser­vice, or en­ergy costs had to be borne by the agen­cies.

Barry Si­mon, CEO at Hart­ford-based Oak Hill School, one of the largest agen­cies serv­ing clients with phys­i­cal and in­tel­lec­tual dis­abil­i­ties, said the fund­ing would help him at­tract nurses, phys­i­cal ther­a­pists and other pro­fes­sional staff.

Other non­prof­its, he said, likely would use the funds to make long-de­ferred investment­s in com­puter sys­tems, build­ing main­te­nance and equip­ment.

“We see this as an op­por­tu­nity to catch up,” he said.

The al­liance pro­jected a $100 mil­lion pay­ment to non­prof­its would be the equiv­a­lent of a 5 per­cent rate in­crease — with no strings at­tached.

This is also im­por­tant, Casa said, be­cause many of the non­prof­its’ clients also qual­ify for Med­i­caid as­sis­tance, which means the state would be el­i­gi­ble for al­most $37 mil­lion in match­ing fed­eral aid un­der this plan.

Arnold Gold / Hearst Connecticu­t Me­dia

Gov. Ned La­mont

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