Big bad impact from the State budget deadlock is coming soon - Generocity Philly

Funding

Aug. 20, 2015 2:00 pm

Big bad impact from the State budget deadlock is coming soon

If the impasse continues into September, even bigger effects will come into play

Day 50 of the State budget impasse has come and gone — what does that mean for our local social impact ecosystem? Recently PANO partnered with United Way of Pennsylvania and six other statewide human service provider organizations to quantify the impacts of the state budget impasse. The deadlock has already resulted in service cutbacks as of mid-August, which more cuts projected into September.

Here are the results of a survey they conducted:

Use the radio buttons to see what the situation will be like in September

 

  • About half of respondents say they will be experiencing cash flow problems as of mid-August.
  • Another 25 percent will have cash flow problems in September.
  • As of mid-August, 23 percent of human services agencies responding have already exhausted their contingency funds. By September, half of the agencies will not have any more contingency funds.
  • 60 percent of organizations who responded planned to access lines of credit in August to be able to continue their services.
  • 110 of those who are definitely accessing lines of credit projected that they will spend at least $1.4 million on interest costs through the end of October. Those are costs that cannot be reimbursed by the state, and could otherwise be invested in services.

 

Kristen Rotz, President of the United Way of Pennsylvania, said that “many of the most vulnerable residents in the Commonwealth depend on services that rely on state funding. With every passing week that this budget delay continues, more and more of them will lose access to these services, leaving them to fend for themselves, as providers are forced to make budget cuts.”

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28 percent of organizations expect to curtail services in August, including:

  • Life-sustaining services that provide for basic needs such as emergency food, rental assistance, and safety for domestic violence victims.
  • Essential services like child welfare, state-funded drug and alcohol treatment, payments for foster parents, and state-funded services for individuals with intellectual disability.
  • Services which prevent people from accessing higher and more expensive levels of care, such as respite services for caregivers and assistance for individuals in recovery with mental health services, employment services, and services which nurture strong parenting skills and enable families to support loved ones.
  • Human services quantified $110 million in accounts receivable through the end of July which will be delayed as a result of the budget impasse. Providers and agencies are doing their best to maintain uninterrupted services while this impasse continues, but the strain this is causing is evident in this survey. Cuts in services are occurring.

 

The group is calling for stop gap measures which will assure that vulnerable Pennsylvanians do not experience loss of services during the impasse. There are a few different options, including authorizing continuing appropriations at last year’s levels until a new budget is enacted; assuring that all federal pass-through funds continue to flow; or expanding the list of essential services which continue to receive some funding during the impasse.

Peg Dierkers, Executive Director of the Pennsylvania Coalition Against Domestic Violence, reiterated, “The health and human services providers surveyed are organizations that have been impacted by more than ten years of funding cuts, leaving them more fragile than they were in the last extended impasse of 2009. As a result of the void created by missing state and federal dollars, depleted resources are being spent on lines of credit which would be better invested in service delivery.”

A temporary solution in Berks County

A nonprofit corporation, The Berks County Community Foundation, has created a low-interest loan program for local nonprofits that are experiencing cash flow problems due to the failure of the state government to adopt a budget.

In partnership with Customers Bank, the Community Foundation established a temporary $2 million line of credit from which it will lend up to $200,000 per qualified nonprofit during this crisis, an unprecedented move for the organization.

The bank has agreed to a low interest rate (30 day LIBOR plus 2 percent) for the Community Foundation’s line of credit. The Community Foundation will then lend – at that same rate – to nonprofits serving Berks County that are not receiving their regular state funding.

“The failure of the state Legislature and the governor to come together on a resolution to the budget crisis threatens critically-needed services in Berks County,” Community Foundation President Kevin K. Murphy said. “We’re pleased, along with our partners at Customers Bank, to offer this innovative approach to assist our local nonprofits. We’re ready to accept applications immediately and we expect loan proceeds to be ready for disbursement by mid-September.”

Qualifications for the loan assistance program can be found on the Berks County Community Foundation’s website.

Featured image via Tom Wolf’s Flickr

 

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