Connecticut nonprofits on the chopping block amid state budget impasse
Patriot Bank President Richard Muskus Jr. speaks on the importance of government funding for nonprofits, as well as Patriot’s ongoing support of the sector.
The state budget impasse is already being felt by a number of sectors, but perhaps none as much as the nonprofit segment.
“I think it’s a horrible situation,” said Eileen Healy, executive director of Independence Northwest. One of the state’s five Centers for Independent Living, the Naugatuck-based advocacy program for the disabled already reduced its catchment area from 44 towns to about 10 last year, with further reductions possibly on the way.
“At this point we’re pretty much limited to the greater Waterbury area,” Healy said. “We would love to keep serving places like Newtown, Bethel and Danbury as we have in the past. If someone comes to us we’ll help them, but we can no longer go to them.”
Since 1988, the five centers had served all 169 of the state’s towns and cities but with last year’s reduction in state funding, from nearly $529,000 to about $202,000, they now serve only 25, including Bridgeport, Stratford and Trumbull in Fairfield County.
Independence Northwest slashed salaries throughout the organization last year but is maintaining its staff of 11 full-time and four part-time employees.
Funds for the five centers will likely take another hit when a budget is passed, Healy added, with Republicans budgeting $372,000 and Democrats proposing $250,000. “We’ve planned for the worst and budgeted accordingly,” she said. If funding is cut, “A couple of positions will probably be reduced to part time and we may have layoffs.”
“We don’t know when the funds are coming, but we’re still supposed to do the work,” Healy said. “Some nonprofits have been told to cease services, but we have not — at least not at this point.”
Twenty-six nonprofit providers that contract with the state Department of Social Services were informed the would no longer receive funding as of the close of business on July 1, with some funding provided through Aug. 1 to help them transition to the new reality. Those included programs offered by the Greater Bridgeport Adolescent Pregnancy Prevention Program; Person-to-Person Inc., a Darien-based provider of basic needs and services to the underprivileged; Career Resources Inc. and Families in Crisis Inc., both of Bridgeport; and the Community Action Agency of Western Connecticut Inc. in Danbury.
Meanwhile, a survey conducted by the Connecticut Community Nonprofit Alliance as the July 1 budget deadline approached painted a similar gloomy picture. In answer to how they would plan for a reduced level of funding, 82 percent of Alliance members said they would be forced to lay off staff; 77 percent that they would need to reduce services or programs; 60 percent that they would eliminate programs entirely; 57 percent would reduce service hours; and 45 percent would stop accepting new clients.
“We know that if things don’t change, thousands of Connecticut residents will go without the care they need,” said Gian-Carl Casa, president and CEO of the nonprofit alliance. “Depending on how long the situation goes on, there may be some places that will be forced to shut down.”
The alliance has proposed to lawmakers a plan it says would save approximately $300 million over two years by shifting more services from more expensive state government agencies into the nonprofit sector.
As an example, the alliance said that the cost for group homes serving the developmentally disabled is $152,000 per person. If half of the 888 people still in state care are shifted to nonprofits, the state would realize a gain of almost $100 million over the next two years.
Casa noted that the change would not be a new one, as more than 86 percent of people receiving state services for developmental disabilities are getting them through community-based nonprofits.
“By supporting the more expensive status quo over new ways to deliver services, the state chooses to deprive people of care they need,” he wrote on the alliance’s website. “There are more than 2,000 people on the waiting list at the Department of Developmental Services and they may never receive services if we maintain the current inefficient and expensive service delivery system.”
Robert Francis, executive director of Regional Youth Adult Social Action Partnership in Bridgeport and an alliance board member, endorses the Casa proposal, especially as his organization is already facing a number of cuts. State funding makes up about $800,000 of its $2.4 million annual budget, Francis said.
While the Department of Children and Families has maintained its funding, money from the Department of Mental Health & Addiction Services and the Judicial Department remain in limbo. As a result, the partnership has already laid off two members of its Street Gang program and instituted a one-day furlough for its remaining 17 full-time and seven part-time employees, who are required to take off one day every two weeks.
Noting that to date Bridgeport this year has already seen 17 homicides, Francis said those numbers “are always higher from June to September. This is the worst possible time to pull our (anti-gang violence) guys off the street.”
Martin Schwartz, president and CEO of The Kennedy Center in Trumbull, said that two of his organization’s key funders have already promised cutbacks. The Department of Social Services announced a 10 percent cut across the board, which will include six furlough days during which the state will not reimburse programs serving people with disabilities; the first will be on July 26.
“We will be closed on those days,” said Schwartz. “But we still have our own expenses and overhead.” Noting that many of Kennedy’s 750 employees make $12 an hour, “Going a day without pay is a pretty difficult thing to do,” he said,
Schwartz said each furlough day would cost the organization about $55,000. “And that’s on top of the cuts we’ve already made over the past several years,” he added, which included laying off about 50 workers.
In addition, cuts by the Department of Rehabilitation Services will result in the layoffs of nine Kennedy Center employees who work with the visually impaired if no budget is in place by July 31.
“I’ve been here for 39 years,” Schwartz said, “and I’ve never seen anything like this. I always thought that one of the primary purposes of a society is to take care of its most vulnerable people, but that’s not the case in Connecticut right now.”
In Bridgeport, The Center for Family Justice President and CEO Debra Greenwood said her organization has been ramping up fundraising efforts through events and appeals to corporations and individuals over the past year in the face of declining state support. The Center laid off five employees, four of them full time, last fall but is hoping to hold on to its 41 remaining staffers.
As its staff has dwindled, its workload has increased, Greenwood said. Its safe house for victims of domestic violence is at 125 percent capacity. By combining services with other nonprofits, the Center is maintaining its level of service for now, she said.
“The big question is, if we and other nonprofits don’t do the work, who will? It won’t be the municipalities. They might be able to for a short period of time, but you need experts to do this kind of work.”
The Bridgeport Public Education Fund Inc., whose services include college access programs, has “never wanted money from the state or the feds — it’s too onerous a process,” said Executive Director Marge Hiller.
Even so, the organization has continued to struggle financially as the purse strings of corporate and individual donors have tightened over the past few years. Although it ended 2016 in the black after posting the first deficit in its 34-year-history in 2015, that was only accomplished by laying off one employee and cutting back on some services, including reducing its two-day college prep workshop to one day. “We’re pretty lean to begin with, so there are not a lot of places to cut,” Hiller said.
Even so, the $10,000 donations it used to get are now usually more in the $5,000 range, she said, adding that unless things dramatically improve, the nonprofit will undergo “a total restructuring” next year.
One reliable source of nongovernmental funding has traditionally been banks, but even they have refocused their priorities. Hiller said that the likes of Citibank, Bank of America and Chase have been redirecting their resources toward community development. The First Niagara Bank Foundation said it would end its funding by 2020 following its 2016 merger with KeyBank, Hiller said.
Richard Muskus Jr., president of Patriot National Bancorp Inc., said that while Stamford-based Patriot Bank will continue to provide support to nonprofits, especially in the education and community development areas, it is incumbent upon the state to supply most of the necessary funds.
“The landscape for nonprofits throughout the state of Connecticut is certainly stressed at this point,” he said. “A lot of nonprofits are going to have to reinvent themselves to some degree, which could include shedding some assets. Our hope is that once the state sorts things out, the money will flow down and stabilize those organizations.”
“The state government, legislators and the governor alike, are being very short-sighted. If these service organizations go out of business, the state will have to pick up those services and their costs, which means the taxpayer will have to pay so much more. And if we need to lay off staff, those people are no longer paying income tax,” Muskus said.
Read more at the Fairfield County Business Journal