Originally published on July 28 by the Pittsburgh Post Gazette
Uncertainty looms for Pittsburgh nonprofits as the Pennsylvania budget delay stretches more than 20 days.
Organizations serving the community’s most vulnerable are confronting questions about how to continue their operations if they lose consistent funding from the state. Recalling the fallout of the 2015-16 budget impasse, advocates worry an extended disruption could push already limited staffing and cash reserves past their limits.
One of the region’s largest networks of human service nonprofits, The Greater Pittsburgh Nonprofit Partnership, is already hearing from worried organizations. Emily Francis, the coalition’s executive director, believes the impasse could come at a greater cost to the social service sector than ever as nonprofits reel from the pandemic.
“With the last impasse, there were really hard discussions that had to take place about who would get paid, who would get served, how that would happen,” she said. “It’s a different kind of animal this year … The social service sector has provided the safety net for so many people in the last two years.”
The state budget, due over three weeks ago on June 30, remains in a deadlock as the Republican-controlled Senate and the Democratic-controlled House clash over funding for school vouchers. Legislators aren’t scheduled to return to session until late September, leaving nonprofits, along with public schools and local governments, in a holding pattern.
Anne Gingerich, executive director of the Pennsylvania Association of Nonprofit Organizations, said nonprofits find themselves especially vulnerable since the pandemic.
The COVID crisis left the nonprofit workforce struggling to hire and retain staff, especially when their wages can’t compete with other industries. And inflation flattened donations – last year, Americans gave at their lowest levels since 1995.
“Many nonprofits are in a worse position than they were in 2015, 2016,” Ms. Gingerich said. “If they need to go to a line of credit, if they’re lucky enough to have one, interest rates have only gotten worse. We have a lot of concerns around what happens if this impasse continues. We’re really trying to pay attention to what happens.”
State Sen, Jay Costa, D-Allegheny and minority leader in the chamber, is hopeful that the legislature will reach a resolution as early as mid-August. He finds it “certainly disappointing” that the budget stalemate puts nonprofits in a tough way, but believes the process won’t turn into the “long, protracted” stalemate seen in years past.
Unlike the last impasse, this year’s budget has passed both the House and Senate, but a signature on the floor of the Senate is needed before going to Gov. Josh Shapiro’s desk for his signature. Top Republicans already have discharged the chamber until September.
“All we need now is a procedural step that quite frankly, should have taken place by now,” he said. “We’re going to get there, and we’ll be able to get resources flowing really in an expeditious way once the budget is signed.”
Carlos T. Carter, president and CEO of the Urban League of Greater Pittsburgh, doesn’t want to see political debate get in the way of essential community services. He isn’t “overly worried” about the delay just yet. His nonprofit is among the luckier few, with enough reserve to keep operating – even if final approval doesn’t come around for another few months. But he knows other groups aren’t in the same position.
“How do you stop someone from serving the public?” Mr. Carter said. “Stop the funding too quickly. Many nonprofits, they don’t have much cash flow. I think many nonprofits have maybe 30 days cash on hand.”
The current delay doesn’t immediately put social services to a grinding halt, Ms. Francis said. But nonprofits, including many local organizations that operate with annual budgets as little as $100,000, expect to receive state funds on time in order to run smoothly. It’s especially concerning as many groups rely on reimbursement payments from the state to fund their services at their current levels, she said.
“Because there is dependence on funding like this, inconsistency is a bit scary,” Ms. Francis said.
Over the past 20 years, Ms. Francis said Pennsylvania has seen over a dozen late budgets, some of which extended past 100 days. The longest happened in 2015-16, lasting nine months.
The gridlock brought widespread impacts, as reflected in a 2016 survey by the Pennsylvania Association of Nonprofit Organizations.
Nonprofits in dire need of money turned where they could. They dipped into their cash reserves. They borrowed from bank loans, credit cards and their own lines of credit. Over 130 organizations collectively borrowed $171,921,108. Organizations also reported temporarily closing, reducing their hours, laying off staff and cutting pay.
But suspending services just isn’t an option in the eyes of Gretchen Kelly, executive director of the PLEA Agency, even with the financial risk. The PLEA Agency offers multiple support programs for adults and children with autism, mental health issues and developmental difficulties, including a school-based partial hospital program.
“As human service providers, we will never say no to our consumers,” Ms. Kelly said. “We continue to serve regardless of the funding, even if that means we use reserves.”
She believes that if the delay persists, legislators should help buffer the effects in the human service sector with its rainy day fund, which sits at a record $5 billion. She said legislators could tap into those funds any time to help organizations adequately serve people in need.
While the government will continue paying for some social services deemed essential, there’s still major confusion over who falls under that category.
Cara Ciminillo, executive director of the children’s advocacy organization, Trying Together, already knows that two key early childhood programs, Pre K-Counts, and Head Start Supplemental are left out of the state’s “must-pay” list.
The pause in resources will hurt low-income families the most, she says, as those who fall under the federal poverty level, are experiencing homelessness, receive public assistance, among other factors, are eligible for these programs.
“We know that disproportionately here in our region, folks that are of lower income are also people of color,” she said. “Our Black and brown neighbors are going to be more greatly impacted. And programs that typically would be enrolling children and their families to start here next month are left to essentially wait and see what happens.”
As nonprofits brace for what’s ahead, Mr. Carter of the Urban League has one message to state legislators: “Be sensible, and work something out soon.”
First Published July 27, 2023, 5:30am