Conference Call Brings Together Nonprofits Impacted by Budget Impasse

State Budget and Tax Policy

On August 13, 2009, the Pennsylvania Budget and Policy Center and the Pennsylvania Association of Nonprofit Organizations held a conference call with 140 nonprofit organizations to discuss the impact of the state budget impasse on the essential services provided by nonprofit organizations.

Below is a summary of what was discussed during that call.

Date: August 13, 2009
Facilitators: Sharon Ward, Director, Pennsylvania Budget & Policy Center; David Ross, Policy Officer, Pennsylvania Association of Nonprofit Organizations

CONFERENCE CALL HIGHLIGHTS

Approximately 140 organizations participated in the call.
Groups agreed to work together and reach out to others in their counties to plan joint actions.
Visibility with the local media and local lawmakers is critical.
County contacts to coordinate events and resources are needed. PANO/PBPC can help organize events, if needed. We can publicize. Please send email to volunteer to ward@pennbpc.org.
An effort will be made to quantify the impact of the budget impasse on nonprofits. The United Way of Southeastern PA has developed a questionnaire and other United Ways may do the same. We will coordinate around the collection and dissemination of data.
PBPC will act as a clearinghouse for resources and a calendar of events.

GOALS FOR THE CALL

Help advocates faced with long-term budget cuts and immediate crisis of no funds.
Provide background to give perspective to events.
Encourage cooperation, with guidance, and effective communication.

David Ross from PANO gave a brief introduction. His message was: We are faced with a very serious problem. Let’s leverage resources and pressure the Legislature to get back to the table. Let’s develop a plan of action.

Introduction:

These are difficult times to do good work. We are in the sixth week of this budget crisis. Not a lot of good news. Pennsylvania is one of 48 states that have experienced budget deficits in the past two years. Pennsylvania is now experiencing the worst of it, expected cuts and delayed payments for contracts.

Budget overview: The Senate passed a budget bill, Senate Bill 850, in May, which proposed significant cuts in a number of areas. The bill went to the House and was the subject of several days of hearings. House members rejected that bill and passed their own budget, House Bill 1416, which would spend more than the Governor’s last proposal and restore some of his proposed cuts. The Senate amended that bill with a modified version of SB 850. The House voted not to concur with the amendment and a conference committee was established. The conference committee’s public “negotiating session” was a failure, and little progress was made in behind-the-scenes negotiations. One week ago, the House, faced with public pressure from public employees, decided to send SB 850 to the Governor, which he signed on August 5, vetoing most of the budget.

The “bridge budget” funds $11 billion of the $24 billion in state funds appropriated by SB 850. Most line items were vetoed except those providing for general government operations, some emergency services, and many Medicaid services. The bridge budget appropriates $1.8 billion in federal stimulus (ARRA) funds for Medicaid, but the rest of the ARRA funds were vetoed.

Most of the money in the budget doesn’t stay in Harrisburg. It goes out to vendors, nonprofits, school districts, local governments, and is spent in local communities. This is the portion of the budget that was vetoed. Most of you have missed grant and contract payments, and are struggling with staff layoffs or program closures. We’ve been monitoring these impacts on our website. http://www.pennbpc.org.

There is big disagreement on how much the state should spend this year and how to pay for it. The Governor has proposed spending $28.8 billion. The Senate would like to spend less than that. Hence, the impasse. The Senate has refused thus far to consider any revenue increases to balance the budget. The Governor proposed a personal income tax increase which failed to gain traction in the House.

Our goal is to move the process forward. The conference committee formed to negotiate the budget has not met recently. There is very little going on in Harrisburg and little urgency about the budget. It is critical that we work together to try to change the perception and move the process forward.

Action Plan:

The first step is to communicate with your state legislators, through your boards, your staff and people you serve. Let them know the impact of this budget crisis on your programs and on your communities.

The second step is to communicate with the public. If you followed budget debate, you probably found it disheartening. The public doesn’t know what state government is or what you do, and has little knowledge of the impact of tax dollars on communities. As a consequence, this notion that you can cut the state budget and have no impact at all is pervasive. The crisis provides a chance for the public to see how state tax dollars are spent and the value of those expenditures.

Third, we need to create visibility about the problem through the local media.

Comments:

Let’s highlight the nonprofit issue. Nonprofits are using their lines of credit, and it is just a matter of time before money runs out. Time is running out. The Legislature may not be aware of it.

It’s time to bring the message to the community. What are the corporate partners that would be impacted? Go to grassroots organizations. Some counties are unable to defer the costs for the community past the next two or three weeks.

Montgomery and Delaware counties have said they can’t pay bills. They can front money for a few months. Some 2008-2009 funding hasn’t gone out either so there is a real cash flow problem. Even Department of Aging services and early intervention services, which were not blue lined, don’t know when the money will flow. One senior center had its line of credit turned down because it couldn’t specify when state funds would come through, even though its appropriation was not blue lined. The center will have to close its doors in August.

Comment: The County Commissioners had their annual conference this week. We discussed the budget and decided we need to be more proactive in the media. We are having issues. It depends on the county; some are OK; some have problems from prior fiscal years. Some have reserves; you’ll see a mix across the board. You’ll see a real drop in services in the middle of September, when the rubber hits the road, and counties will have to make decisions of where to put funding.

Question: What is timetable for resolution?

Comment: We’re trying to figure that out. We had internal discussion of when the budget will break, when pressure will cause them to fix this? We’re trying to get stories out, as well. This is really hurting real people here.

Comment: Regarding the 2008-2009 payments, we don’t have reimbursements for quarterly payments for April, May and June, which exacerbates the problem. Lackawanna County has made clear it won’t pay provider bills until the state budget is passed. Organizations are reducing hours, but have no sense as to when the budget will be passed. We are concerned that we will have to wait 30-45 days for checks to be sent after the budget is passed.

Comment: We need to make the case that services will be cut and that the nonprofit sector is an important economic engine, with cascading impact, on business, small businesses. We are not just services providers, but employers, as well, and the crisis affects the economic health of our communities. The economic point may have more impact on the public and legislators.

Question: Can we quantify the economic impact of budget impasse?

PANO did report on the economic impact of nonprofits in Pennsylvania. David Ross will make that available.

Comment: The LA Fitness tragedy in the Southwest has had tremendous ramifications for our counties, even as we have had cuts in mental health illness services and for first responders. Our organization had to lay off four staff members this week; we are not sure we’ll make it after August or September. In order to respond to this massive problem, we have services to provide but have to wait for funding. Had this terrible incident happened in September, we may not have been able to respond at all.

Comment: We need to document situations like this; this is a Page 1 story.

Comment: What if each organization sent their phone number in a simple email with the name of the organization, the total number of people employed, the number they will have to lay off and when. PANO can then aggregate that for the state. It seems it will be an incredible number for the Legislature.

Tim Delaney, National Council of Nonprofits: We have found that the message that works best is about the community impact, what services will be lost and how many people won’t be served. It’s not about nonprofits. It’s about people who will suffer because legislators are not doing their job to come up with resources. The suggestion was made that Sharon Ward and David Ross fashion a template for nonprofits to fill out and return. Add a paragraph to put stories like the incident in the Southwest. That’s compelling. We might be able to do same thing in California, New York and Illinois.

PBPC has a Web Feature called “30 Ways in 30 Days” and “The Price of Service Cuts,” which we will start to send out everyday by email and hard copy.

David Ross suggested that we need people to communicate with legislators and to engage people from the corporate sector. We should also address the increase in unemployment. The impact of the work we do is the largest message that will resonate. We have 100-200 stories on the call right now, and there are 41,000 501(c)3s in Pennsylvania. It is conceivable that thousands will write to legislators.

Comment: The conference committee is not feeling pressure. We should focus pressure on Senator Dominic Pileggi and understand his self interest. He is bragging about stopping Governor Rendell on his website. We need to get people from his district to complain. He is the key here.

Sharon Ward: We should communicate with all of our elected officials, but the key to getting a good budget is the Senate. We need to communicate with Senator Pileggi and with other Senators, particularly those in the Southeast. Senator Pileggi will move when he hears from members that they are uncomfortable and have to do something. We have to make him uncomfortable with his hard-line position. If you have relationships with the Senate, or board members with those relationships, use them.

Comment: The problem is the issue of revenue. Senator Pileggi is not deaf and mute to the impact; he does not want to raise taxes. People on our side aren’t talking about the need for a tax increase. Only that they care about one service or another. Having a coordinated strategy around the need to raise revenue is helpful.

Sharon Ward: Key messages for the group: We need you to get back to Harrisburg, to pass a good budget and to support revenue increases to prevent service cuts. Legislators need to hear that people are willing to support higher taxes.

Comment: Providers that contract with counties do not have signed contracts, and will have to wait six weeks for payment even if they do. Very few contracts are intact. Providers are continuing to extend services to kids in care, knowing they won’t be paid for six weeks.

Each county is handling this differently. Some will front money and some will not. Some say they will not sign contracts and some will not pay until they get funds from the state. In any case, counties won’t pay until contracts are in place.

Jennine Miller, Project HOME: Folks are interested in putting pressure on Senator Pileggi. We need to be closely allied with our friends in Chester and Delaware counties. We are very Philly-based, and we want to connect with the suburbs, so he can hear from his constituents.

Sharon Ward: The United Ways are meeting today to discuss a plan of action for local communities. We anticipate they will take the lead in an event or budget forum. Talk to your United Way and work with them to put events together. They have a unique perspective as a funder and credibility in getting the message across.

Local events are important – some in Senator Pileggi’s district have gotten tremendous press. Today (August 13) a number of groups have planned a walk through Gettysburg to “End the Budget Impasse.” Lehigh Valley groups are talking about doing a children’s march.

We are asking one person from each county to be a county contact person. We should work together where possible. If you have an event, we can help you organize or publicize events if needed.

Communicating with legislators: You can use the Cap Wiz features available at the PANO web site (http://pano.org/) or at Public Citizens for Children and Youth’s (PCCY) web site (http://www.pccy.org/).

The reporting template will be developed as soon as possible, hopefully by the end of the week.

Pennsylvania Community Providers: There is a march focused on the impact of the budget impasse in Pittsburgh on Tuesday, August 18, from noon until 1 p.m. in front of the Pittsburgh State Office Building on Liberty Avenue.

Participants also voiced interest in a nonprofit rally in Harrisburg in a few weeks.

Ron Cowell, Education Policy and Leadership Center: Can you put a calendar on your website for events? Can you keep a list of county coordinators and a brief description of the coordinator responsibility? Also, in addition to saying “we want a tax increase,” we need to change the culture of the state, the mindset of people that we can cut our way through this, etc. We need to change that, create understanding that there is not enough money at the state government level for the things that we think they ought to be doing and that we need to increase resources.

Project Home will be holding a call to assess what we can do in the region. Welcome to join for people surrounding counties. Conference call line 1-518-825-1300 (access code 362885). Email jmiller@projecthome.org for more information.

Sheila Simmons, PCCY: I encourage you to go multi-issue at your events. We put a list of many of the proposed cuts on one page, to show the impact. It is very powerful. Don’t focus on one issue area; it’s a numbers game; we need to fight all of those cuts. Our rally had 24 groups represented, including disabilities, business development, childcare, the arts, and autism.

PBPC will put the list on our website.

Comment: We haven’t heard discussion of using social networking tools on the web. This will be very important. We should have a smaller talk with people interested in this and add a social networking question to the template.

Send emails to ward@pennbpc.org. If you want to be a county contact, please email Sharon. We’ll try to be a clearinghouse.

David Ross: We need to get corporate partners involved. How do we get banks to talk to legislators to say the burden should not be on us? Insurance companies worried about unemployment for thousands of people. How can we leverage the corporate sector?

This is complicated when corporations are asking for additional tax cuts. Thus far the corporate community and statewide business associations have been of little help. In some instances, they have not been valued partners in protecting vital community assets.

Hospitals are good colleagues. A letter from a corporate board member, from a bank or an insurance company is worth your time.

It is not about nonprofits; it’s about the communities we serve.

A strategy will be shared soon. If you have stories to tell or media contacts, send names to PANO.