Price of Service Cuts: Budget Impasse Pushes Safety Net to Brink of Collapse

August 14, 2009

Deep cuts to public services are being considered in Harrisburg as lawmakers and the Governor work to resolve the budget crisis. PBPC is tracking news reports on the potential impact of these service cuts, as well as the impact of the state's budget impasse on local communities across Pennsylvania.
 
Today, we look at the impending collapse of the social safety net, as the budget impasse drags on, risking the public safety of thousands of children, the elderly, the mentally ill and the homeless.
 
The Associated Press reported on August 14 that the social safety net is on the verge of collapse due to dried up cash reserves nonprofits have been forced to rely on as they wait for a state budget. Nonprofits all over the state, responsible for daycare for low-income children, mental health counseling, foster care, homeless shelters, group homes, elderly care, and food pantries, are on the verge of shutting down. Many are relying on lines of credit which run out in mid-August, or tapping home equity credit lines, and retirement and personal savings accounts to pay employees, utilities and mortgages. Fearing a statewide crisis, some counties who previously refused to step up to pay the state's obligations are now fronting the money in order to keep the safety net intact. 
 
More information about how proposed cuts will hurt Pennsylvanians can be found at PBPC's 30 Ways in 30 Days Service Cuts Will Hurt Pennsylvanians, which examines proposed cuts to public education, college costs, hospitals, children's health care, senior services, state police patrols, and agricultural programs, among other areas.  Read more stories in PBPC's Price of Service Cuts series. 
 
Read The Associated Press article below.

Social safety net fraying, in danger of collapse: Nonprofits and government agencies laying off, closing offices, turning people away
By Marc Levy
August 14, 2009
http://www.mcall.com/news/nationworld/state/all-a16_statebudget.6988483aug14,0,7336648.story

Pennsylvania's six-week-old budget stalemate has turned off the spigot that normally keeps billions of taxpayer dollars flowing for social services for the poor, prompting scores of nonprofit agencies to lay off workers, take out loans and cut back to survive.
 
Another month or more without action to free up that money could irrevocably tear a safety net that is already jammed with waiting lists and relies heavily on low-wage employees, according to nonprofit directors and the government officials who deal with them.
 
For now, dollars are drying up for everything from day care for children of the working poor to people who desperately need mental health counseling.
 
''It couldn't be any worse,'' said Pam Cousins, director of Elk County Children & Youth Services.
 
Cousins has a little more than $12,000 left to pay the bills for August that, if June was any guide, will be more than 10 times that much to provide shelter to neglected and troubled children. She'll pay for foster care first, while group homes and other institutions might have to do without.
 
Unless help arrives, South Central Community Action Program, which provides health screenings and nutrition education for pregnant women and young mothers, day care services, food pantries and homeless shelters across Franklin and Adams counties, plans to close Aug. 22.
 
Major operators of preschool programs in at least three counties -- Washington, Greene and Luzerne -- have scotched plans to start up in September, laying off three dozen employees and dropping more than 300 children.
 
''It means fewer options for low-income children who need high-quality education,'' said CEO Darlene Bigler of Community Action Southwest, which serves Washington and Greene counties.
 
In Pennsylvania, reimbursements for many services are routed through the counties to the nonprofits. Some counties are dipping into their reserves or borrowing from banks to keep payments flowing as long as they can afford it, or until a complete state budget is signed.
 
Some counties so far are not.
 
That includes Allegheny County, the state's second-largest county and home to Pittsburgh.
 
On Thursday, the state's third-most populous county -- Montgomery -- reversed its stance, saying it feared nonprofits were on the cusp of shutting down.
 
''Once that happens, you can't unscramble the egg,'' said Commissioner James R. Matthews.
 
Philadelphia, the state's largest city, is fronting money for only emergency needs or statutory obligations, such as foster care, but not things like day care and mental health.
 
Many nonprofit directors and county officials believe a state budget will be signed at some point -- although it's not clear whether it will be before severe pain is inflicted.
 
Asked whether such pain is being felt yet, Gov. Ed Rendell said Monday he believes that will happen in early September, when officials say many counties and nonprofits will have no choice but to lay off workers and shut down programs.
 
''But it's right around the corner,'' Rendell said.
 
So far, the $12.8 billion in spending that Rendell has authorized -- the total includes $1.8 billion in federal stimulus money -- only ensures that state employees get their paychecks on time, the poor get medical care and government offices, prisons and state parks stay open.
 
The Democratic governor vetoed another nearly $13 billion that Republicans had proposed for social services, school subsidies and more. That proposal, Rendell said, is not enough to sustain crucial services, and rejecting the money is his tactic to pressure GOP lawmakers to accept a tax increase that would allow the state to spend more on those programs as part of a $28 billion-plus spending plan.
 
Advocates say social services are worth the investment because they keep their wards out of unemployment lines, homeless shelters, emergency rooms and jails, where they end up costing taxpayers more.
 
In recent days, negotiations in Harrisburg have stood still. Even if a budget is signed tomorrow, it will be several weeks before nonprofits get the money, they say.
 
Arlene Bell, president and CEO of Caring People Alliance in Philadelphia, said Friday's payroll for her several hundred employees will be slashed by more than half to keep the 77-year-old nonprofit's doors open to the children and elderly it serves. It also has stopped paying many vendors, such as the business that provides meals to its day care centers, Bell said.
 
Human Services Inc., which treats the mentally ill at offices and residential programs throughout Chester County, plans to rely on its bank credit line to meet its mid-August payroll, but is unsure what it will do after that.
 
Joan Enz-Doerschner, owner of Once Upon a Time child care center in Washington, Washington County, said she is prepared to tap her line of home equity credit and her personal retirement account to pay her employees, many of whom earn less than $10 an hour.
 
At one Philadelphia day care center, A Child's First Step, whose 29 children are all subsidized, the five employees are working voluntarily without pay. Owner Sherea Davis also said she is spending her own savings to pay the mortgage and utility bills.