Not-For-Profits Plead: Stop The Cuts

Markeshia Ricks PhotoMore than 80 heads of local not-for-profits got state lawmakers in a room to urge them to stop the budget blood-letting that’s stretching their operations at a time of great need.

The directors and some of their employees and clients gathered at the ConnCAT education and training center in New Haven’s Science Park Thursday morning to issue the plea at a time when recurrent state budgets have led to rounds of painful cuts to social service providers statewide.

The providers said that services for children, the disabled, the mentally ill, the addicted, the homeless, the formerly incarcerated, the unemployed and the working poor are all at stake.

New Haven State Sen. Martin Looney, Hamden/Ansonia State Sen. George Logan, New Haven State Reps.Juan Candelaria and Roland Lemar, and Milford/Orange St. Rep. Pam Staneski participated in Thursday’s forum. The not-for-profit leaders called on them to recognize that such agencies provide not only services, but lots of jobs.

The meeting took place a day after the lawmakers returned to the state Capitol in Hartford for the beginning of a legislative session where they are expected to spend much of their time grappling with a $245 million hole in the budget they just passed and the potential for a nearly $2.2 billion hole in fiscal 2020.

Gian-Carl Casa, president and CEO of the Connecticut Community Nonprofit Alliance, said that not-for-profits across the state are reporting that demand for their services are up even as state funding for such services has continued to trend down. He said the biggest challenge is that not-for-profits in the state are funded from the 47 percent of the state budget that is not reserved for fixed costs — meaning that, say, when a big deficit suddenly emerges, those are often among the first line items to get cut.

Casa urged lawmakers to treat not-for-profit services as fixed costs in the budget, especially in the wake of a recent change in federal tax law that many believe will discourage giving to charitable organizations.

“Unless this changes, unless funding for nonprofits is considered essential and necessary, unless it is considered essentially the same as fixed costs and taken off the table for budget cuts, we’ll be looking at a Connecticut that isn’t going to be providing for people with intellectual disabilities,” he said. “We’re going to be looking at a Connecticut that is not providing for the mental health and addiction needs, a Connecticut that does not provide re-entry support for our communities, a Connecticut that won’t have arts and culture.

“And that’s not just the frippery, not just something that makes life nice, but also very essential for certain things including when our state has to go out and compete for business against other states,” Casa added. “It makes us attractive, we need this investment. If nonprofits falter, are weakened and they close, we’ll have a Connecticut without those things.”

Casa said given that not-for-profits can’t raise their own taxes, or increase what they charge for their services, there is a real danger in seeing such dire predictions come to fruition if the state doesn’t step up to do its part.

“All you can do is cut stuff,” he said. “All you can do is close programs and lay off staff. That’s not the Connecticut we want. That’s not the Connecticut you want.”

“I employ 200 folks in New Haven,” said Alice Forrester, who runs New Haven’s Clifford Beers Clinic. “We are the innovators, and we should be part of the economic development conversations. We are the people who can turn this state around. We have a lot of ideas that could help during this terrible crisis in our state.”

State Rep. Staneski, one of two Republican lawmakers present (in addition to Logan), said she’d like to see the state shrink government by turning over many of its own social service programs to not-for-profits.

Staneski, who serves on the legislature’s Appropriations Committee, said she helped found a not-for-profit and worked for the United Way of Milford. In those roles she became convinced that the state might be better off as a convener of the funding of social services and not-for-profits should be the conduit for delivering those services.

“This isn’t about dissing our state employees,” she said. “They can’t help that we built a system that is broken.”

Marrakech Inc. employs some 850 staff members. President and CEO Heather LaTorra said she supports Staneski’s idea in principle. She said that currently there are three conversions underway in the state that would transfer some state social services to not-for-profits like hers.

Those conversions are anticipated to save the state $3 million a year in perpetuity. But there is a problem. If some of the cost savings don’t come back to Marrakech, LaTorra said, she can’t afford to pay her employees a living wage. If she can’t pay a living wage, she can’t recruit people to provide the services the state will entrust her agency with.

“If this is not well thought out, it could set up more citizens to be under the living wage standards in Connecticut and more without adequate services,” she said. “You must reinvest a portion of the savings so that we can increase our capacity and increase the wages of hardworking people.”

State Rep. Lemar encouraged the not-for-profit leaders to make their voices heard in Hartford, noting that some 75 people once came to testify against a proposed increase in taxes on luxury yachts. He told them to bring their stories and their ideas, particularly to the Appropriations Committee.

State Sen. Looney and State Rep. Candelaria both agreed that the state won’t be able to cut its way out of the deficits ahead, noting that some 10,000 workers have been dropped from state government in the last eight years. They advocated raising new revenues through legalizing the recreational use of marijuana and instituting highway tolls, among other controversial ideas currently under consideration in Hartford.

Looney spoke about the state’s difficulty in relying heavily on income taxes from the extremely wealthy, especially in the financial industry, whose incomes vary widely from years to year. He noted that someone who makes $100 million or more might pay $7 million in taxes one year and then reduce their income by half the next, with a concomitant drop in taxes.

“There is such a difference between the merely wealthy and the super, super wealthy,” he said.

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posted by: wendy1 on February 9, 2018  10:30am

God bless Alice and the others fighting for social justice and compassion, the 2 things Big Money doesn’t give a damn about.  Unfortunately most politicians are bought and sold by Big Money.  Bill Maher said ,“How can a country that is so religious have so little compassion?”

Remember folks, Blumenthal is worth 86 million and DeLauro is worth 27 million…rich and greedy politicians I condemn and heckle whenever I get the chance.  Please help me heckle as I am almost 70.

posted by: opin1 on February 9, 2018  11:26am

1. Reduce the cost of state employee pensions (either by reducing the % of salary, making people work more years to receive full benefit, switching to defined contribution, etc. - take your pick, but reduce the costs).
2. Build the tolls. Discount it and put a monthly cap for cars with CT plates. Hypothetical example: $5 toll for out-of-state, $2 for CT plates, capped at $100/month out-of-state, $40 for CT plates.
3. Tax recreational marijuana.
4. Ask for voluntary donations (tax deductible) from super-wealthy and from large corporations for capital projects, and name the projects for them: ex/ “The Ray Dalio Bridge”.  “The United Technologies Tunnel”. “The MGM Grand Ferry”. “The Coca-Cola Express Train”.

We know CT is not a poor state. It’s in the top five wealthiest in terms of average income. We already have a sales tax, a property tax, a gas tax, cigarette tax, a lucrative state lottery, and revenues from casinos. (There are other NE states that survive without some of these). Yet we are still broke.

posted by: wendy1 on February 9, 2018  12:38pm

opin 1——tolls on the highway kill people and CT citizens who have to work are already taxed to the max.  Rethink buster!

posted by: Perspective on February 9, 2018  1:27pm

@opin1—We know CT is not a poor state. It’s in the top five wealthiest in terms of average income. We already have a sales tax, a property tax, a gas tax, cigarette tax, a lucrative state lottery, and revenues from casinos. (There are other NE states that survive without some of these). Yet we are still broke.

Unfortunately “average income” is not an accurate indicator of the wealth of the majority of residents of CT.  The upper scales will certainly skew the average. Additionally, as you have indicated, we continue to add enormous tax burdens and a high cost of living to the residents further diluting this average income comparison to other states.  Contrary to State Rep. Candelaria the issue is not revenue, but spending!  Connecticut has implemented numerous avenues to increase revenue (lotteries, income tax, increased sales tax, fees,etc) but continues to operate a deficit because they cannot control their spending.  As some point someone has to say NO! 
No one is saying the not-for-profits are not useful and provide a valuable service (because they do)but something in the spending budget must be cut, the question to the lawmakers and all of us is what are you willing to do without because you can no longer have everything.

posted by: Kevin McCarthy on February 9, 2018  2:42pm

Opin1, the state can reduce pensions and other benefits for incoming employees. It has, in fact, made benefits progressively less generous with each new tier of employees. But the bulk of post-retirement costs are attributable to employees who vested in their pensions many years ago. Short of declaring bankruptcy, I don’t know that there a constitutional way of reducing these costs. Full disclosure - I am a Tier II retiree. My pension is not as sweet as those of folks in Tier I, but I have no grounds to complain.

Wendy, what are talking about with regard to toll fatalities? The state is considering electronic barrier-free tolls. You don’t even slow down to pay them.

posted by: opin1 on February 9, 2018  3:06pm

@wendy1 - “tolls on the highway kill people”. Have you been on the mass pike lately? You don’t even have to slow down and you barely know you’re passing the sensors. Would enjoy hearing how those kill you. 
“CT citizens who have to work are already taxed to the max” - yes, this was my point. We, as a state, are wealthy and heavily taxed, so why can’t we balance a budget?  I don’t want to see social services cut and I don’t want to see tax rates go up. If you have better suggestions I’d love to hear them.

@perspective - we’re in the top five wealthiest when you use median (as well as average) income. We are in agreement about spending - part of my point.. we have high income and we’re heavily taxed, which means the state should have sufficient revenue compared to other states, yet we’re still broke.

posted by: THREEFIFTHS on February 9, 2018  10:07pm

posted by: opin1 on February 9, 2018 11:26am

1. Reduce the cost of state employee pensions (either by reducing the % of salary, making people work more years to receive full benefit, switching to defined contribution, etc. - take your pick, but reduce the costs).

How about this state doing like other states who had this problem.Follow the The New York State and Local Retirement System (NYSLRS) model.

Pension Fund Overview

As of March 31, 2017

Third largest pension fund in the United States
Audited value of $192.4 billion in assets held in trust for pension benefits
Over 3,000 State and local government participating employers
More than one million members, retirees and beneficiaries
$10.9 billion paid out in benefits in fiscal year 2015-2016
Two different systems: Employees’ Retirement System (ERS) and Police and Fire Retirement System (PFRS)

NY State workers can even borrow against there retirement contributions

https://www.osc.state.ny.us/retire/members/loans.php

They even have a Pension Funds In-State Investment Program.New York’s state pension fund is now one of few public pension funds across the country offering multiple sources of capital for in-state companies, which include credit (SBIC), equity (In-State Private Equity Investment Program) and small business loans (New York Business Development Corporation).A lot of those companies that are taking these loans are from the private sector.In fact this state was told to look at how other states manage there pension funds.

https://www.osc.state.ny.us/press/releases/nov15/111015.htm

So Blame the state not the workers who pay there part.

My bad.Even New York State Teachers’ Retirement System is the second-largest public retirement system in the state and one of the 10-largest public pension funds in the nation.

https://www.nystrs.org/

posted by: robn on February 10, 2018  9:10am

CT has a spending problem not a revenue problem Mr Candelaria.

Feel free to scroll through this database of CT salaries and pensions and see how long it takes you to get below six digits.

http://ctsunlight.org

To make matters worse, The legislature has been hiding the true severity of unfunded pension liabilities by calculating their return at 7% when the recent bull market rate of return is more like 5%...in truth it should actually be conservatively calculated lower, more like at a municipal bond return rate. Right now it’s published as something like $30,000 for every man woman and child (an astounding figure) but the Leg is actually hiding liability that’s probably 3x that.