Reading an Early Draft of the Stimulus Bill Conference Report: Compromise Provisions (Part I)–Spending

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But realize this:  EVERYTHING in the stimulus bill is important to the nonprofit sector, not just the pieces that may end up in nonprofit operating budgets.  In the lobbying scrum leading up to the House and Senate bills and the final compromise, every subsector weighed in for its potential piece of the nearly $800 billion aimed at stimulating the increasingly moribund U.S. economy.   Targeting money to this issue or that isn’t nearly as important as getting the economy going, else the little pieces of the stimulus that some nonprofits think they may have won turn into fool’s gold as joblessness, mortgage foreclosures, and poverty continue to increase across the nation.

Now for the appropriations (remember, these are short term infusions meant to be used quickly, not permanent increases in program appropriation levels):

Rural Housing:  The compromise bill reduced the insurance money for rural housing insurance for single family home purchase loans from $500 million in the House bill to a final number of $200 million in budget authority.  Everyone should read the appropriation numbers in this program as well as others as meant to leverage additional loan and grant funds.

Rural Community Facilities:  The conference report announced a compromise, reducing budget authority for new funds for rural community facilities down from $200 million in the House bill but up from $127 million in the Senate bill to a final number of $130 million.

Women Infants and Children program:  The compromise settled on the Senate figure of $500 million as opposed to the $100 million in the House bill for the Special Supplemental Nutrition Program for Women Infants and Children.

Emergency Food Assistance Program:  The compromise endorses the $150 million figure in the House and Senate bills, but permits up to $50 million to be used for administrative funding.  For nonprofit food  banks, this is something to watch to see how these admin funds are distributed and used.

Supplemental Nutrition Assistance Program (since the fall of 2008, the new name for food stamps):  The value of food stamps was increased by 13.6 percent, plus the conference bill allowed for $295 million to be used for state government administrative expenses and $5 million for admin expenses for food distribution on Indian reservations.

Economic Development Assistance:  The final bill approves $150 million for economically distressed communities.  The legislation includes permission for up to $50 million to “help communities recover from sudden and severe economic dislocation and massive job losses due to corporate restructuring,” which looks like the kind of funding that will help states like Michigan generate new industrial ventures to replace massive shrinkage in threatened sectors such as automotive.

Violence Against Women Prevention and Prosecution:  As stated in the draft report, “The conference agreement provides $225,000,000 for Violence Against Women Prevention and Prosecution Programs…of which $175,000,000 is for the STOP Violence Against Women Formula Assistance Program, and $50,000,000 is for transitional housing assistance grants.”  In this case, unlike the food stamp program, the conference committee notes that no administrative overhead is permissable from these funds.

Community Development Financial Institutions:  The House had a zero on extra funding for CDFIs and the Senate had $250 million.  The conferees agreed on a figure of $100 million, not enough to be sure, but it’s good that the Senate reminded the House about the local economic development importance of these community-based lenders (who happen to put many dilatory commercial lenders to shame).  It may be very worthwhile for nonprofits to monitor CDFI activities for their impact on stimulating economic development locally and, in the aggregate, nationally.

Small Business Administration loans:  The conference agreement topped the $430 million in the House bill and the $621 million in the Senate bill with an appropriation of $636 million for the Business Loans Program.  Of that total, the compromise legislation targets $6 million for direct microloans and the remainder for reducing or eliminating fees in 7(a) loan guarantees and for deferred loans to small businesses encountering financial hardship.

Smithsonian:  The proposed facilities improvement expenditures for the Smithsonian continued to sink in popularity the more they were considered.  The House had $150 million for capital improvements, the Senate cut that to $75 million, and the conferees, after originally zeroing the Smithsonian out entirely, put in $25 million for facilities improvements.  This should concern nonprofits, as it returns the Smithsonian to having to pitch for private, frequently corporate contributions to pay for costs that in many cases should be borne by tax expenditures.  In the past, the Smithsonian has been a little too quick to toy with agreements with corporate funders to find the capital and operating resources it so desperately needs.  Its long history of financial mismanagement, covered frequently in the Cohen Report, may be a contributing factor to the reluctance of the two chambers to put more money into the Smithsonian, but that should be a reminder for the nonprofit sector to take stock of this important component of our nation’s cultural resources and help redefine the posture of both government and philanthropy in this arena.

National Endowment for the Arts:  Although zeroed out by the Senate, the conferees agreed with the House’s allocation of $50 million for the NEA, a major accomplishment of the arts sector lobbyists.

YouthBuild:  The nation’s foremost program for training and placing young people in the construction trades was bumped to $100 million in the Senate version of the stimulus, but the conferees knocked it back down to a new infusion of $50 million in the final version, which was the number the House had selected.  Nonetheless, $50 million is a huge new capital infusion that will challenge the Boston-based nonprofit’s financial and implementation capacities.  This will be another nonprofit-focused part of the stimulus warranting close scrutiny regarding how well the sector contributes to this nation’s economic recovery.

Job training and placement:  From the draft conference report:  “The conference agreement includes $750,000,000 for a .program of competitive grants for worker training and placement in high growth and emerging industry sectors, as proposed by the House, rather than $250,000,000 for a similar program proposed by the Senate.”  Of that total, $500 million is designated for worker training for careers in efficient and renewal energy consistent with the Green Jobs Act of 2007.

Job Corps:  The compromise beats the $160 million authorized by the Senate to allocate $250 million for the Office of Job Corps for the construction and modernization of residential facilities serving at-risk youth.

Community Service Employment for Older Americans:  The compromise included the $120 million for these community service slots for stipended senior citizen volunteers.

Community Health Centers:  The conference report allocates $500 million in services to be provided by existing and new community health centers (the same number as in the House bill, compared to the zero in the Senate bill) plus $1.5 billion for construction, renovation, and technology improvements in community health centers.

Child Care and Development Block Grant:  States will get $2 billion in the conference report, but unlike the House bill which allocated that sum among different fiscal years, the conferees agreed to make the $2 billion available immediately upon enactment of the stimulus legislation.

CSBG/SSBG:  The conferees directed $1 billion for the Community Services Block Grant (CSBG) and incrased the income-eligibility levels for CSBG beneficiaries from 125 percent of the federal poverty level to 200 percent.  Unfortunately, the conferees killed the funding the Senate had directed for the Social Services Block Grant (SSBG), which does not bode well for nonprofits facing increased service demands.

Head Start:  $1 billion goes for Head Start and $1.1 billion for Early Head Start to begin in FY2009 (which is already underway) through FY2010.

Compassion Capital Fund:  This remnant of the Bush Administration’s faith-based initiative had been targeted for $100 million in the House stimulus bill but zero in the Senate version.  The conferees agreed to alloate $50 million for “capacity-building grants directly to nonprofit organizations,” described as a “new initiative” under Section 1110 of the Social Security Act rather than a capital infusion into the Compassion Capital Fund.  As described in the draft conference report, “The conferees intend that this program will expand the delivery of social services to individuals and communities affected by the economic downturn.  The conferees expect that grantees have clear and measurable goals, and must be able to evaluate the success of their program.”  The language suggests that the two chambers harbor serious concerns about what the Bush Administration’s faith-based program accomplished and want to chart a new course.  The Cohen Report will monitor the Obama Administration’s new course closely, particularly trying to figure out how these capacity-building funds get distributed and used.

Education funding:  There are several provisions of the compromise bill addressing education programs, all worthy of a separate and detailed analysis.  To mention a few here:  $70 million for the Education for Homeless Children and Youth program, reflecting “the conferees’ understanding of the impact the economic crisis has had on this group of disadvantaged students, and their commitment to helping mitigate the effects;” no funding for the Credit Enhancement for Charter Schools program (despite President Obama’s appearance at Capital City Charter School on Friday, February 13th); $650 million for the Enhancing Education through Technology program; and $13 billion for Education for the Disadvantaged grants–$10 billion for Title I ESEA grants and $3 billion for school improvement grants–to help school districts mitigate the impacts of reductions in school funding through FY2011.

Corporation for National and Community Services:  The compromise bill gives the Corporation $160 million for operating its various community service programs, including $89 million for additional awards to existing state and national AmeriCorps grantees, $6 million for CNCS technology upgrades, $65 million in VISTA funding (which had been a zero in the House stimulus bill).  The conferees limit the proportion of the new AmeriCorps funding for national grantees to no more than 20 percent, but it is easy to anticipate that that ceiling will turn into the benchmark that national AmeriCorps grantees will automatically get from the new AmeriCorps appropriation.  The National Service Trust (which funds the AmeriCorps education awards) gets $40 million in the stimulus package.

Public Housing:  There is $4 billion in the bill for repairs and redevelopment of public housing through HUD, $3 billion distributed by formula to public housing authorities and an additional $1 billion available through competitive applications.

Community Development Block Grant and HOME:  The compromise gives $2 billion for the Neighborhood Stabilization Program for acquisition and redevelopment of vacant, foreclosed properties (this had been zeroed out in the Senate) plus $1 billion in additional CDBG funding.  See past issues of the Cohen Report for discussions of the NSP program and the nonprofit roles in the CDBG program.  In addition, the stimulus will run $2.25 billion through the HOME program as gap funding for stalled housing development projects subsidized by Low Income Housing Tax Credits. This is discussed in Part II of the Cohen Report summary of the stimulus package, examining tax subsidies.

Homelessness:  The Homelessness Prevention Fund gets $1.5 billion for “short term rental assistance, housing relocation, and stabilization services for families who may become homeless due to the economic crisis.”

Obviously nonprofits have much more at stake in the economic stimulus than these appropriations.  One almost fears watching national and local groups fight over capacity-building moneys and AmeriCorps supplements while the major elements of reversing the nation’s downward economic spiral continue.  Nonetheless, challenges abound:

*How will nonprofits do with carrying out their components of the economic stimulus?

*Will the nonprofit sector remember that its advocacy functions are as important as its service delivery and government contracting roles in addressing our economic revival?

*Is the sector prepared to take on some of the implicit language in various lines that make the two legislative chambers appear unsympathetic to the need for increased administrative/operating funding necessary for delivering services and programs?

*Will we all monitor this bill to ensure that it doesn’t simply become a hodge-podge of special programs, but a coherent package of government investments helping lift this nation out of its economic doldrums?

*And will nonprofits own up to the accountability challenge and provide monitoring and oversight over government expenditures in addition to whatever accountability provisions the House and Senate have built into the stimulus?