Senate and House Divergence in FY2010 Appropriations for Nonprofits

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Appropriations start in the House of Representatives, but require action from the Senate as well in order to pass a budget.  The Senate’s Committee on Appropriations started to make some budget headway just this past week, passing a number of bills that will require negotiations and blending with their House Appropriations counterparts in conference committee.

Where is the Senate’s attention on issues of concern to the programs and finances of the nonprofit sector (knowing full well that nonprofits should be attentive to and involved in every aspect of federal government budgetary matters, not just those that lead to money filling nonprofit coffers)?  Here is  the beginning of a budgetary travelogue of the recommendations from Senate appropriators:Corporation for National and Community Service:  The House appropriators cited problems with the CNCS management to cut $90 million from the White House budget recommendation, zero out the Volunteer Generation Fund, and slice $15 million from the Social Innovation Fund.  The Senate doesn’t agree.  It actually added $8 million onto the Corporation’s budget, perhaps reflecting that the Serve America Act which will greatly expand community service programs in this agency had its genesis with national profile bipartisan support from sponsors Ted Kennedy (D-MA) and Orrin Hatch (R-UT), the former seriously ill after being diagnosed with a malignant brain tumor in 2008. The Senate has the full $50 million in its recommendations for the Social Innovation Fund and $8 million for the Volunteer Generation Fund.  At least in the formal committee text of the appropriations report, there is not a mention of managerial issues within the Corporation or reference to any of the findings of the Inspector General.

YouthBuild:  The Senate appropriators pitched $105 million for the YouthBuild program, short of the President’s request of $114 million, but above the $100 million set by the House Appropriations Committee.  Like the House, the Senate politely noted that YouthBuild scored $50 million in the stimulus packed and the program needs a “rigorous evaluation…as a means to build on the research base for this promising program and strengthen it for future YouthBuild participants.”  Like the House, the message to the YouthBuild program is, show us that a program that got a big (proportional) increase in the stimulus bill can demonstrate and validate with hard data the wisdom of the Congressional endorsement.

Community Development Block Grants:  The House boosted this program above the White House recommendation to $4.6 billion, but Senate appropriators returned to the White House recommended level of $4.45 billion, citing no specific reasons for diverging from the House recommendation.  Readers should remember that many nonprofits depend on funding from the “public service” component of CDBG, a critically necessary capital infusion into the nonprofit infrastructure building healthy urban and rural communities.  Cutting $150 million from CDBG plus diverting other CDBG dollars into predetermined Congressional (House and Senate) earmarks reverberate down to local, usually small nonprofits struggling to provide needed services and supports in low- and very-low income communities.

Within the Community Development fund are other programs that in some ways reduce the overall budget that would be distributed by formula to eligible cities and states.  For example, the Senate agrees with the Administration to set aside $25 million for a Rural Innovation Fund, but the report noted that the Senate Appropriations Committee did not find particularly clear or compelling the Administration’s explanation for restricting applicants for these moneys to states.  The Committee suggests opening the Fund to tribes, housing finance agencies, and Community Development Corporations (CDCs).

Like their House counterparts, the Senate Appropriations Committee members recommended funding for “Economic Development Initiatives” and “Neighborhood Initiatives”, both of which containing lists of earmarked public and nonprofit sector recipients, with the minor caveat that the EDI and NI funds cannot be used to reimburse costs already incurred by these earmark winners prior to the HUD award.  Among the nonprofit earmark recipients are the following:

Some EDI earmarks…from a very long list

  • $1 million for the Boys and Girls Club of Southwest Washington for facilities expansion
  • $200,000 to the Delaware Children’s Museum for participation in a community revitalization effort in Wilmington
  • El Centro de Servicios Sociales in Lorain OH would $600,000 for the renovation of an “aging structure”
  • Foodbanks in Boston, Cincinnati, Newark (DE), Baltimore, and Barre (VT) as well as statewide foodbank networks in Utah and Arkansas would score six-figure earmarks in the Senate’s recommendations
  • $1 million for the Rockland Housing Action Council (Nanuet NY) for permanent supportive housing for disabled returning veterans
  • $1 million for the Portsmouth Music Hall (NH) to repair, modernize, and expand its facility
  • $400,000 for the Anchorage (AK) Community Land Trust
  • $750,000 for Crossroads (North Kingston RI) toward the development and construction of a child care and community center
  • $650,000 for a new roof on a historic building of the Detroit Institute of Arts

Of course, nonprofits are not the big winners in this earmark list, as they are outnumbered and outfunded by grants designated to public agencies.  Nonetheless, for small nonprofits as well as affiliates of national networks such as the United Way and the Boys and Girls Clubs, there will be federal grants waiting if the Senate’s recommendations are followed.

Some Neighborhood Initiatives earmarks…from a much shorter list

  • $1 million for the Center for Planning Excellence (Baton Rouge LA) for “provision of technical assistance to a community regarding sustainable development, neighborhood revitalization, housing and land use planning”
  • $500,000 to the Consumer Credit Counseling Service (Las Vegas) for foreclosure prevention assistance
  • $500,000 for the Northern Community Investment Corporation (Berlin NH) to capitalize a revolving loan fund to support businesses in New Hampshire’s “north country”
  • $750,000 to Kitsap Community Resources (Bremerton WA) for the construction of an “early learning center”
  • $300,000 to the Urban League of Stamford CT for foreclosure prevention and homeownership counseling
  • $200,000 to the North End Action Team (Middletown CT) for foreclosure prevention assistance

In light of the presence of earmarks for foreclosure and homeownership housing, it is worth noting that the Senate Committee also recommended a full $100 million in funding for the HUD housing counseling program, disagreeing with the House which had pulled $30 million from that as duplicative with the counseling efforts run by the Neighborhood Reinvestment Corporation.  But the Senate goes one step better than the House regarding Neighborhood Reinvestment.  The White House had recommended $166.8 million, the House Appropriations Committee boosted that to $196.8 million (with the $30 million it had removed from the HUD counseling program), but the Senate Appropriations Committee is recommending an even larger increase–$243 million, that is, $76.2 million more than the White House budget proposal.  This incorporates, apparently, $65 million for Neighborhood Reinvestment to continue and expand the National Foreclosure Mitigation Program that was authorized in 2008 and NR implemented in a matter of months in response to the subprime mortgage foreclosure crisis.  The Senate recommendation is $31.2 million more for the NFMP than recommended by the White House.

Choice Neighborhoods:  House Appropriators nixed this proposal from the White House, suggesting that it was unauthorized and, because of unspent HOPE VI funds for public housing, unjustified.  The Senate Appropriations Committee disagreed entirely with the House and recommended the President’s full $250 million.  However, reflecting some of the House’s concern with the HOPE VI program, the Senate report indicates that this program, meant to build on the “successes of the HOPE VI program”, should direct at least $165 million to Choice Neighborhoods projects in which public housing authorities are the lead applicants–because the challenge of redeveloping distressed public housing, according to the Committee, “is not yet complete.” Calling on the HUD Secretary to deliver within 60 days after the appropriation a plan that defines that HUD really means by “choice neighborhoods,” the Committee included this advice in its report:  “The Committee applauds the administration’s effort to think holistically about the needs of distressed communities and their residents to ensure that revitalization efforts transform both neighborhoods, and the lives of their residents. However, while the Committee supports the administration’s efforts to push communities to work in partnership with other organizations and different State and local agencies, the Committee also expects HUD to recognize that communities have different local needs and structures. So, in developing the criteria for this initiative, HUD should not be overly prescriptive or unnecessarily limiting in what types of partnerships are required or how they are defined.” The language sounds like the Committee has heard from public housing authorities that this program is pushing them into partnerships that they may not want.  Are the PHAs concerned about nonprofit/CDC partnerships?  The HUD Secretary’s response will be worth watching.

Community Service Employment for Older Americans:  Here the Senate and House diverged significantly.  House Appropriations clearly loves this program, pitching an increase of $40 million over President Obama’s proposal on top of the $120 million for this program in the stimulus package.  The Senate appears not quite so head over heels, simply agreeing with the President to authorize $575 million. The Senate appropriators added language apparently omitted in the White House request that unused and unneeded program funds should be recaptured and reprogrammed for “technical assistance, incentive grants, or other purposes” in line with the purposes of the Older Americans Act.  One might think that a large appropriation linked to language about unneeded funds is a clue that the program hasn’t been one of exceptional performance.

The Program Assessment Rating Tool (PART) evaluation of the program that was done by the Bush Administration didn’t give the program high marks–actually calling it generally “ineffective”–questioning the lack of a competitive process for the designation of the 10 national nonprofit grantees and suggesting that the program lacked employment, retention, and earnings performance measures (Note:  The Department of Labor website for the Senior Citizen Community Service Employment Program currently lists 18 national nonprofit grantees:  AARP Foundation, Asociacion Nacional Pro Personas Mayores, Easter Seals, Experience Works, Goodwill Industries International, Institute for Indian Development, Mature Services, National Able Network, National Asian Pacific Center on Aging, National Caucus and Center on Black Aged, National Council on the Aging, National Indian Council on Aging, National Urban League, Quality Career Services, Senior Service America, SER-Jobs for Progress National, Vermont Associates for Training & Development, and The Workplace. How well are they doing, how much do older Americans’ in-program placements lead to job mobility out of program, how long do participants stay, what skills do they development, what training do they get, these are all questions that ought to and probably have been addressed in formal evaluations, but they are not referenced in either the House or Senate appropriations reports.

Even Start:  President Obama called for this program getting a zero.  House Appropriations completely disagreed, restoring the program’s $66.5 million and chastizing the Administration for using flawed research to justify the rescission.  With absolutely no published commentary in its report, the Senate Appropriations Committee agreed with the White House and recommended no Even Start funding.  There is no question that both houses like Head Start, but they do not agree about this program geared toward parenting skills.

Community Development Financial Institutions:  As we discussed in a review of “other programs” addressed by the House Appropriations Committee, the CDFI program has been very popular in the stimulus legislation, the FY2009 budget, and President Obama’s FY2010 budget proposal.  While the House agreed with the President’s $243.6 million recommendation, the Senate upped the CDFI budget recommendation to $246.75 million.  But there is a catch.  The $3.15 million increase was designated by the Senate appropriators for “a pilot program to be conducted in Hawaii for financial education and pre-home ownership counseling.”  The Committee report justified the earmark by virtue of the National Low Income Housing Coalition’s ranking of Hawai’i as the nation’s most expensive state for housing.  Attaching a housing counseling earmark to the CDFI program is odd, since housing counseling is typically the province of the Department of Housing and Urban Development and the Congressionally-chartered nonprofit, the Neighborhood Reinvestment Corporation.  But there is no question where the earmark originated: Senator Daniel Akaka (D-HI) specifically requested an earmark of $4 million for this purpose, Senator Akaka’s earmark language mirrored in the text of the Senate Appropriations report.  Otherwise, for the $166.75 million that would go into the CDFI fund itself (another $80 million would go to the Capital Magnet Fund), the Committee recommended a temporary waiver of matching fund requirements due to the recession-wracked problems of the nation’s capital markets.

Small Business Administration earmarks:  The Small Business Administration functions with a bevy of admirers and detesters, usually of little important to most nonprofits that do not qualify for SBA assistance–even though nonprofits in many ways are classic examples of struggling small businesses with significant upsides if they got investment and technical assistance.  But the Senate Appropriations report contains $59.6 million in “small business development
and entrepreneurship initiatives,” that is, like the HUD economic development initiatives and neighborhood initiatives, nothing less than earmarks.  The list includes many business support funds and ventures run by nonprofits, including these:

  • Detroit Renaissance–$200,000 for the Detroit Creative Corridor Center
  • Chicago’s Haymarket Center–$700,000 for a workforce development initiative
  • Hope Community Development Corporation in Charleston WV–$137,500 for an economic development initiative
  • Lawrence CommunityWorks (Lawrence MA)–$200,000 for the Union Mill Redevelopment Project
  • Lutheran Social Service, St. Paul MN–$200,000 for Credit Counseling Capacity Building
  • Neighborhood Development Center also in St. Paul MN–$200,000 for Midtown Global Market business technical assistance
  • Nebraska Community Foundation in Lincoln NE–$275,000 for a Hometown Competitiveness program
  • Cuban American National Council (Union City NJ)–$100,000 for a Latino financial education,
    foreclosure prevention, and home ownership program
  • Urban League of Eastern Massachusetts in Boston–$200,000 for expansion of an economic development center
  • Urban League of Philadelphia–$50,000 for an Entrepreneurship Center

Here as elsewhere, the earmarks for nonprofits like these pale in comparison to those awarded to universities (nonprofit and public) and to public agencies.  But they are worth noting as mechanisms where groups with political relationships and lobbying resources find avenues to resources that may not have much if any connection to the ostensible purpose of the budget appropriation.

Agency for International Development:  Worth noting is that the Senate agreed with its House Appropriations counterparts to knock $50 million off of President Obama’s request for the Agency for International Development (USAID).  The House was clear in its signal to the State Department to staff up AID in order to reduce dependency on large and often high-priced intermediaries given sizable AID programs through indefinite quantity contracts (IQCs) and other mechanisms that reflected the agency’s eviscerated in-house staff capacities.  The Senate’s report is opaque on this and other criticisms of AID operations.

The Senate has not finished its appropriation work, more will be coming.  Nonprofits should be watching the dynamics of appropriations within both houses of Congress and eventually when they go into conference committee deliberations to work through differences.