Nonprofits and Local Governments Handling 3 States’ Budget Stalemates

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Suspended-bridge

Image Credit: Konstantin Leonov

August 25, 2015; Bucks County Courier Times, Quad-Cities Online, and the News & Observer (Raleigh, NC)

As NPQ readers may already know, three states—Pennsylvania, Illinois, and North Carolina—remain without budgets as Labor Day approaches. While governors and legislators remain at loggerheads over the role of government, the best way to encourage economic growth, state deficits, and whether or not they can or should raise more revenue, local officials and the leaders of nonprofits and schools struggle behind the scenes with the real impact of gridlock. And with each week without a solution to the impasse, these struggles become harder and harder.

The Bucks County Courier Times recently provided a picture of how it looks in Pennsylvania:

Since 1986, Chris Carabello, of Doylestown, has helped adults with disabilities find jobs. But after 54 days without a state budget, Carabello’s nonprofit organization, Employment Technologies Inc., is now worried about providing a paycheck to its caseworkers. […] Employment Technologies is one on many nonprofits contracted by federal and state governments to help the poor and disabled. […] Officials with the Pennsylvania Treasurer’s office confirmed it may not be able to release some federal grants without an approved state budget.

To try to bridge the funding gap, local officials are stepping into the breach by funding organizations using available local funds and risking that when the state’s budget crisis is solved, they will be reimbursed. “I don’t think it’s a risk,” said Brian Hessenthaler, chief operating officer for Bucks County. “We’re paying out that money in the hopes of getting it back. We’re pretty confident that we will be able to fund these organizations.” Montgomery County Chief Financial Officer Uri Z. Monson said the county would use $14 million to pay the vendors.

Where local governments are unable or unwilling to assume this risk, have not had the benefit of local governments providing bridge funding until the impasse ends. Larger, well-funded organizations may have the option of using reserve funds to allow them to bridge the funding gap. For smaller and less well funded organizations short term loans are an option if they can be found and afforded.

In Illinois, Quad-Cities Online reported on one example of the stalemate’s impact.

Since the new budget year began July 1st, groups such as Alternatives for the Older Adult in Moline have gone without funding from the state. “We’re living on a line of credit,” Kathy Weiman, the agency’s CEO, said at a forum Wednesday on how the budget standoff has affected local service providers. Ms. Weiman said her group helps about 18,000 seniors in 10 counties stay independent and out of nursing homes. She said home-delivered meals to Henderson County seniors have been stopped because of the lack of funding, and other programs could soon follow. […] Western Illinois Area Agency on Aging supports a number of smaller nonprofit organizations, said Jen Boedecker of the agency. But she said it will have to close its doors Sept. 1 unless the state sorts out the budget crisis.

Late last week, North Carolina’s political leaders agreed on the amount of their new state government budget, but the lack of consensus on specific levels of funding for social services and education means uncertainty continues to plague those who will be funded. With public schools set to open, the News & Observer looked at how this uncertainty is unsettling school leaders:

Without a final state budget, schools around North Carolina are opening Monday uncertain about how much state funding they’ll receive for the new school year. This means teachers and support staff don’t know if they’ll get any state raises. Thousands of teacher assistants don’t know if they’ll have a job. School districts don’t know if they’ll be offering driver’s education…Some school districts have put a hiring freeze on teacher assistants or warned those employees they may be laid off. Wake school officials have continued to hire teacher assistants as normal and say they’ll make any adjustments if needed.

Doug Thilman, Wake County’s assistant superintendent for human resources, said at a press briefing Friday, “If we have to come up with a Plan B, we certainly will. We don’t have that yet because we’re confident that the folks at the legislature will recognize and see the value those TAs add to our classrooms.”—Martin Levine