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HARRISBURG, PA (June 9, 2016): This morning, Greater Pittsburgh Nonprofit Partnership (GPNP) Executive Director Samantha Balbier testified at the House Human Services Committee’s hearing on the impact of Pennsylvania’s FY 2015-2016 budget impasse. Only five of the 27 House Human Services Committee members attended the hearing. Community Human Services CEO and GPNP Advisory Team member Adrienne Walnoha also testified during the hearing.
Below is a three-point summary of Balbier’s testimony on behalf of GPNP, along with four recommendations made to the House Human Services Committee:
Summary of Balbier’s Testimony
1. Government has historically paid less than the actual cost of essential human services. In addition, the carrying cost on financing funding gaps during the FY 2015-2016 budget impasse was devastating for human service agencies. They will face further destabilization if there is another budget impasse or continued flat funding or cuts that do not meet rising demand.
2. Reimbursement rates need to be increased based on rising labor costs as a result of the changes to the Fair Labor Standards Act’s (FLSA) overtime regulations. GPNP is in full agreement with the intent of ensuring fair wages for all employees, however the increased costs -- which take effect in December, midway through many organizations’ fiscal years -- will challenge nonprofit service providers’ service models and budgets. Many employees in the nonprofit sector earn less than the new overtime threshold of $47,476 annually ($913 per week), and GPNP estimates that the FLSA changes will have a 5-10% expense consequence for organizations’ budgets. Employers must pay time-and-a-half overtime pay -- not compensatory time -- to all employees under the new threshold who work more than 40 hours per week. Government cannot expect human service providers to fundraise their way through the forthcoming shock of increased labor costs.
3. GPNP strongly urges the General Assembly and the Governor to reach a bipartisan and cooperative agreement that results in a responsible on-time budget that fully funds human services. Full funding for human services means allocating enough resources to meet the increasing service demands in communities along with the rising labor costs facing providers. Further funding cuts (including flat funding) and/or budget delays will be devastating and negatively impact service availability and delivery. This will impact millions of Pennsylvanians who receive services in addition to the dedicated employees who earn their livelihood working for nonprofit service providers.
GPNP recommends four policy changes for the House Human Services Committee and the General Assembly to implement. GPNP joins with the Public Health Management Corporation to recommend:
1. Expanding the current definition of essential provider to include nonprofits that offer health, human, and social services. This will ensure that there is no lapse in funding due to another budget impasse.
2. Establishing a system of expedited payments so that service delivery is uninterrupted, which will prevent agencies from accruing additional interest resulting from delayed payments.
3. Reimbursing nonprofits for interest accrued during the budget impasse resulting from borrowed funds. This will enable organizations to continue providing high-quality services without diverting funds away from their charitable service-oriented missions to make debt service payments.
GPNP also recommends:
4. Providing resources to meet dramatically increasing service demands and labor costs by restoring the 10% cut to Human Services Block Grant funding made during FY 2012-2013, which now totals $350 million. The County Commissioners Association of Pennsylvania recommends this same action as part of their 2016 legislative priorities.
Balbier said after testifying, “I am honored to have had the opportunity to represent the 420-strong organizational coalition of the Greater Pittsburgh Nonprofit Partnership today. On behalf of GPNP, I sincerely thank the House Human Services Committee for today’s opportunity to discuss the Pennsylvania budget impasse’s impact on our members.”
Balbier’s full testimony is available here as a pdf and below.
Testimony of GPNP Executive Director Samantha Balbier
Submitted to the House Human Services Committee
Informational Meeting on the 2015-2016 Budget Impasse
June 9, 2016
Good morning Chairman DiGirolamo, Chairman Cruz and members of the committee. My name is Samantha Balbier. I am a Pittsburgh resident and the executive director of the Greater Pittsburgh Nonprofit Partnership, also known as GPNP. This partnership represents a coalition of 420 nonprofit organizations (80 percent of which are human service organizations aligned to the interests of this committee) located in the southwestern Pennsylvania counties of Allegheny, Armstrong, Beaver, Butler, Cambria, Fayette, Greene, Indiana, Lawrence, Somerset, Washington and Westmoreland. Together, the GPNP membership represents hundreds of thousands of staff and clientele connected to those organizations.
GPNP was created 11 years ago by the Forbes Funds, a supporting organization of The Pittsburgh Foundation, the Pittsburgh region’s community philanthropy, to be a voice for the nonprofit sector on policy issues related to the administration of nonprofits. GPNP conducts policy analysis, education, outreach and advocacy for the nonprofit sector. Because many of our members are publically funded, the state budget is a top priority of our membership, which provides the scores of essential services that the communities they represent need.
Speaking for Human Services
Every human service available in Pennsylvania was at risk of being damaged or put out of business as a result of last year’s budget impasse. Scores of these essential nonprofits and the people they serve were harmed and some were not able to fulfill their missions in the community. Services that were endangered include senior care, elder abuse protective services, drug and alcohol rehabilitation services, shelter care for the homeless, behavioral and mental health supports, job training for the hard-to-employ, child protective services, family reunification supports, protecting domestic violence victims, support to the disabled, early education for young children, prenatal support, and hospice care.
As you know, the services offered by GPNP members are often a basic response to growing demand or needs in our communities. Often, essential services cross economic boundaries. Among some of the examples: child protective services, addiction treatment to combat Pennsylvania’s rapidly escalating opioid epidemic and child-adult mental health treatment.
The most important thing for members of this committee to remember about these human services is that their availability to the state’s most vulnerable residents is what helps move the entire state forward – economically and qualitatively.
Each of us has a list of family members, friends or neighbors we know who have turned to nonprofit providers for help with a significant human service need.
At GPNP, we are developing a much more comprehensive list by way of a 12-county analysis of citizens who access mental health treatment by zip code. Preliminary findings from Allegheny Health Choices, Inc. reveal that some of the highest concentrations of mental health service utilization can be found in zip codes located in Beaver, Fayette, Washington and Westmoreland counties. The numbers are alarming and they dispel the notion that human service needs are found only in urban areas; the needs are growing in every zip code across southwestern, Pennsylvania.
I know that most of you will agree with the premise that solving serious societal problems is the core function of human services. Human service providers deal daily with the complexity of human nature and the human body, and they work their way through the thicket of familial, regulatory and financial issues that accompany so many societal problems.
The ability of human services nonprofits to do this work is what makes them critically important to the overall welfare of Pennsylvania and worthy of funding by state government at a level proportional to the benefits they provide.
The degree to which these services are available is directly proportional to the numbers of troubled individuals who are able to be made stable and productive. Degree of availability also determines how much tax revenue can be saved. Some examples of tax-dollar-saving services include preventing incarceration, helping disabled citizens find jobs and preventing and reducing hospitalizations.
By acknowledging that all of Pennsylvania’s citizens are different - that some may need more help than others; that our citizens can experience bouts of vulnerability; and that all of its people are valued, the government is humanized. It gains strength, admiration and respect from the people it serves. Sadly, I believe the state government’s constitutional role of “…protecting the health and welfare of all of its citizens” was pushed to the back burner this past year.
The Pennsylvania Budget Impasse of 2015-2016
During the budget impasse of 2015-2016, Pennsylvania government effectively de-valued its most vulnerable citizens. They were placed at serious risk because their caregivers and the nonprofit organizations that provide for them were not paid for nearly nine months. Three senior centers temporarily closed in Westmoreland County. Domestic violence shelters were forced to turn away women and children in the month of December – during the holiday season, when domestic violence is at its worst.
Hundreds of thousands of human services staff wondered why fair budgeting and smart problem solving seemed so impossible for our leaders and why their own livelihoods, which are dedicated to improving the quality of life through careful budgeting and smart problem solving, were at risk.
You have heard our survey results from the United Way of Pennsylvania and the Pennsylvania Association of Nonprofits on the financial impact of the budget impasse on the nonprofit sector – particularly the human service provider network. By December 2015, ninety percent of GPNP human service providers were experiencing a serious cash-flow crisis. As prepared as our sector was for a likely impasse, no one expected that it would last as long.
Here are some other depressing findings from the survey:
- Diversion of resources – Money and a significant amount of time had to be spent on borrowing from organizational reserves, banks, credit cards, mortgages or other contingencies, rather than service to Pennsylvanians.
- Economic impacts – Providers laid off/furloughed staff and reduced the number of hours and/or benefits staff received.
- Cost shift – When the full continuum of community services was not available to meet basic needs, individuals wound up in more costly interventions, such as the emergency room, the homeless shelter, or prison.
- Drain on human capital – Staff at all levels had to shift more capacity and resources to triage and uncertainty over funding took a psychological toll.
- Negative impacts on private business – Organizations had to delay their accounts payable schedules well beyond 120 days.
Understanding the Context
This year we have additional concerns. We face a likely budget impasse and an already compromised and fragile human service sector. It is very important that members of this committee understand the financial and managerial crises that will fall on providers under a flat funding position on the budget.
Public investment in human services has flat-lined; demand continues to rise as mentioned earlier, and the cost of doing business for human service nonprofits is sky rocketing. In 2011-2012, human services funding was cut by 10 percent. The urgency to restore these funds is heightened when the calculation is made that cost-of-living increases have not been appropriated for more than 15 years. Also, human service providers are in debt due to the impasse, and in December (mid-year), the nonprofit sector will witness astronomical increases in personnel and benefits costs due to federal policy changes to the Fair Labor Standards Act (FLSA). For example, Family Services of Western PA will see an eight percent increase in their annual budget.
The FLSA changes are predicated on the ability of the organization to meet increased personnel and benefits costs by increasing revenue through efficiencies and price increases. Nonprofits already operate on very thin margins and do not control pricing.
All of you as members of the Legislature have that power.
According to the Bayer Center for Nonprofit Management’s wage and salary report for 2015, human service jobs represent some of the lowest-paid professional employees: caseworkers, social workers, home health aides, drug and alcohol counselors were all making less than the new overtime threshold of $47,500 and they don’t have competitive (or any) retirement plans, which makes their financial situation very different than what is the case for state employees. These are staff who must respond to crises as part of their jobs and therefore, overtime calculations are often unpredictable.
Human service providers will not be able to fundraise through the increase costs of the FLSA amendments and the rise of the overtime threshold. This federal policy change disproportionately impacts the nonprofit and human service sector. Reimbursement rates need to be reconsidered and increased.
Approaching the Constitutional Budget Deadline: June 30th
GPNP strongly urges the General Assembly and the Governor to reach a bipartisan and cooperative agreement and pass a responsible budget that fully funds human services by the constitutional deadline. Fully-funded human services entails meeting the service demands in communities and the rising labor costs facing providers. Further funding cuts (including flat funding) and/or budget delays will be devastating to them and will negatively impact the service availability, which will diminish the lives of millions of your constituents.
Thank you for this opportunity to testify and I am happy to answer any of your questions.