GPNP's FY 2016-2017 Budget Advocacy

Unifying the voice of nonprofits to leverage their power

On February 9, 2016, Governor Tom Wolf proposed his FY 2016-2017 budget. Video of the budget address appears below.

Governor Wolf proposed another ambitious and complex budget that requires serious bipartisan cooperation on major issues such as tax revenue, property tax reform, pension reform, and liquor privatization. GPNP's reaction follows below; click here to download the release as a pdf.

'It is disappointing that Pennsylvania’s leaders reached the deadline for the FY 2016-2017 budget proposal while the budget for FY 2015-2016 is only partially completed,' said John Lydon, CEO of Auberle and Chair of GPNP’s Advisory Team Chair. 'The Governor’s current proposal is ambitious and predicated on passing the bipartisan compromise that fell apart at the end of the 2015. Many GPNP members watched the saga unfold and made tough decisions during the impasse in order to continue providing the quality services that the state and counties pay us to provide. The Governor and the legislature need to work together to close out the current budget year and prevent an impasse from happening again.  This means democrats and republicans need to make tough choices.'

'Today is a déjà vu moment,' said GPNP Executive Director Samantha Balbier. 'The Governor has proposed a budget that acknowledges the $2 billion structural deficit, and if history is a predictor of the future, we are unlikely to see cooperation from legislative leaders to address the "ticking time bomb" issues referenced by Governor Wolf. Tax revenue, property tax reform, pension reform, and liquor privatization all hamstrung last fiscal year’s budget. Can we count on our legislative leaders to make tough choices and compromise during an election year? Or will we witness the paralysis that took place last year while both parties maintained status quo? I sincerely hope we can count on leaders to make collaborative decisions on these important matters to move our Commonwealth forward.'

During the 2015 budget impasse, nonprofits across Pennsylvania endured tremendous uncertainty as the Governor and the legislature played politics with state funding for vital services. To survive the impasse, many nonprofits were forced to reduce services for their consumers, exhaust their cash reserves and credit lines, take out bridge loans, and temporarily lay off tax paying employees. These measures will have long-term consequences for the people served by nonprofits because the agencies will be repairing and paying for the damage caused by 2015’s impasse at the expense of service innovation. GPNP is conducting research to asses and evaluate the damage caused by the FY 2015-2016 budget impasse.

In May 2016, the Pittsburgh Post-Gazette reported on GPNP’s preparations for the FY 2016-2017 budget:

Now that coalition, PApeoplecount.org, is trying to find ways the budget process can be adjusted so that 'nonprofits can be sustainable and not broken by this political process,' said Samantha Balbier, executive director of the Greater Pittsburgh Nonprofit Partnership.

Because changes to the process in Pennsylvania require legislative action, not a voters’ referendum, 'reforming the process is a daunting if not impossible task,' she said.

Among the budget overhauls the partnership’s public policy committee has analyzed and which could benefit the nonprofit sector, Ms. Balbier said, are a legislative proposal to reimburse the interest rate on loans that agencies secured to fund their operations during the impasse and a proposal to adopt a two-year budget.

To help nonprofits prepare for whatever happens in the next budget round, the partnership is planning training sessions for members on topics such as how to right-size their organizations, cash advances, hiring and purchasing.

Many organizations cut back on staff or equipment in the current fiscal year or were forced to secure lines of credit.

'They are in a much more fragile situation' for 2016-17, Ms. Balbier said.

On June 9, 2016, GPNP Executive Director Samantha Balbier testified before the House Human Serivces Committee. A bulleted summary of her testimony appears below; her full testimony is available here

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.

Recommendations

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.

Community Human Services CEO and GPNP Advisory Team member Adrienne Walnoha also testified during the hearing. According to The Patriot-News

Adrienne Walnoha, executive director of Community Human Services Corporation based in Pittsburgh [and a GPNP Advisory Team member], said she and her partner had no other option but to empty their retirement accounts just to replace the damaged roof of their house. Despite their personal finance woes, the main concern of the non-profit employees lies with the clients they've had to turn away. "[During budget impasses] we are to look at the thousands of citizens of Pennsylvania pouring into our office and say 'we have no bed for you, sleep in your car in 2 degree weather. We have no food for you, go hungry. Our psychiatrist can't see your mother so you will have to figure out another way to manage her schizophrenia," Walnoha said angrily. "You expect us to do what government can't or won't."

On June 22, 2016, GPNP participated in a rally for an on-time budget hosted by the Westmoreland County Department of Human Services. GPNP Vice Chair Bobbi Watt Geer and GPNP Advisory Team member Laurie Barnett Levine spoke during the rally, along with representatives from GPNP members the Consumer Health Coalition, Family Services of Western Pennsylvania, Westmoreland Case Management and Supports, and Westmoreland Community Action. According to the Pittsburgh Tribune-Review:

...more than a dozen people who spoke Wednesday at a noon rally in the courtyard in front of the Westmoreland County Courthouse to lobby state lawmakers and Gov. Tom Wolf to pass a state spending plan on time this year. As signs throughout the crowd of about 200 pointed out, passage of last year's state budget was delayed by 267 days, causing funding problems for municipalities, schools and social service programs.

Click here to view a collection of tweets and photos from the event.

On August 26, 2016, after the budget's passage and enactment. the Pennsylvania House Appropriations Committee held a hearing in Pittsburgh about funding for health and human services. House Appropriations Committee Chair Bill Adolph (R-Delaware) chaired the hearing and Representatives Leslie Acosta (D-Philadelphia), Mike O’Brien (D-Philadelphia), and Curt Sonney (R-Erie) participated. Representatives from UPMC, the McGowan Institute, the Epilepsy Foundation of Western Pennsylvania, the Western Pennsylvania School for Blind Children, the Pittsburgh Super Computing Center, and the Pittsburgh Poison Center testified during the hearing. UPMC, the Epilepsy Foundation, and the School for Blind Children are GPNP members.

Key points from the testimony included:

  • At the beginning of the hearing, Representative Adolph said that the hearing’s purpose was to illustrate the importance of the budget’s discretionary spending. At the end of the hearing, he stated for the record that his colleagues in the legislature should avoid starting budget line item negotiations at zero because each line item serves an important purpose for the Commonwealth.   
  • The Epilepsy Foundation testified that its funding through the Department of Health is currently being held up. Representative Adolph said that he was aware of approximately 12 line items from the Department of Health that are currently being withheld without explanation. He and other members of the Committee pledged to investigate the cause with the intent of getting the funds disbursed. If your organization’s funding is currently delayed, please email streeter@forbesfunds.org.
  • The School for Blind Children’s Executive Director Todd Reeves testified about the comprehensive services it offers to blind students, including those with severe disabilities. The services include teaching, therapy, behavioral health services, and case management, among others. Reeves also discussed the school’s outreach to school districts and emerging adult program.
  • The Poison Control Center testified about its role in addressing the opioid epidemic. The center not only provides treatment to individuals harmed by opioids, it assists law enforcement with investigations into the sources of the drugs. The Center’s Director estimated that the center’s work to address the opioid epidemic and other poison-related issues saves taxpayers approximately $30 million per year in state spending.
  • UPMC and the McGowan Institute discussed the advances that they have made in health care services and innovation. Additionally, both institutions discussed their economic impact as employers and as research institutions that use their state funds to leverage additional federal and philanthropic dollars to support research.