Nonprofits Struggle With State Budget Impasses, Cuts
The growth and diverse funding certainly helps, but it won’t negate steep budget cuts from the state. Perez estimates his group may have to cut services by 10 percent for fiscal year 2017.
“We’re going to have to reduce the number of people we serve because we want to make sure that if we’re going to serve people, we’re going to serve them with the highest of quality and in a safe environment, and with those kinds of cuts, we just cannot continue to maintain the same capacity, and that’s true of every provider in the state.”
Suzi Craig, senior director of advocacy and development for Mental Health Connecticut, strongly believes diversification of funding streams is vital for the futures of nonprofits that have relied heavily on their states for funding.
“Reliance on state and federal dollars is, I think, going to be challenging for anybody moving forward,” she said. “Building that community of support whether it’s corporate sponsorship, individual giving—really having those programs and testing new waves to build those different communities to really diversify the funding streams is really important. My goal as developmental director is to get us to be at least, within the next three to four years, like Teflon, so we are not susceptible to the changing tides of our funding streams.”
Illinois remains in limbo
In Illinois, nonprofits have found no relief. Gov. Bruce Rauner, a Republican, is up against a Democrat-controlled General Assembly. A few days before the fiscal year started, the governor vetoed the budget that came to his desk because it would have put the state, which has not had a balanced budget since 2001, in a $4 billion deficit for the year.
Currently, Attorney General Lisa Madigan, daughter of House Speaker Michael Madigan, is reviewing a state Supreme Court decision regarding government workers’ pay, which could result in the state halting paycheck disbursements and completely shutting down. Meanwhile, the state recently passed a bill for last-minute, emergency funding for higher education institutions, like Chicago State University, which cancelled spring break in order to end the school year today due to lack of funds and the need to lay off employees by the end of the month.
Nonprofits—like ReVive Center for Housing and Healing, a Chicago-based organization that provides temporary and permanent housing for the homeless, particularly those struggling with addiction—haven’t received any sign of possible relief.
ReVive Center, with a budget of almost $2 million, depends on the state for two contracts—one for addiction services and another for supportive services at Cressey House, a permanent supportive housing locale, and The Royalton Hotel, a former-hotel-turned-affordable-housing unit. While those contracts totaled $56,000 and $259,000, respectively, last year, the state cut the latter almost in half to $131,000 this year, Kevin McCullough, chief operating officer for ReVive Center, said. The addiction treatment funds remained the same because they are federal dollars that passed through the state, but even getting those funds was a bit of a hassle, as nonprofits had to wait for a bill to pass in August in order for the state to release those funds.
While the state money may seem like a small portion of the group’s budget, there are other caveats that make that funding so important. Additional federal funds that come straight from The Department of Housing and Urban Development (HUD) for its Cressey program prevents the ReVive Center from cutting those services.
“They don’t care where we get the money for it,” he said. “Doesn’t matter to them. We have to provide services. And we also have to match that federal [HUD] contract. … We have to provide a 25 percent match, and our rental assistance [contract] is about $300,000, so that state money was incredibly important—not only to make sure we had the funds to provide the services, but it was really helpful in making that federal-match requirement.”
However, since ReVive Center isn’t heavily reliant on state funding, it was able to find ways to fill the gap with money raised from its thrift shop and annual events, like The Art of Giving gala and Real Estate Ends Homelessness networking affair. Another way ReVive Center has survived the impasse is with drastic reductions in staffing costs by giving a 5 percent pay cut to executives; not filling vacant positions, like events and development manager roles; and cutting positions (and services) from the newer, state-funded program at The Royalton House. But each reduction that is part of the organization’s state contract has to be negotiated with the government, whose workers have been empathetic.
“We signed a contract saying we’re going to do X, Y, Z,” he said. “At the end of July, we were like ‘Well, we can do X and Y, but we really can’t do Z.’ And now, it’s at a point that having not gotten paid anything from those contracts, and we have another opportunity—somebody has let us know that they’ll be leaving—we’re going back to the state and saying, ’We can barely do X, and it’s just costing us too much money.’”
At this point, ReVive Center is just hoping for the budget to be passed soon, as it has exhausted its line of credit and reserves—just one month’s worth of money—and is out of options.
“It is as bare-boned as it can possibly be,” McCullough said. “If any employee left at this point, we’d have to refill [the position] or close the program. There’s just not a whole lot left to cut. … It’s still incredibly tough. Not having that $130,000 is making us look at every bill that we pay, and I’ve got lots of vendors that are not very happy with me because I’m paying bills very slowly.”
Even looking ahead to fiscal year 2017 is difficult, as McCullough and the staff have no way of knowing whether the funding in the next budget will be available on time either. They began discussing the issue earlier this month, but have not come to a conclusion yet.
“It’s one of the back and forths that ‘Well, let’s not plan on having that money.’ ‘Well, they’re going to do something at some point, we think, and the services are needed.’ We don’t want to continue to cut services for folks who need it the most,” he said. “We haven’t decided how we’re going to proceed. We’re entering realms that none of us have ever experienced before. I’ve worked in nonprofits for almost 30 years and this has never been anything that I’ve dealt with or even heard of.”
