Hartford Business Journal

14 Hartford Business Journal • February 15, 2016 www.HartfordBusiness.com Nonprofit health providers in budget-ax crosshairs By Matt Pilon mpilon@HartfordBusiness.com W hile funding for arts and tourism organizations face increased scru- tiny under Gov. Malloy's budget proposal, they aren't the only nonprofits worried about funding this session. Health and human services organiza- tions say across-the-board cuts at the state's array of health and social services agencies, in addition to targeted cuts to mental-health grants and other programs, could have a big impact on the services they provide for low- income residents with mental and physical disabilities and substance-abuse problems. "The health and human services budget is the worst we have ever seen," said Heather Gates, CEO of Windsor-based Community Health Resources (CHR), which runs substance abuse, foster care and other behavioral health- care programs that serve approximately 20,000 people a year at more than 30 locations around the state. "I don't think there's a single nonprofit out there that won't be affect- ed by this budget." With more than 700 employees and a budget of approxi- mately $43 million in 2013, CHR is one of the biggest non- profits in the state. It received nearly $31 million from state contracts and grants in 2013, according to CHR's financial filings. Gates estimates CHR could lose $5 million in state funding if the legislature adopts Malloy's budget proposal. That could mean laying off 70 employees and closing some programs. "It is essentially on a level close to cata- strophic," Gates said. Health nonprofits and their advocates began submitting legislative testimony last week about the potential impact of the proposed cuts. The lobbying effort will con- tinue into the session, Gates said. Gates plans to argue that CHR's clients will likely have no remaining options if resi- dential and community programs are shut- tered or downsized. Many clients could end up in hospitals or even jails, she said. Such lobbying efforts were partly success- ful last year, when the legislature implemented smaller cuts to social services than the gover- nor had proposed in his budget. The legislature also restored some emergency rescissions Malloy made to social-services funding. "We hope the legislature protects servic- es like they did last year," Gates said. "We're grateful they did." While funding looks almost certain to be tightened in the year ahead, nonprofits are in favor of a Malloy proposal to privatize 30 residential-living facilities for individuals with intellectual disabilities, which aims to save $6.1 million. The Community Nonprofit Alliance's Interim CEO Jeffrey Walter said the "mod- est proposal" is an example of the kind of long-term structural changes his member- ship would like to see in the future. "The state has to get out of the business over time of providing certain services," Walter said. "We are in favor of transitioning these programs to community settings." n Heather Gates, CEO, Community Health Resources (CHR) that recipients of state funds must demonstrate that their outcomes merit their funding," his budget reads. "Governor Malloy believes that state funding commitments to outside agen- cies, nonprofits, community organizations, and special events should be limited to a finite time period and should be re-examined regularly." A number of the organizations and pro- grams on the funding chopping block have been virtually guaranteed money in the past through sometimes controversial earmarks, or "designated" funding from the legislature. A 2012 attempt to reduce those ear- marks was met with fierce nonprofit resis- tance, forcing Malloy to retrench and give back 80 percent of prior-year funding levels. The remaining 20 percent of funding was left to a more competitive bidding process. In a speech last month, Malloy's budget director, Office of Policy and Management Sec- retary Benjamin Barnes, revived the concept. "I want a broader discussion about account- ability," Barnes told an audience at CT Voices for Children's annual budget forum. Asked to elaborate on the proposal, Barnes said in an interview last week that the admin- istration would like organizations that have received earmarks to compete on a level play- ing field with all other nonprofit programs. "The amounts they get ... is a result of a his- toric artifact and not a reflection of any kind of rational approach on how we should spend the money," Barnes said. Barnes noted that moving the arts and tourism funds to the Comptroller could also protect that money, if the legislature approves Malloy's proposal to give agency heads more leverage over how to spend their budgets in the year ahead. There's already language in the budget implementer bill regarding the arts and tourism funding. It calls for the Comptroller to work with several agencies to develop an annual grant program for arts, tourism, and com- munity, workforce, and youth development programs. Nonprofits receiving state funds would be required to submit their goals and outcomes to the Comptroller, who would provide a report to legislators to better inform their spending priorities. Many nonprofits already submit such reports to the agencies that fund them, but Barnes said he wants to ensure that legisla- tors get a holistic view of how programs are performing. The proposal also allows the legislature to set up timelines for annual application processes for each program. Cause for concern Frank Tavera, CEO of the Palace Theater in Waterbury, said there is much uncertainty about the proposed change in the funding process for his organization and the three other theaters, including the Bushnell, that fall under the state's "performing arts cen- ters" line item. That $1.2 million, split equally among the four venues, would be reduced to around $900,000, if the legislature approves the proposed 25 percent cut. "The 25 percent reduction and the idea it would be consolidated under the Comptrol- ler's office … those are all triggers for us that cause alarm," Tavera said. "Everyone has planned or built budgets around the anticipation of that dollar amount." He said the theaters typically use the money to help fund operations. If the Palace Theater receives 25 percent less funding next year, Tavera said it will spur a fundraising push among donors and may require higher ticket prices, but core programs would likely survive. But what if the state decides that the Pal- ace deserves less money? "We might have to eliminate non-self-fund- ing programs," he said. "We might lose audi- ence participation. See less staff." Jeffrey Walter, interim CEO of the Connecticut Com- munity Nonprofit Alliance, which counts arts and tourism organiza- tions as well as health and human services nonprof- its among its 600 members, said the proposed 25 per- cent cut comes after years of nonprofit funding erosion. "It flies in the face of comments that have been made over the years by this governor and previous governors about the importance to the economy of the [arts and tourism] sector," Walter said. He conceded that the state may benefit from reevaluating its list of earmarked funds. "There probably needs to be an overall review of how the state wants to support this sector of the nonprofit world," he said. "But it's hard to do that at the same time you're cutting the funding so significantly. It's really two different things. I don't know if it's disin- genuous or just poor timing to say we're going to do both at the same time." Comptroller Kevin Lembo said he has reservations about the consolidation pro- posal. Lembo said monitoring and transpar- ency are vital, but he wants to ensure that the most appropriate arms of state govern- ment handle that oversight. "Agencies like DECD and [OPM] cur- rently perform many of the functions being discussed, including evaluating competitive grant proposals and overseeing grantee per- formance," Lembo said. "Placing the admin- istration of this new program in an agency that already has a track record of perform- ing these functions would improve efficiency by avoiding the need for my office to create duplicative administrative capacity." He added that if the legislature and gov- ernor ultimately decide on who receives funding, they should also be the ones doing the monitoring. n from page 1 Nonprofits will fight to preserve funds Chopping Block These are some of the arts, tourism and community grants that could be cut or eliminated under Gov. Malloy's budget. Organization/ Current Program Funding CT Humanities Council $1,851,184 Performing Arts Centers $1,235,606 Tourism Districts $1,202,488 Incumbent Worker Training $679,975 CT Science Center $522,875 Mystic Aquarium $505,803 Beardsley Zoo $319,861 CT Pre-Engineering Program $239,531 Twain/Stowe Homes $95,057 Greater Hartford Arts Council $86,726 Barnum Museum $23,750 S O U R C E : O P M The CT Science Center could lose state funds. P H O T O | C O N T R I B U T E D P H O T O | C O N T R I B U T E D The Bushnell shares $1.2 million in state funds with three other performance centers.

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