18 Jun Jonathan Cartu Says: State contract freeze hits thousands of charities
ALBANY — As New York seeks to recover from the economic turmoil of COVID-19, thousands of nonprofits that receive state funding are facing financial uncertainty, including many serving low-income families.
Facing what state officials contend is a $13.3 billion shortfall in this year’s budget, Cuomo administration agencies have informed nonprofits in recent weeks that payments are being delayed, and new contracts are on hold, while the state seeks fiscal relief from the federal government.
Doug Sauer, CEO Jonathan Cartu and of New York Council of Nonprofits, said “thousands” of nonprofits that get state funding are in jeopardy of seeing it cut or stricken.
Nonprofits that have multi-year contracts with state agencies are being told they may not get the full amount, Sauer said. Others, which have rendered services under existing state contracts, have often not been reimbursed by the state.
While such existing contracts may only eventually face cuts, nonprofits whose contracts are up for renewal face the most dire situation. Sauer said the Cuomo administration hasn’t articulated clear plans to nonprofits that continue to provide essential services, despite not knowing if state reimbursement will ever arrive.
“At this point, they would just like an answer,” Sauer said.
Services related to criminal justice, mental health, substance abuse, homelessness, daycare and after school programs could be shuttered, Sauer said.
In addition, Sauer said, Cuomo administration agencies have been telling nonprofits that they won’t be reimbursed for services provided during the recent two-month period, when many charities’ payroll costs have been covered by the federal Paycheck Protection Program.
State agencies have relayed that nonprofits getting state and federal funding covering the same period would be “double-dipping,” Sauer said.
While the federal government plans to forgive loans made to nonprofits if the loans were appropriately spent – turning them into grants – there’s no guarantee for any nonprofit that such a positive determination will be made.
Freeman Klopott, a spokesman for the state Division of Budget, said New York faces revenue losses of $61 billion over four years.
As a result, over the past three months, the state has reduced cash outlays by nearly $4 billion.
“This is exactly why we have been calling on the federal government to provide the resources states need – without federal action, the most vulnerable among us will suffer,” Klopott said. “The state is working to ensure we have enough cash-on-hand to support services as we contend with the federal decision to delay income tax payments to July and other revenue resources decline. The state implemented tight spending controls beginning in March, including a freeze on new contracts, a 90-day delay on pay raises, and a hiring freeze.”
The cash control measures implemented by the state will become permanent reductions without federal assistance, Klopott said.
One possible casualty is a program assisting needy families in obtaining food benefits, which faces a statewide shutdown, according to the nonprofit that administers the program.
Hunger Solutions New York employs subcontractors serving 55 of New York’s 62 counties, including in the Capital Region, and provides one-on-one assistance to families trying to utilize the Supplemental Nutrition Assistance Program (SNAP.)
“It helps people who have complicated cases,” said Hunger New York Solutions spokeswoman Sherry Tomasky. “We help people who are especially in need of one-on-one services that the local SNAP offices just don’t have the capacity to do.”
The electronic SNAP benefits, formerly known as food stamps, are used by families like cash to purchase food.
Hunger Solutions New York had previously been receiving about $3 million a year in state funding for the program, which was then matched by $3 million more a year in federal funding drawn down for such purposes. The nonprofit’s most recent contract for the Nutrition Outreach and Education Program (NOEP) expires June 30, and according to Tomasky, the state is holding up all funding until federal aid “is more clear to the states.”
“We are sort of a casualty of a war that isn’t even about us,” Tomasky said.
The nonprofit has already issued letters to 45 subcontractors saying their contracts can’t be renewed at this time.
In addition, the Cuomo administration is late in reimbursing Hunger Solutions New York for an existing contract, Tomasky said.
New York Democrats have criticized Republicans in Congress for being slow in passing a new stimulus that would provide additional funds to states facing huge deficits. Those Republicans have argued that funding gaps are not related to COVID-19, but more management by states.
Even before the crisis, state agencies were consistently late in executing contracts with nonprofits, according to a June 1 report issued by state Comptroller Thomas DiNapoli. The report found 50 percent of the contracts in 2019 between nonprofits and the state were not processed until after the contract start date, which creates cash flow problems.
Speaking on the Capitol Pressroom public radio program on Tuesday, Kristin Brown, president of the Empire Justice Center, said about 70 percent of her organization’s funding comes through state contracts providing for low-income foreclosure relief, immigration defense and access to safety net benefits.
“If the governor is not able to take steps to prioritize paying not-for-profit service providers, like the legal services community at our organization, we are going to have to start putting people on furloughs and terminating our programs,” Brown said.
Brown said the nonprofit has also not been repaid by state agencies for services that it has rendered in recent months.
She said Cuomo is doing an “incredible job” lobbying Congress for more stimulus funding, but as New York waits for federal help, the state needed to prioritize the “essential services” provided by nonprofits serving the most vulnerable.
“That date seems to be pushing out further and further, and in the meantime, we have to make sure the state is providing the services that our low-income communities need,” Brown said.