Storm Clouds Gather
as Sky Prepares to Fall
Nonprofit human service providers had a lot to worry about as we went to press in mid August.
In Albany, Governor David Paterson was asking legislators to consider a $1 billion series of potential budget cuts for the fiscal year which had only begun four and a half months earlier. Many of these proposals would have significant impacts on nonprofit providers and their clients.
In New York City, government agencies and contract providers were still trying to figure out what had happened – and what it actually would mean – when the budget for Fiscal Year 2008-2009 was adopted at the end of June. Topping their list of questions was how the New York City Housing Authority would deal with its $195 million budget deficit – a gap which threatened to eliminate funding for hundreds of senior centers, community centers and other programs.
Nonprofits in neighboring counties were looking forward to similar problems as government officials prepared to address spiraling deficits in their own budgets for 2008 and 2009.
Federally, one remaining proposed change in Medicaid rules was threatening to eliminate $350 million in funding for a wide range of New York State’s mental health, substance abuse, developmental disabilities and medical programs – effectively eliminating reimbursement for some services and slashing reimbursement rates for others.
For more on all of these potential threats to programs and services, see individual stories.
Nonprofits on the Menu
as Governor Offers Up Budget Cuts
Nonprofit human service providers lost their appetite when Governor David Paterson set the table for an August 19th special session of the State Legislature with a menu of $1 billion in potential budget cuts. The Governor was asking for at least $600 million in additional savings this fiscal year as a way to begin dealing with an anticipated multi-billion deficit in FY2009-2010. Paterson can not implement the proposed budget reductions without approval by the Senate and Assembly -- an approval which appeared far from certain as legislators continue to woo voters in anticipation of upcoming elections in November.
“On April 1, 2009, in just 232 days, we will have no other choice but to reduce spending and close a $6.4 billion budget gap,” said Paterson. “And, if the economy continues to worsen, the spending reductions I have proposed will be necessary to help ensure the current year’s budget remains in balance.”
Unlike an earlier round of $630 million in cuts announced on July 30th which included only the State’s own directly-run operations, the Governor’s proposals yesterday would significantly impact nonprofit human service programs.
The menu items offered up by the Governor for consideration by the legislature include the following:
• A 6% reduction in “Local Assistance General Fund Spending” which would generate $250 million in savings. These cuts would impact many services operated by nonprofits under contract with State agencies. Just a few examples are Youth Development and Delinquency Prevention-YDDP ($1.4 million); Advantage Afterschools ($646,000); Adult Protection and Domestic Violence Programs ($2.1 million); Home Visiting ($741,000); Expanded In-Home Services for the Elderly ($1.9 million); Supplemental Nutrition Assistance Program ($935,000); AIDS Institute Programs ($605,000); and VESID Case Services for Disabled Adults ($2.2 million).
• A 50% reduction in “New and Enhanced 2008-09 Executive and Legislative Programs” for savings of $132 million. Examples of these proposed cuts include $3.4 million from a proposed restoration of 21st Century Community Learning Centers; $735,000 for Adolescent Pregnancy Prevention; a total of approximately $600,000 from OASAS for Enhanced Services for Co-Occurring Disorders, Recovery Centers and Permanent Supported Housing; $1.7 million from OMH for Co-Occuring Disorders, PROS, Housing Development and Managed Care Demonstration Projects.
• A 50% reduction in “Member Item Spending” for saving of $100 million. A significant portion of these budget reductions would impact nonprofits, including many smaller, community-based programs.
• A $506 million reduction in Medicaid Spending. This would include cuts for hospitals ($99 million); insurance companies ($120 million); nursing homes ($169.4 million); home care ($45.5 million) and other actions $47.9 million) such as state premium payments to managed care programs and elimination of COLAs for early intervention providers.
“While we appreciate the State’s fiscal challenge, we are especially concerned that many of these cuts would potentially endanger the safety net of services and programs that keep the most vulnerable New Yorkers able to provide for themselves and their families during these difficult economic times,” said Susan Stamler, Director of Policy & Advocacy at United Neighborhood Houses.
“These cuts would be devastating to the clients that we serve,” said Ron Soloway, Managing Director of Government and External Relations at the UJA-Federation. “The nonprofit sector is already contracting in terms of the services it can provide. The city cuts already have had a significant impact, especially on smaller nonprofit organizations.”
Advocates also questioned the Governor’s timing and approach to addressing the state’s fiscal problems.
“I know the state faces a very difficult deficit that needs to be addressed,” said Soloway. “I am just not sure that it needs to be addressed in August when the markets might improve and before the state really debates to what extent revenues should be increased versus cuts being made.”
“Asking State legislators to revisit a budget they put in place four months ago, on just one week’s notice, before they have a sufficiently complete picture of the State’s finances, is unreasonable and unrealistic,” said Stamler.
While most observers agree that the State will be forced to take significant steps to address its fiscal situation prior to passage of next year’s budget, many question whether the legislature will begin taking those steps next week. Assembly Speaker Sheldon Silver is already on record saying that the State should wait for the next round of quarterly financial reports before deciding on steps to address the problem.
“I’m not panicking just yet,” said Philip Saperia, Executive Director of the Coalition of Behavioral Health Agencies.
What happened when legislators reconvened on August 19th. Go to the “Breaking News” section of our website at www.nynp.biz.
Proposed Medicaid Rule Could Cost NYS Clinics $350 Million and Devastate MH, Substance Abuse and MRDD Services
A proposed Medicaid rule change originally scheduled to go into effect on November 1st could devastate a wide range of mental health, substance abuse treatment, developmental disabilities and medical programs, completely eliminating financial support for some services and drastically reducing reimbursement for others.
According to an analysis prepared for Governor Paterson, the proposed rule on “Hospital Outpatient and Community Clinic Services” (CMS 2213-P) would could cost New York State providers approximately $350 million by limiting Medicaid reimbursement only to those services which are also reimbursable under Medicare. In addition, the rule would also limit maximum levels of Medicaid reimbursement for individual services to rates currently being paid by Medicare.
“This is a huge issue,” said John Coppola, Executive Director of Alcoholism and Substance Abuse Providers of New York State, Inc. (ASAP). Medicaid reimbursement for local clinics providing methadone services would no longer be available, costing providers nearly $25 million.
New York’s mental health clinics would also be devastated. Many services, including Day Treatment, Intensive Psychiatric Rehabilitation Treatment (IPRT) and Partial Hospitalization would no longer be Medicaid reimbursable.
“A Federal reduction in Medicaid spending in this realm would dramatically affect the very viability of community based organizations that serve individuals with mental health and substance abuse disorders,” said Philip Saperia, Executive Director of the Coalition of Behavioral Health Agencies, Inc. “If this rule is implemented, states would be left with the difficult choice of paying full cost for these programs or eliminating services altogether, leaving thousands of New Yorkers with profound disabilities without care.”
Mental retardation and developmental disabilities clinic services also could lose $25 million since certain clients will not qualify for services under other reimbursement mechanisms.
The rule change was one of seven originally proposed by the Bush administration. A moratorium on implementation of the other six proposals was included as an amendment to a budget bill passed by Congress earlier this year. Since that time, implications of the seventh proposed rule change have become more clear. Advocates and providers are pressing CMS to delay implementation of the rule and asking Congress to impose a moratorium similar to that passed for the other six rules.
A Not So Happy New Year;
NYC Providers Wait for Clarification on Cuts
York City’s nonprofit human service providers began the new fiscal year on July 1st in less than good spirits as they began coping with an estimated $40 million or more in cuts to existing programs. A month and one half later, they are still trying to understand exactly what the cuts are and how they will be implemented.
“This is a bad budget for human services,” said Susan Stamler, Director of Policy and Advocacy for United Neighborhood Houses, addressing a City Hall gathering of advocates and providers on the Sunday following adoption of the new budget. More than 200 people representing at least 50 organizations made their feelings known.
“It is especially devastating for services for older adults and youth,” Stamler continued. “All of these cuts – cuts in infant mortality programs, HIV/AIDS services – are just the wrong decisions for our City at this point in time.”
“It is just horrible,” said Michelle Yanche, Staff Director of the Neighborhood Family Services Coalition. “For the most part, none of these cuts were made on the merits. Human services became a pawn in a brinksmanship exercise between the Council and the Mayor.”
Services for seniors were one area bearing a significant portion of the overall budget reductions. “This is not a good budget for seniors living on a fixed income,” says Igal Jellinek, Executive Director of the Council of Senior Centers and Services (CSCS). Most programs funded by the Department for the Aging (DFTA), including the network of 329 senior centers, will be taking an across the board 3% cut for a total of $5.5 million. Additional cuts were made in funding for food, transportation and space costs. “I do not understand it,” says Jellinek. “Every time you turn around the costs of food and transportation is going up.”
Providers next turned their attention towards understanding exactly how the cuts will be allocated and implemented, something which is still far from clear one and one-half months into the new fiscal year.
Perhaps the largest – and probably least understood -- single cut impacting nonprofit service providers and their clients is the estimated $195 million deficit facing the New York City Housing Authority – a deficit which threatened to eliminate completely funding for more than one hundred senior centers, community centers and other programs. Among the NYCHA programs threatened by the deficit was a $29 million intra-city transfer of funds to support 100 DFTA-contract senior centers operating in NYCHA buildings.
“The closing of NYCHA senior centers affects thousands of the most vulnerable elderly during these difficult economic times,” said CSCS’ Jellinek. “It is hard to believe that this is the only option.”
While the adopted budget restored $18 million to DFTA’s budget for “NYCHA Community Services”, in was unclear exactly how much of this funding would go to these DFTA contracts and how much may be allocated to offset another $47 million shortfall for other NYCHA programs, including its directly operated senior centers and community centers. “The $18 million provided for NYCHA will allow us to partially maintain our network of youth and senior centers and community programs while we go through a process that will require difficult choices,” said Millie Molina, a NYCHA spokesperson. “Over the coming months NYCHA will continue to work with our stakeholders to ensure that essential services for public housing are maintained.”
When we went to press on August 17th, there was still no further clarification as to how these issues would be resolved. A DFTA spokesperson continued to refer questions on the impact of the cuts to NYCHA. A NYCHA spokesperson continued to say that the agency was evaluating the best way in which to accommodate its budget shortfalls.
Youth Services
Cuts in youth services include $3.3 million from Beacons programs, $1.9 million from Summer Youth Employment and $1.1 million from the Neighborhood Youth Alliance/Street Outreach program. “That program was cut in half,” says Yanche.
Similarly, while several Department of Health and Mental Hygiene programs were restored in their entirety -- Autism Awareness Initiative and the Children Under Five Initiative – others took cuts of varying degrees. Geriatric Mental Health Services took a 10% cut and alcoholism programs were reduced by more than half.
Exactly how these and other cuts will be implemented remains unclear. “Even in areas where the City Council restored funding, additional decisions must be made about how these dollars will be allocated. In some cases the City Council noted that funding would be designated post budget adoption by the Council, the city agency or an intermediary,” said Stamler.
On the bright side, however, the budget did include funding to provide Cost of Living Adjustments (COLAs) for nonprofit staff working on programs funded through City contracts, notes Allison Sesso, Deputy Director of the Human Services Council of New York.
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