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Commentary: State budget crisis must be prevented from happening again

Monday, November 16, 2015   (0 Comments)
Posted by: Amy Seasholtz
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By Kevin Murphy, President, Berks County Community Foundation

Our elected officials in Harrisburg are signaling they’re finally close to agreeing on a budget.

But even if a budget is passed today, significant damage has already been done to nonprofit organizations across Pennsylvania.

For almost five months, $765 million in human service funding has been withheld from Pennsylvania nonprofit organizations.

We haven’t had a clear picture of how widespread the impact has been in Berks County, so we decided to conduct a survey of organizations in an attempt to bring that picture into better focus.

But it is still difficult to accurately see how truly disastrous this has been. Unfortunately, many agencies are concentrating so intently on staying afloat that they could not devote resources to answering the survey, so our data is incomplete.

We analyzed the results of the survey, which was conducted Nov. 9 to Nov. 11, and found that it is clear what types of organizations have been impacted the most by the state budget impasse. We also found that the needs of thousands of Berks County residents have gone unmet.

It is very clear that the agencies that have been affected the most are those that provide human services, homelessness prevention, food for those in need, shelter for domestic violence victims, disability services and more.

To weather the crisis, eight agencies that provide those types of services have borrowed $2,980,500, or an average of $372,562 each. Those agencies represent only a portion of the nonprofits that are turning to financial alternatives to get by at this time.

It should be noted that past experience with budget failures prompted some agencies to be relatively well-prepared to deal with this crisis. Our survey found that several local nonprofit organizations have been able to use reserve funds, lines of credit and other means to survive.

Berks Encore, for example, has been building a “rainy day” fund since 2007. But that money will be gone by the end of the year. If a budget isn’t passed by that point, Berks Encore will either begin using its line of credit or liquidating assets.

Other agencies were not as prepared. If the budget crisis is not resolved soon, 11 human service agencies in Berks County will be unable to continue programs for more than 25,000 people each month.

Even if this impasse is resolved immediately, it will take weeks or perhaps months for all owed funds to be disbursed by the state. It will take time for these local nonprofit agencies to recover and it will cost them considerable funds to pay back interest on money they have had to borrow to keep their doors open.

That is why we have joined with The Pittsburgh Foundation and many other Pennsylvania organizations in a call for permanent institutional reforms that will include, in the event of a future budget stall, that essential human services continue to be funded, and that legislators, the governor, the cabinet and their appointed staffs go without pay until an agreement is enacted.