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Governor Cuomo’s Budget Garners Much Praise-Along with Questions and Concern

���������� NonProfit Press�� January 18, 2012

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There were a lot of positive reactions to Governor Andrew Cuomo’s presentation yesterday of his Executive Budget proposals for FY2012-13.���� With a mere $2 billion deficit to cut – down from $10 billion last year – the pain levels for nonprofit human service providers generally seemed to be more manageable, at least at first glance and in relative terms.�� And, it appeared that the pain was being shared more evenly, based in large part on a newly enacted State personal income tax structure which muted calls for a “Millionaires’ Tax” that had dominated much of last year’s budget debate.

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“We are pleased that the Governor adopted a fair and balanced approach to reducing the budget deficit, meaning he did not seek to balance the budget by targeting services that primarily assist low-income and vulnerable ����������ers,” said Nancy Wackstein, Executive Director of United Neighborhood Houses.

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Governor Cuomo emphasized that his proposed budget was also a “Reform Plan” for ���������� State government.�� Many of these reforms of governmental operations are likely to impact nonprofit service providers directly.�� He called for merging a number of state agencies, rationalizing and consolidating programs, and revamping and streamlining the procurement and grants management process.����

“The Governor’s FY13 Executive Budget recommends many administrative improvements that will assist the delivery of human services though some concerns in key service areas remain,” said the Human Services Council of New York (HSC).��

No COLAs
Among the painful measures which the Governor did propose is an elimination of automatic Cost of Living Adjustments (COLAs) in all human service program contracts for FY2012-13.�� Many programs had anticipated a 3.6% COLA “trend factor” in program budgets or rate calculations.���� HSC puts the total anticipated cost to providers of this loss of COLAS at $160 million.

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“A lot of programs haven’t been receiving COLAs anyway,” said Harvey Rosenthal, Executive Director of the ���������� Association of Psychiatric Rehabilitation Services (����������).�� “I guess this levels the field.”

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Looking ahead to FY2013-14, Cuomo proposed to replace automatic COLAs with “increases based on appropriate provider costs and meeting performance outcomes.”

Executive & Administrative Compensation
In another controversial, but much anticipated move, the Governor is proposing to limit state reimbursement to providers for executive compensation and administrative costs.

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“One-third of the State budget goes to non-profit and for-profit agencies to provide services on behalf of the State,” said the Governor.�� “However, there are inadequate controls to protect against excessive executive compensation, administrative costs, and profit.”

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In response, the Executive Budget calls for the following reforms beginning in FY2012-13:

• At least 85 percent of every public dollar will be spent on direct services, not administration.
• Reimbursement for any executive’s compensation will be capped at $199,000.
• Excess compensation will be a basis for rejection of a provider.

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Providers and advocates are responding cautiously to the proposals as they attempt to learn more about how the proposed caps would be implemented in practice.

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As outlined in proposed legislative language, the new restrictions appear to cover a broad range of contracts issued by state agencies “including, but not limited to” the Office for People with Developmental Disabilities, Office of Mental Health, Office of Alcoholism and Substance Abuse Services, Office of Children and Family Services, Office of Temporary and Disability Assistance, Department of Health, Office for the Aging, Division of Criminal Justice Services, Office of Victim Services and the State Education Department.

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“Based on this list, it looks like hospital executives who often earn much more than $199,000 would be covered by the cap,” said one advocate.

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“I don’t know where they came up with the $199,000 figure,” said another.�� “It seems pretty random.”

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“It appears that the $199,000 cap is a limit on the amount of State reimbursement, not on the salary levels of executives,” said one association head.

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Advocates also questioned the potential implications of a 15% limitation on administrative cost reimbursement.�� “A proper balanced policy would be for the state to examine all of its bureaucratic and compliance regulations that force administrative costs up and pledge to reduce that,” said another association executive.�� “Also,�� if they were to enact the 15%, then they should allow 15% admin for all contracts and not reduce to 10% or some other lower amount. Most nonprofits subsidize state programs by contributing administrative expenses.�� This is choking them.”

The Good News
The Governor’s Executive Budget included a number of proposals which drew strong support from providers and advocates.�� These included:

• Maintenance of Federal Title XX funding for ���������� City Senior Centers;
• An investment of $93 million in State funds to offset Federal funding reductions in child care services;
• Funding Summer Jobs for youth at $25 million, an increase of $10 million from last year;
• Preserving some of the promised grant increase for ����������ers on public assistance;
• An additional $1 million in funding for Food Stamp outreach;
• A new “Close to Home” Juvenile Justice Reform Initiative;
• New commitments for supportive housing.

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“On behalf of the 10,000 seniors who were anxious to see if their senior center would be on the hit list due to a proposed Title XX cut again, we are thrilled and appreciative that Governor Cuomo did not include this cut again in his budget,” said Igal Jellinek, Executive Director, CSCS.�� “The 16,642 letters sent by seniors to Governor Cuomo opposing a cut clearly portray the vital importance senior centers play in the lives of thousands of older ����������ers.�� Thank you, Governor Cuomo.”

“The Federation of Protestant Welfare Agencies (FPWA) applauds Governor Cuomo for including vital early childhood education funding increases for low-income children and their working parents in the Executive Budget,” said Fatima Goldman, Executive Director & CEO. “The $93 million of funding will ensure that working poor families will not lose their child care slots at a time of great economic need and high unemployment.”

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“We strongly support the Governor’s call to provide an extra million dollars for food stamps outreach to families with children,” said Joel Berg, Executive Director of the ���������� City Coalition Against Hunger. “This modest investment in addition State spending, will surely generate exponentially more money in federal nutrition assistance benefits, thereby aiding broader economic growth.�� The Governor clearly understands that this is not only good nutrition policy, but also good education policy, since children must be fueled before they can be schooled.”

“Citizens’ Committee for Children of ���������� (CCC) applauds Governor Cuomo for his steadfast commitment to reforming the State’s juvenile justice system to better serve youth and keep communities safer,” said Executive Director Jennifer March-July. “Last year, the Governor made a significant down payment on reform by eliminating costly and empty beds, closing placement facilities that were far from where youth lived, and creating a statutory funding mechanism for alternatives to detention and placement programs. Today, with the release of the SFY 2012-2013 Executive Budget, Governor Cuomo advances an ambitious set of juvenile justice proposals that create a more cost-effective system that will produce better outcomes for youth and communities throughout ���������� State.”

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Harvey Rosenthal of ���������� praised the Governor’s commitments over the next three years to move 1,000 nursing home residents and 5,100 adult home and state Psychiatric Center residents into community housing and to create 3,400 NYNY III beds.

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The Bad News

There were, on the other hand, additional pieces of bad news for human service programs and programs.���� Preliminary reports focused on the following:

• Delay of the final 10% phase in of the public assistance grant to 5% in FY13 and 5% in FY14, saving $6 million in both FY13 and FY14.
• Elimination of the Neighborhood Preservation Program and the Rural Preservation Program funded at $12 million.
• Suspension of the $15 million NYC shelter supplement pending determination of the program’s efficacy.

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“We are strongly opposed to the Governor’s proposal to further delay half of the third and final installment of the public assistance grant increase,” stated Bich Ha Pham, Director of Policy Advocacy and Research at FPWA.�� “ Adult welfare recipients work in paid jobs or work activities. These individuals sweep our parks, clean our city buildings, and otherwise work at jobs that do not pay enough for them to get off of welfare.�� We should support their efforts by making sure that they and their families have a little more to make ends meet in these difficult times.”��

The Hunger Action Network of York State added that “it was appalled” by the delay.�� “Unemployment and poverty are soaring in ���������� State and Cuomo’s austerity budgets just keep making the situation worse. ���������� has a constitutional duty to care for its needy. Taking money away from poor New Yorkers after cutting taxes for affluent ����������ers last month is both immoral and unconstitutional,” said Mark Dunlea, Executive Director of the Hunger Action Network of NYS.

“The further delay in a promised increase in the public assistance grant suggests a lack of attention to poverty, especially direct assistance to low-income ����������ers,” said Sean Barry of VOCAL-NY.�� “The already meager 10% increase was postponed from last year and will now be spread over two years.”

The Hunger Action Network, also took a less positive view of the budget’s funding for anti-hunger programs. “The Governor also failed to increase funding for emergency food programs, continuing the present $29.7 million allocation,” said Mark Dunlea.�� “His statement that he would seek to ensure that no child would go to bed hungry apparently was limited to appropriating an additional $1 million to assist individuals in applying for food stamps and other federal nutrition programs. While appreciated, this falls far short of ending hunger among children.”