Pennsylvania Budget Impasse is Hurting Nonprofits

Here in Pennsylvania, we still don't have a state budget.  Without going into the politics of the situation, the result is that many PA nonprofit organizations are unable to receive earned reimbursements for services provided and other state funding.  While at some unknown point in the future, some funding and most payments will come, but until then, there is a cash flow crisis.  How many organizations have the reserves or lines of credit established to cover 3-4 months or 5-6 months of unexpected shortages? 

In Pennsylvania, the PA Association of Nonprofit Organizations (PANO), has been leading the advocacy effort in Harrisburg.  The importance of having a cohesive voice for the nonprofit sector is never more important than in times like these.  More on that topic later, but please visit their site if you want to learn more about the budget impasse and how you can help.  

Here is a letter to the editor written by Maureen Powers and Tina Nixon, co-chairs of the YWCA Mid-Atlantic Region, describing very well the issue at hand. 

"Since the passage of the Governor’s Stopgap budget, State budget negotiations have stood at an impasse.  State workers are now receiving paychecks, but organizations and agencies with contracts with the state are still not being paid for their services.  During this recessionary time, this adds to the severe economic distress nonprofits are already under.

As Co-Chairs of the YWCA Mid-Atlantic Region, we are witnessing the impact the lack of a state budget is having on the 24 YWCAs in PA.  YWCAs provide childcare for thousands of low-income families daily that is subsidized through the state.  We also operate domestic violence shelters and rape crisis centers that are almost wholly dependent on government grants, and we certainly cannot refuse these crisis services to victims of crime because of inability to pay.  However, because we currently are not receiving payment from the state for services provided and may become unable to pay our staff, these services and others are at risk of shutting down.

As one example, at the YWCA of Lancaster, we continue to provide child care for 300 children daily, counseling and accompaniment for sexual assault victims, parenting education for low functioning parents, and youth services that are costing us $100,000 per month for which we are not receiving our expected and earned reimbursement.  School is starting, and there is no state money to subsidize childcare for babies of teen parents who want to finish high school.

Some YWCAs have exhausted their reserves and their lines of credit.  If the state does not pass a budget promptly, they will have no recourse but to lay off staff and suspend programs.  This will only add to the number of unemployed people in PA, and deprive communities of essential services.

And in forcing us to use our own reserves or lines of credit, the state is essentially using nonprofits as a bank.  We are virtually “lending” the state money at no cost to the state, but at a loss to us, as we will not be reimbursed for interest payments and fees incurred.

We urge our representatives and senators to abandon their intransigent positions and focus on resolving an intolerable and unworkable situation.  Posturing for a certain constituency may enhance an individual candidate’s political image, but it damages the underlying fiber of the community and exacerbates an already difficult situation for our most vulnerable populations.  

The issues involved in the budget are the same today as they were in May and June, and could have been resolved then as well as now.  In the name of democracy, we call on the state legislature to put an end to this injustice charading as political debate."

Sincerely,

Maureen Powers     Tina Nixon   

Co-Chairs  

YWCA Mid-Atlantic Region