Rethink the 2016 Budget: Flat Funding is Reduced Funding

20 Apr 2015 12:31 PM | Anonymous

It really is a simple economic concept. For the last ten years non-profits in the state of NJ have been trying to convince our elected officials that flat funding of services and programs serving those living in poverty or with a disability is, in reality, less funding. Inflation is a familiar concept in the US economy: costs go up year over year. The exact inflation rate varies, but the direction is consistent. Nevertheless, this reality has been ignored in the state’s budgeting for non-profit service providers.  If expenses were decreasing in our economy then we’d be cheering flat funding.  However, the reality, as we all know is quite the opposite.  If one were to shop with $100 a week for groceries today you could not get as much food as you did five years ago.

Yet, vital programs that serve those barely making ends meet, those with serious mental illness,and seniors on fixed incomes, are expected to be grateful that funds have not been directly cut.  The trend, known as flat funding, impacts a variety of programs, from benefits that individuals and families receive directly from government programs to services from non-profit programs that contract with the state.  One has to really pay attention to words used in the FY16 State Budget Summary to understand the semantics of how flat funding is represented as an “investment”.  Words such as reaffirms, maintains, or will continue to provide over $x billion…are smoke screens to the reality that  flat funding and disinvestment is hurting effective social service programs in our state.

Throughout our blog series you’ll be hearing about the impact of flat funding in the areas that are crucial to progress in ending poverty: housing, hunger and economic empowerment.  The less obvious impact of flat funding, on the non-profit organizations and those they serve, is equally disconcerting. As an advocate for Catholic Charities, Diocese of Trenton I have seen first hand the impact on our programs. Increased demand paired with flat funding often leads to longer waits for those seeking help, reduced hours at our food pantries, and fewer public presentations on preventing domestic violence, to name a few. We know a major part of this mismatch is the lack of a cost of living adjustment in state contracts, widening the gap between revenue and cost.  In 2013, a report done by the Urban Institute found that “76% of New Jersey non-profit survey respondents, the highest percentage in the country, indicated that contracts that don’t cover the full costs of providing services is a problem.”

Like any other business, providers’ expenses are subject to inflation also- higher health insurance costs for our employees and increased rates for food and transportation that support our programs are just two examples.  However, it’s our workforce that is really impacted….and that impacts those we serve.  Many of those who work with our most vulnerable residents have not seen increases in their paychecks since 2008, because the state contracts that pay these salaries have not kept pace with costs.  The NJ Association of Mental Health and Addiction Agencies (NJAMHAA) has written a compelling piece on how this has impacted staff turnover, staff safety and continuity of care for those served.  They also found that the NJ State Workforce has had a 27.25% increase in wages over the last 12 years compared to only 7% for community based behavioral health providers.  Similar challenges impact programs providing services to the working poor, homeless, children, and many others who are in need of help. 

True investments need to be made and our state budget should reflect this.  Continuing to ignore the reality that inflation exists only increases the vulnerability of those served by state programs and non-profits.  In the long run we know inadequate help leads to crises, with much higher costs to the state as well as more suffering for those who can least tolerate it.  Flat funding is less funding.  It’s simple…put the money where it should be!

by Joyce Campbell, Associate Executive Director for External Affairs, Catholic Charities, Diocese of Trenton

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