State Budget Delays Creates Trouble for Non-profit Sector PDF Print E-mail

The longer the state budget is delayed, the harder it is for the non-profit sector to continue their current services, let alone move forward. The budget, now ten weeks overdue, creates two specific problems for the organizations who rely on state aid to function:

  1. Contracts for future plans and services are being held up in the planning stages since there is no guarantee they will pass or be funded.
  2. Organizations can’t get reimbursed for services they have already provided.

This is not a new problem. Non-profits providing services to New Yorkers were approved late 82% of the time in 2009 (up from 63% in 2008), but the problem this time is that non-profits are not being paid for services they are currently providing under existing contracts, forcing many organizations to choose between delaying their services to customers or closing their doors for good.

A state-adopted contract law passed in 1991 dictated that not-for-profit contracts obtained by state agencies be processed within 150-180 days. Yet approximately 6000 contracts valuing $4.2 billion were processed on average 152 days late in 2009.

Governor Patterson assured in a speech late Tuesday night (June 15), that a balanced budget would be reached no later than June 28th, however this late date cuts awfully close to July 1st when non-profits in the mental health safety net, the system of housing, employment support, drop-in, emergency and crisis relief, and child emotional services will all cease to receive the emergency funding they are currently being allotted in weekly emergency spending bills.
As stated by New York State comptroller Thomas DiNapoli, “The budget crisis is creating a financial crisis for not-for-profits.” This is especially problematic because the existing financial crisis has created record demand in the need for such services to begin with.

DiNapoli has made a number of suggestions to streamline the contract policy with non-profits in mind. NYS Not-for-profit Contract Advisory Committee Chair Ron Soloway hopes that progress can be made within the coming year to save the non-profit industry as well as NYS citizens receiving their help more headache and uncertainty in years to come.
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