Nonprofits will need time to rebound from budget fallout

By DENNIS GRUBAUGH
    It will take more than a governor’s signature to restore confidence among Illinois’ social service agencies that have suffered so much during the two years of a budget impasse.
    It might take the sweep of a magic wand.
    Some experts say it will take years, not just months, for a rebound of agencies that have trimmed budgets and closed programs, even if state leaders resolve their differences immediately.
    The struggle is reflected in a survey conducted this spring by United Way of Illinois among 463 human service agencies across the state, members and non-member agencies both. Among the findings:
    St. Clair County Child Advocacy in Belleville is now working with fewer counselors.
    The Lessie Bates Neighborhood House in East St. Louis cut services for older adults, utility assistance and homeless outreach.
    The Wells Center in Jacksonville, which offers drug abuse and mental health treatment among others, says more people are becoming involved with police or going to hospital emergency rooms.
    “We know that across the state 69 percent of agencies have received no or only partial payment for services delivered in Fiscal Year ’17. In Southern Illinois that number is closer to 73 percent,” said Dayna Stock, the senior vice president of regions and initiatives for United Way of Greater St. Louis.
    Agencies have been forced to reduce the number of clients that they serve and take other measures, such as not filling vacant positions and using cash reserves.
    In Southwest Illinois, 44 percent of responding agencies in the spring survey said they were not filling vacancies. Thirty-nine percent were using cash reserves.
    “That could pose more problems down the road if they spend down their cash reserves,” Stock said. “Cash reserves are their backup. Spend that down, and if this goes on much longer they won’t have anywhere to go to make up the difference. It’s hard to have a crystal ball and predict how much longer they can survive, but it’s certainly been very taxing.”
    Agencies generally fight against spending reserves because there are enormous costs to restarting closed programs.
    “It’s really hard for them to staff back up again and get that going,” she said.
    Even when the budget situation is resolved, nonprofits will be months, perhaps years rebounding, she said.
    United Way of Greater St. Louis serves about 300,000 people in a nine-county area of Southwestern Illinois, and supports 60 agencies.
    “We know 54 percent of agencies in Southwestern Illinois have had to reduce the number of clients that they are able to serve,” Stock said.
    The survey was conducted in March, 21 months into the budget battle and less than three months after a stop-gap budget that released funds owed from July 1 to Dec. 31, 2016.
    At issue is the money still owed to human service agencies that do work under contract with the state. The amount is part of the overall $14.3 billion in bills that the Illinois Comptroller’s Office says are backlogged.
    Last month, Comptroller Susan Mendoza encouraged agencies to regularly report liabilities to her office, including late interest penalties associated with outstanding bills. She said there has been an increase of bills for medical, corrections, state group health insurance, human services and other state agencies.

    Without a thorough accounting, it’s hard to say how much is owed to schools, social service organizations, health-care providers, vendors, small-business owners and others, she said.
    Legislation initiated by Mendoza known as the Debt Transparency Act (House Bill 3649) calls for more accountability from state agencies on Illinois’ bill backlog. It would require agencies to report monthly to the Comptroller the bills they are holding and estimate the amount of late interest penalties that will be paid on those bills. The Comptroller’s Office projects that Illinois will owe at least $800 million in late payment interest penalties on its overdue bills by the end of the current fiscal year on June 30. But without accurate information from state agencies on what is owed, it’s nearly impossible to precisely report interest charges. That measure was pending at the end of May.
    Current state law only requires agencies to report on Oct. 1 of each year the aggregate amount of bills being held on the previous June 30. The information is outdated by the time it is received, Mendoza said. But the agencies already have the personnel and infrastructure in place to compile the data.
    Mendoza, a Democrat, has been sharply critical of Gov. Rauner, a Republican, for what she said has been his administration’s effort to mask the amount of the debt by holding bills at some state agencies.
    The politics of it all is part of a two-year battle between the governor and the Democratic-led House and Senate over the governor’s demand for certain business reforms as a condition of budget compromise
    And those politics have human service operations hanging in the balance.
    “While Rauner continues wasteful spending on storing old paperwork in warehouses, social service agencies like IMPACT Center for Independent Living are suffering and being forced to discontinue vital programs. SIU in Edwardsville and our state’s universities are losing out on critical state funding to continue programs,” state Sen. Bill Haine, D-Alton, said in a letter to constituents.
    United Way’s Stock said the agency strain has a rippling effect.
    “It means other agencies are forced to take on additional clients. It means people are having difficulty getting access to services,” she said.
    United Way has responded to the problems, both from agency and individual standpoints.
    On the individual side, the organization has been pushing its 211 service, which celebrates its 10th year in 2017. That services allows people to dial the hotline number of 211 to find help with any number of services, including utility bills, food, shelter and daycare.
    Last year, 211 received more than 150,000 calls for help.
    “We try to connect them with resources in the community,” Stock said. “Shelter/housing and utility assistance are the two big requests.”
    On the agency side, United Way is the largest non-governmental funder of human services in Illinois.
    “But private philanthropy can’t fill this gap that’s made by the state funding deficit,” Stock said. “We’ve invested additional resources in our agencies. We’ve really tried to double down on training and workshops to help agencies plan for and deal with crises.”
    Helping agencies strengthen their field muscle, budgeting, fund development and strategic planning will put them in a better position down the road.
    “Hopefully, we’ll return to a better state of being, and the skills built through these trainings and consultations will help them in the long run,” Stock said.
    The in-house training falls under a division called Agency Consulting and Training Services.  It’s an opportunity for member agencies to access consultant advice at low or no cost.
    They can gain expertise on topics from budgeting to board development — a benefit of being affiliated with a larger United Way that has the capacity to have that kind of training opportunity.
    “After the budget crisis started, we added one on contingency planning. What’s the point at which you can’t keep a program going? You need to know what your breaking point is,” she said.
    Most are one-day workshops.
    While individual philanthropy can’t take off all the pressure, it certainly helps. The United Way of Greater St. Louis raised more than $75 million in its last campaign, surpassing its goal. It ranks in the top five in the nation in terms of fund-raising.