Nonprofits Can Save the State $1.24 Billion Over Five Years
Why the Numbers Work

Connecticut can save hundreds of millions of dollars each year, saving programs from closure and expanding opportunities for thousands of people who languish on waiting lists by shifting the remaining state-provided services into the community.

More than half a million people get life-sustaining support from community-based, nonprofit human service providers every year. The overwhelming majority of life-sustaining human service programs in Connecticut are already provided by community-based nonprofits while the State continue to provide a small number of services at significantly higher cost services.

Approximately $110-$115 million can be saved in FY 18, over $300 million for the biennium.
Below are answers to frequently asked questions about how the numbers work. Remember, the five-year figure is with a three-year phase-in.

Conversion of State-run Local Mental Health Authorities (LMHAs) to Nonprofit Providers

How many LMHAs are now run by nonprofits?

• There are thirteen LMHAs – seven are already run by nonprofit providers
• The per-person cost of the state-operated LMHAs are more than double the cost of those run by nonprofits

How did you come up with the amount of savings?

• We compared average costs-per-client.
• The cost difference was $7,300 per client per year in FY 16
• We multiplied that difference by the number of clients in state-operated and nonprofit LMHAs

Are people working at nonprofit LMHAs paid a living wage?

• Yes. People working in mental health facilities tend to be paid well above the minimum wage. Clinicians and social workers in the nonprofit sector average starting salaries in the $40,000-$50,000 range.

Don’t state-run LMHAs provide different services from the ones run by nonprofits? Wouldn’t that make them more difficult to convert to nonprofit operation?

• The only difference is that the three urban LMHAs (New Haven, Hartford, Bridgeport) provide in-patient care. Our proposal is a phase-in. Although the way in which conversion is phased-in would be determined by DMHAS, one way to do that would be to convert the three urban LMHAs in year three, after having learned from the experience of converting others.
• Inpatient psychiatric care is also provided in other facilities across Connecticut that are not state-operated. There is nothing about inpatient psychiatric care that necessitates it being provided directly by the State.

Conversion of State-Run DDS Residential Facilities to Nonprofit Providers

How many people in DDS care are already served by nonprofits?

• 93% of people in DDS care who live in residential settings are in settings operated by nonprofits.
• 86% of all people in DDS care are served by nonprofits

How did you come up with the amount of savings?

• We compared average costs-per-person served in residential settings.
• The cost difference was $152,000 per client per year.
• We multiplied the difference by the number of people now in state-operated residential settings.
• These numbers are based on the Department of Developmental Residential Services Cost Comparison, FY14-FY16.

How much would it cost to pay line workers more? How much of the savings above would have to go back into the system to pay them more?

• It has been a decade since the State has provided a Cost of Living Adjustment (COLA) to DDS providers.
• The average Cost of Living increase over the past twenty-five years, is less than .05%. According to the Governor’s proposed biennial budget in 2015, a one percent COLA to private providers would cost the State $8.5 million.

Conversion of State Agency Caseworkers to Community Caseworkers

How many caseworker positions at DCF could move into the nonprofit sector?

• Based on an analysis of foster care caseworkers within the Department of Children and Families, there is a $31,222 difference in the average salary between publicly funded caseworkers and privately funded caseworkers.
• Converting public to private services would require nonprofits providers to contract for the services of 392 caseworkers, thus saving the state $12,241,473 if phased in over 3 years.
Additional savings would obviously occur if other state caseworkers found in other state agencies where shifted to the private sector.

Reduction of State Overtime

How much in overtime payments are estimated to be saved by these conversions?

• OFA recently reported overtime costs for DMHAS, DDS, and DCF at $87 million.
• The Alliance calculated a 32 percent reduction in overtime for 3 state agencies at a savings of $28 million.
• Conversion will substantially reduce the need for public staff and substantially reduce public overtime as well.

**Our members can identify additional state services that they are providing which, if done by their organizations, will also result in further savings to the state budget of at least $15 million per year.

For more information, please contact Gian-Carl Casa at gcasa@ctnonprofitalliance.org.

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