Shifting Human Service Programs to Nonprofits Can Serve More People and Save Money

Shifting More Human Service Programs to Community Providers
Would Save $1.3 Billion in 3-Year Phase-in and
Protect Thousands Who Rely on Services

10 Percent Budget Cuts Would Gut Programs and Close Agencies

(Hartford, CT) – As the Governor and the Legislature work to pass a budget for FY-18 that addresses a projected $1.7 billion shortfall, they could avert devastating cuts to vital human service programs and save as much as $1.3 billion over the next three years by moving state-operated programs into the community nonprofit sector, leaders of the CT Community Nonprofit Alliance said at a Bridgeport press conference today.

The cost savings estimated by the Alliance would come from eliminating the state’s duplicative human service system which currently provides the vast majority of all human services through community-based agencies, and the balance through state operated facilities. Human service programs provided directly by the state are significantly higher cost.

“The community-based human service system can be part of the state’s budget solution, and we are urging lawmakers to enact structural change,” said Martin D. Schwartz, President and CEO of The Kennedy Center. “Services provided by the Kennedy Center, the Child & Family Guidance Center, and our colleagues across the state are of equal or even higher quality than those provided by the state and they are less expensive.”

Gian-Carl Casa, President and CEO of the CT Community Nonprofit Alliance, urged lawmakers in Hartford to shift their focus, said. “Legislators are talking about taxing nonprofits and taking money away from services for the most vulnerable citizens. Shifting services to the private sector is a realistic solution that avoids taxing the services for some of our most vulnerable citizens; please consider it.”

The Alliance, which represents community-based organizations in Connecticut, has estimated the permanent and ongoing savings that would come from both five and three-year phase-in of state-to-private programs for mental health and substance abuse programs and for services for individuals with developmental disabilities. The five-year phase in savings are slightly lower, but still substantial: $169 million for mental health and substance abuse treatment and $804 million for developmental disability facilities. (Full detail here)

The alternative to converting state services to community-based programs, Alliance leaders said, will be massive budget cuts. The proposal to convert state services to community-based nonprofits got bipartisan legislative support at the Bridgeport press conference.

“This is about finding real solutions to Connecticut’s budget crisis,” said Sen. Tony Hwang (R-Fairfield). “These non-profit organizations provide essential services to our most vulnerable and at-risk populations. The Alliance’s presentation of fiscal savings represents a potential ‘win-win’ for Connecticut residents.”

“Nonprofits like The Kennedy Center and Family & Child Guidance Center are success stories that the Legislature should be finding ways to replicate across the state. Rep. Jonathan Steinberg (D-Westport) said. “We should be looking at all budget options that would protect existing human service programs, and expand their reach, including The Alliance’s recommendations for shifting more services into the nonprofit sector.”

Earlier this year, the Office of Policy and Management asked state agencies to provide proposals for 10 percent cuts. In a survey of member organizations, The Alliance found that if implemented, those cuts would force layoff of off direct-care staff, salary freezes or cuts, elimination of programs, leaving thousands of vulnerable individuals without the life-sustaining services they need.

The survey of 77 agencies already operating with inadequate funding for more than a decade, found 80 percent would lay off staff; 65 percent would freeze or reduce salaries, 60 percent would reduce staff hours and eliminate programs; 51 percent would look to restructure employee benefits; 37 percent would reduce service hours and 31 percent would stop taking in new clients.

By shifting those state services into the nonprofit sector for both developmental disability services, and mental health and substance abuse treatment programs, the state can continue to support individuals in need. The billion dollars in savings from converting state services to community based includes estimates for shifting existing state programs for residential and supports for individuals with developmental disabilities, and mental health and substance abuse treatment.