DATE: February 11, 2020 TO: Appropriations Committee FROM: Brunilda Ferraj, Director of Policy Research and Organizational Initiatives, The Alliance RE: H.B. 5005 An Act Adjusting the State Budget for the Biennium Ending June 30, 2021: Human Services Subcommittee Good evening Senator Osten, Representative Walker, Senator Formica, Representative Lavielle and members of the Appropriations Committee. I’m Brunilda Ferraj with the CT Community Nonprofit Alliance (The Alliance). The Alliance is the statewide association of community nonprofits. Thank you for the opportunity to testify on H.B. 5005 An Act Adjusting The State Budget For The Biennium Ending June 30, 2021. Community nonprofits provide essential services in every city and town in Connecticut, serving hundreds of thousands of people in need – and employing 117,000 people. They are an important part of what makes Connecticut a great place to live and work and critical contributors to our state’s economy. I am here to ask you to support nonprofits today and into the future. Since 2007, community nonprofits have lost at least $461 million in state funding that has not kept pace with inflation. At the same time, demand for community services continues to increase. Connecticut’s budget outlook is the strongest it’s been in over a decade, and our economy is finally on the road to recovery. Now is the time to increase funding and invest in the people served by community nonprofits. We urge you to take advantage of this opportunity and appropriate $461 million over five years for community nonprofits. Please:

1. Increase funding by $461 million (28%) by FY25;
2. Appropriate $128 million in new funding for community nonprofits in FY21, (a state net of $67 million after federal reimbursement) a 7% increase;
3. Index Medicaid rates to inflation, to ensure that state funding will keep pace with increased costs in the future.

This proposal includes funding to increase Medicaid rates, which do not cover the cost of care. As you may know, Medicaid pays for services for more than 700,000 Connecticut residents. But community nonprofits operate at a loss for almost every Medicaid service they deliver. According to a study published in 2015, the annual loss for the top ten behavioral health procedures by volume was more than $27 million for approximately 250,000 service hours. With inadequate reimbursement rates, the State not only fails to maximize its federal matching funds, it risks the provision of some of the most highly utilized, critical behavioral health services. Nonprofits are mission driven and dedicated to their communities, stretching every dollar to serve as many people as possible – but the reality is that without this funding, providers are not able to meet every need. According to the Office of Policy & Management’s November 2019 Fiscal Accountability Report, Connecticut’s budget surplus will grow to $5.154 Billion by Fiscal Year 2024, including the state’s Budget Reserve Fund, which will be filled to its statutory capacity of 15% by Fiscal Year 2021. We ask: if not now, when? If we cannot do it now, during the surplus years between now and 2024, when will be the right time? If we cannot do it now, what hope do we have that will we in future years? Community nonprofits and the children and families they serve have made substantial sacrifices during the past decade of State budget deficits, shouldering deep cuts to programs and services or in the best of cases, being flat-funded. With this budget, you have a critical opportunity to address the impact of chronic underfunding and increase access and quality of community services for children and families. We know you face many challenges and that budgetary and revenue requirements make some appropriations more difficult than others. You’ve risen to the occasion and found ways to meet other needs despite such constraints. We ask that you do it again for nonprofits. We ask that you please support the families, friends and neighbors who rely on community services. If you have questions or need more information, please contact me at bferraj@ctnonprofitalliance.org. Thank you. Attachments: 1. Department-specific budget information for DSS and DCF 2. Alliance White Paper: Increase Funding by $461 Million for Community Nonprofits Specific to the budget of the Department of Children and Families: Please reject the Governor’s proposal to cut $5.4 million from Board and Care for Children – Short-term and Residential. Nonprofit providers of children’s services have been struggling to operate with inadequate funding for more than a decade, at a time when demand is on the rise. If we do not safeguard children’s services from budget cuts, we will jeopardize the gains the State has made over the past three decades and risk destabilizing the system altogether, leaving some of our most vulnerable kids and families with nowhere to turn. Board and Care for Children – Short-term and Residential fund crucial programs that provide at-risk children removed from their homes due to abuse, neglect or other high-risk circumstances a safe, stabilizing experience with the support of caring staff in a short-term, home-like, therapeutic setting. These homes are a critical part of the service delivery system and we respectfully ask the Committee to restore this funding. Regarding the budget of the Department of Social Services: Please support the Governor’s proposal to add $47.1 million in funding to reflect caseload growth distributed to HUSKY B, Medicaid, Old Age Assistance, Aid to the Blind, Aid to the Disabled, TANF, Connecticut Home Care Program, Community Residential Services, and State Administered General Assistance. Too often, caseload growth is not funded in the state budget and demand has increased for these crucial services. Please support the Governor’s proposal in the DSS and DDS budgets to create an incentive payment model to help move people with Intellectual/Developmental Disabilities into less intensive and more appropriate levels of care. Please ensure that this new program furthers the creation of a better continuum of care that provides the proper services for everyone who is eligible for them. Please also do not just use the savings it creates to balance the budget, instead taking the opportunity to reinvest that savings into increasing rates and/or moving people off the waiting list.