DATE: February 24, 2022 

TO: Appropriations Committee  

FROM: Gian-Carl Casa, President and CEO  

RE: H.B. 5037 An Act Adjusting the State Budget for the Biennium Ending June Thirtieth, 2023 Health Subcommittee  

Good afternoon, Senator Osten, Representative Walker, Senator Miner, Representative France and members of the Appropriations Committee: 

I am Gian-Carl Casa, President and CEO of the CT Community Nonprofit Alliance (The Alliance). The Alliance is the statewide organization representing the nonprofit sector. Community nonprofits provide essential services to more than half a million people and families in Connecticut every year and employ 115,000 Connecticut workers, improving the quality of life in communities across the State.  

Thank you for the opportunity to testify on H.B. 5037, An Act Adjusting the State Budget for the Biennium Ending June Thirtieth, 2023. 

First, I want to thank you for the 4% Cost of Living Adjustment for community nonprofits that you fought to include in last year’s budget.  It is greatly appreciated; we know it didn’t come easily. What we are saying today doesn’t diminish our gratitude, but nonprofits today are in crisis, and we must discuss with you what nonprofits need to continue providing community-based services for the fiscal year starting July 1 and years thereafter.  

We are asking that you: 

1. honor the long-term plan to restore at least $461 million in buying power lost to inflation for community nonprofits, an 8% increase in funding for FY23; and 

1. increase funding by statutory requirements for the full $461 million, or 28%, by FY2026, indexed for inflation after that. 

COMMUNITY NONPROFITS ARE IN CRISIS 

Connecticut’s community nonprofits find themselves at a confluence of problems that taken together equal a nonprofit sector in crisis. Let’s review them: 

• Nonprofits were, at the beginning of last year, $461 million – 28% – behind inflation since 2007; 
   

• Two years of covid exacerbated the impact of inadequate funding and brought unanticipated, unbudgeted costs and operational challenges for most community nonprofits; 
   
• The 4% increase in the current year was quickly absorbed by rising costs. Over the last year, inflation rose by almost 6%, surpassing the COLA that is in the current year’s budget; 
   
• Adding to this is a workforce crisis the likes of which our members have never seen. A recent survey we did found that, of the 70 nonprofit respondents: 

• 91% said it has been difficult or extremely difficult to recruit employees this past year; 

• The average vacancy rate is 18%; 
• 68% report increased demand, meaning 
• 59% have waiting lists for things like opioid treatment, shelter, respite care and help for people returning to their communities after incarceration. 

STATE REVENUE IS STRONG ENOUGH TO SUPPORT INCREASES 

It is time to increase funding for nonprofits next year and into the future. The state has the revenue. 

• For FY 2022 OPM’s February estimates project a total state budget surplus of $2.4 billion.  

• Regular budget revenue, operating surplus of $1.5 billion, plus 
• Volatility cap surplus of $969 million. 

• The Budget Reserve Fund (“Rainy Day Fund”) is full with $3.1 billion in it. 

• For FY 2023, the consensus revenue projections by OFA and OPM estimate a surplus of $1.9 billion. 

NONPROFITS PROTECT CONNECTICUT’S FUTURE 

Some people have expressed concerns about whether the state will have enough revenue in the future to support nonprofit programs, but the crisis faced by nonprofits is happening now and those paying the price are people who depend on them for services.  Those women, men, children and families should have the same priority as other budget and tax expenditures to which the state already commits over a long-term. 

We know investments in nonprofits today will help Connecticut thrive down the road.  Community nonprofits are Connecticut’s safety net, and they support residents at every point in their lifespan.  

Turning our backs on them today would mean more problems for our state in the future. 

They took the hits year-after-year with repeated budget cuts when economic times were tough. Years of underfunding, covid, inflation and a workforce crisis are crushing them. Today the state budget is stronger than it’s ever been. 

They need your help. Please stand with nonprofits to support restoring at least $461 million in buying power lost to inflation for community nonprofits, an 8% increase in funding for FY23 and a statutory schedule of increases over the next four years. 

In addition, I would like to offer comments on several specific proposals in the Governor’s budget related to the Health Subcommittee: 

DEPARTMENT OF MENTAL HEALTH AND ADDICTION SERVICES 

For behavioral health services, commitment to increase funding by $461 million is needed now more than ever as we are seeing an increase in the need for mental health and addiction services. We have been encouraged to see the legislature’s focus and attention on this crisis this year. But we want to be clear: There is no way to address the gaps in the mental health system without addressing the chronic underfunding of the existing services provided by nonprofits.  

The Governor’s budget proposes several new programs for which we urge your support, including 

• Expanding Mobile Crisis services to be available 24/7 using ARPA funding, which will be important especially as the state rolls out 9-8-8. 
• 26 new community placements from CVH and Whiting 
• Funding to place peer support specialists in Connecticut’s 12 busiest hospitals. This will improve the connection to services of people who are hospitalized with a mental health crisis or who go to the emergency room. It is important to note, however, that this program will increase referrals to existing community programs and increase in demand which is not funded in the proposed budget. 

The Governor’s proposed budget contains new behavioral health services and initiatives, which we support, but it does not provide support to existing programs that are struggling to keep up with the demand for services. Behavioral health needs continue to increase, with providers seeing an unprecedented high volume of people in crisis as the COVID-19 pandemic continues to wreak havoc on communities.  

DEPARTMENT OF DEVELOPMENTAL SERVICES: 

Nonprofit Providers funded by the Department of Developmental Services are grateful for the efforts of the Appropriations Committee and Governor Lamont to address wage and funding issues specific to services for the Intellectual/Developmental Disabilities population. Last year’s Group Home Settlement provided significant funding to increase the minimum wage for direct support staff in DDS agencies. 

However, the group home settlement also created significant challenges: 

• First, the terms of the settlement provided wage increases of as much as 11.6% for entry level staff, which next year will increase to 14.5%. But the agreement only provides a 3% increase to everyone else. Staff who before July were making only slightly above the new minimum, often people who had years or decades of experience or managing other staff, found themselves suddenly paid almost the same as a new hire. 
• Second, the funding dedicated a pool of dollars to enhance employee benefits, but to date none of that funding has been disbursed to providers. We understand it to total less than half what providers have told DDS they would need.   

Please also support please support the following proposals by Governor Lamont from the American Rescue Plan Act for DDS:  

• $5 million in FY23 for infrastructure improvements for public and privately-owned camps. 

• $5 million in FY23 to provide additional recreational and leisure opportunities to facilitate socialization and connections as the state emerges from the pandemic. 

Thank you for your attention.  Please contact me (gcasa@ctnonprofitalliance.org) or Ben Shaiken, Director of Government Relations (bshaiken@ctnonprofitalliance.org) if you have any questions or would like more information. 

Attachments: 

Appendix A: CT Nonprofits in Crisis Presentation 
Appendix B: Alliance Governor’s Budget Analysis 
Appendix C: CT Nonprofit Workforce Crisis Report