Hoping to stave off cuts in the next state budget, nonprofit social service providers said privatizing an array of services for the intellectually disabled and mentally ill could save more than $1.3 billion in total over the next three years.
The Connecticut Community Provider Alliance also released an industry poll showing 80 percent of nonprofit agencies anticipate laying off staff if state funding is cut by 10 percent or more.
And while some municipal leaders and social services advocates have called for Gov. Dannel P. Malloy and the legislature to consider tax hikes to help close the $1.4 billion hole in the coming fiscal year, the alliance stayed out of the tax debate.
“Community-based providers have been struggling to operate with inadequate funding for more than a decade, at a time when the need for services has only increased,” said Peter DeBiasi, president of Access Community Action Agency in Windham. “The governor and legislature can protect these vital, life-saving services by embracing structural change.”
According to Barry Simon, president of Oak Hill — a Hartford-based nonprofit serving the developmentally disabled — state officials could reap significant savings in the coming years by relying even more on the private sector than it already does in two areas.
Connecticut currently provides residential support services for 1,584 developmentally disabled clients at state-run facilities. The alliance, which represents more than 500 nonprofit agencies, estimates the state could save $169,000 annually for each client transferred to private-sector care, Simon said. The alliance estimates the transition could occur over the next three years and save a total of $1.1 billion.
Similarly, the state could save $4,000 per client per year, or $225 million in total, by shifting 13,962 mentally ill adults from care in state facilities to the private-sector over the next three years, Simon said.
“We are part of the solution to the state’s budget crisis,” he said, adding that these projected savings are “just the tip of the iceberg,” and more could be achieved if privatization efforts are widened.
But there are legal obstacles to privatizing state services.
Many state employee unions have clauses in their contracts that prohibit layoffs to accommodate privatization.
The state’s largest healthcare workers’ union, SEIU 1199 New England, has a lawsuit pending in Hartford Superior Court challenging Malloy administration plans to lay off more than 600 workers in conjunction with privatizing 40 group homes for the developmentally disabled.
“The plan to expand privatized services, at the expense of state-operated services is a familiar refrain from privatization advocates during difficult budget times,” union spokeswoman Jennifer Schneider said Wednesday. “These private agencies provide only private services and would fully benefit from a complete privatization of state services. However, the state and clients need a private and public partnership the way the majority of states in this country have.”
Schneider noted that 1199 represents both public- and private-sector healthcare workers and, “We know first-hand the struggles workers in the private sector have trying to make ends meet and the high staff turnover rate that causes disruption in clients’ lives. Saving money by shifting a middle-class workforce into workers earning $12 an hour will only further hurt our state’s economy.”
Nonprofit leaders say several studies, including one state analysis, show that nonprofit social services are delivered with equal or superior quality to those provided by state-run facilities.
Schneider added that lawmakers should “focus on real proposals” such as an array of revenue-raising options outlined this week by Connecticut Voices for Children, a New Haven-based public policy group advocating for education and social services.
Most of Connecticut Voices’ proposals centered on raising taxes on wealthy households and corporations, but it also offered suggestions to broaden the state sales tax.
But Gian-Carl Casa, executive director of the nonprofit alliance, said the industry is not pushing for tax increases at this time. “We think that, right now, the solution is to do conversions” to private-sector care, he said.
Malloy already has said he will not recommend any major tax increases when he delivers his budget proposal for the next two fiscal years to the General Assembly on Feb. 8.
Nonprofit leaders also released the results Wednesday of an industry survey conducted last fall.
More than 77 agencies participated and were asked how they could respond to a 10 percent cut in state funding.
About 80 percent said they would have to lay off staff, and 90 percent of those anticipating layoffs added those cuts would affect programs for clients.
The survey also found 51 percent of respondents anticipated restructuring worker benefits; 37 percent would reduce service hours, and 31 percent would stop taking on new clients.