Suppose you could replace an expensive state system of providing human services with one that would allow the state to serve more people at lower cost, pay staff appropriately, and do it all without laying off state employees.
Connecticut has an opportunity to save money, preserve services and serve more people right now.
In the coming year, Connecticut state government is facing what some call a “retirement tsunami,” with thousands of state employees leaving state service. At the same time, there is a growing need for human services, with children languishing in hospital emergency departments and families spending years on waiting lists for limited services.
While there are sectors of state government where they must be replaced, that is not true with human services. Connecticut has a dual system that provides some human services through both state-operated and community nonprofit facilities and the state has a ready, proven, cost-effective option to ensure excellent services continue for Connecticut’s most vulnerable citizens.
By all accounts, state-operated facilities operate at a significantly higher cost than the same services provided by nonprofits. At the same time, the quality of services at the state level is no better or worse. Because it is the way the state has always done business, it’s been difficult to change.
If adequately funded, community nonprofits are ready to take on more clients. They support people with intellectual/developmental disabilities, treat people with mental health and substance abuse needs, help former prisoners re-enter the community, feed the hungry, house the homeless, enrich our communities through arts and culture programs, and more.
People who support hiring thousands of new state employees to re-fill the status quo system will say such conversions would take advantage of underpaid nonprofit employees. But the state can find significant savings, adequately pay for services and increase the pay of nonprofit employees.
Community providers have lower personnel costs, overall. They negotiate their own medical and dental insurance coverage each year. They don’t have the long-term debt obligations associated with the State’s union contract provisions for healthcare and retirement. They are more agile in managing overtime.
Community providers are nimbler than their state counterparts at finding cost-efficient ways to support clients. For example, they can provide services in private homes. They bring in third-party revenue through fundraising, donations and from private payers. They engage in creative public/private partnerships with local corporations and businesses. They are accountable for their expenditures to local boards of directors, which often include the people being served.
Making structural changes to move state-provided services into the nonprofit sector will make those services more affordable, allow the state to better serve those already receiving services, and expand the availability of services to the many individuals and families languishing on waiting lists.
A report conducted by the Boston Consulting Group, hired by the state to propose ways to continue services after the retirements, came to the same conclusions.
Among their findings was that contracts for services provided by nonprofits “enable the State to provide high-quality services, often at lower cost, to more Connecticut residents than the State alone could accomplish, improving overall service equity.”
Specifically, the report said using more nonprofits to provide services such as Local Mental Health Agencies (seven of the 13 LMHAs are already nonprofit) could “realize substantial cost savings for the State,” citing a 2016 analysis that “suggests savings of just over 55 percent, or roughly $7,000 per client”.
The study also found there are significant potential savings in converting the few remaining state-run group homes for people with developmental disabilities. Their report said, “Potential savings from conversions of CLAs [Community Living Arrangements] could total $8 million or more annually, with additional savings potential from ICF (intermediate care facilities) conversions.”
The consultants cite a 2011 study by the legislature’s Program Review and Investigations Committee that found that nonprivate facilities “provide similar or greater service quality” compared to state facilities.
So, you don’t need to take just our word for it. Providers, outside consultants, and the legislature’s own research arm agree that utilizing nonprofits to provide health and human services would be less expensive, maintain quality, help more people and solve a potentially major state problem the mass retirements could cause.
The State of Connecticut needs to just do it.
Gian-Carl Casa is President and CEO of the CT Community Nonprofit Alliance.