Connecticut residents got some great news this month. Budget reports recently released predict an enormous budget surplus for the coming fiscal year, and even more surpluses over the next four years.
One of the reports, from the legislature’s Office of Fiscal Analysis, projects that without any new tax increases and with full funding of the Rainy Day Fund, the state’s coffers will have surpluses of $2.7 billion this fiscal year and $1.2 billion in each of the following three years.
After more than a decade of underfunding, the state’s community nonprofits, that contract with the state to provide vital services to Connecticut’s most vulnerable people, create jobs and address problems today that save money tomorrow, hope this great fiscal news will translate into a long-term plan to restore funding.
Connecticut can afford it.
Underfunding has taken a toll on the state’s nonprofits that will take years to address. Even after two years of meaningful increases passed by the General Assembly and governor, inflation has left funding 46 percent behind where it was before the Great Recession hit in 2008.
Over the past several years, the sector has faced inflationary increases that have more than consumed recent funding increases. Agencies report that food costs for school and residential services have jumped as much as 30 percent; insurance for employee health and liability are up 25 percent; and heating oil, gasoline and electricity costs are up 30 to 40 percent.
At the same time, nonprofits have faced costs and disruption created by the coronavirus pandemic, and a workforce crisis that caused staff vacancies as high as 25 percent and not enough funding to hire qualified staff to fill them.
Yet the employees of community nonprofits go to work every day to fulfill their mission to the people of Connecticut who most need their services. Nonprofits have been and continue to be there when people need them — providing support to people with intellectual/developmental disabilities, treating people with mental health and substance abuse needs, feeding the hungry, housing people who are homeless, and providing arts and culture that make our communities vibrant.
In 2021 and 2022 community nonprofits received their first funding increases in more than a decade.
Those increases were welcomed as the start of a longterm commitment by the legislature to support vital services. To restore nonprofit funding and provide the sector with what’s necessary to maintain and expand services, we are asking the legislature and governor to increase funding by nine percent in FY24 and seven percent in FY25. After the biennium they should index future nonprofit funding to inflation.
Funding for nonprofits doesn’t just help the half-million people served by them. Nonprofits employ 115,000 people around the state and pay about $4 billion in wages. They spend billions more in goods and services. A healthy nonprofit sector helps Connecticut’s local, regional and state economies.
Community nonprofits provide the same services as some state agencies, but more efficiently and cost-effectively, according to a 2021 report prepared for the state by the Boston Consulting Group. According to the report, community 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. Health and human services agencies are particularly notable in this regard…”
Funding nonprofits avoids the need for higher cost services. For example, nonprofit services can help a person avoid a costly trip to an emergency department or prevent recidivism among people returning to the community from prison by helping them find jobs and housing.
Community nonprofits do amazing work and can do much more with adequate funding. The governor and General Assembly stepped up in the current biennium; the state can afford to continue with this progress. We can’t afford not to.
Gian-Carl Casa is President and CEO of the CT Community Nonprofit Alliance