As hard-hit states struggle with huge deficits, social service agencies suffer from lack of owed payment and from increasing uncertainty about future funding.
Due to New York's budget gridlock, the state since April has been unable to pay the roughly 30,000 social-service agencies it contracts with to provide safety-net services such as senior care and mental-health counseling. Even so, nonprofits say state agencies are still quietly asking them to keep operations going without knowing if the government will actually pay them later.[...] Social-services agencies, which typically depend on government funding for 50% to 90% of their revenue, say this is the first time the state budget has been late that the governor hasn't included funding to nonprofits in any so-called extender bills, or emergency appropriations.[...] The uncertainty comes as most nonprofits plan their budgets for the next fiscal year.[...] Meanwhile, nonprofits are laying off staff and cutting or reducing necessary programs that provide support for homeless and runaway youth, the elderly and mentally ill.
Banjo, S. (2010, June 4). Nonprofits lose funding. The Wall Street Journal. Retrieved
from http://online.wsj.com/
The state [of Illinois] has $3.8 billion of unpaid bills, and much of that money is owed to the nonprofit groups that care for some of Illinois' most vulnerable residents: children, the poor, the mentally ill and the elderly.[...] By law, the government is supposed to make good in 60 days or pay a small interest penalty. But that measure - which cost the state $31.2 million last year - hasn't caused payments to come any faster, some nonprofits say.[...] Spokeswoman Carol Knowles [of the state Comptroller's Office] said some of the state's bills, such as debt payments and checks for state workers, get paid first. Without enough funds to pay the rest, the office has resorted to a triage system, trying to decide which nonprofit needs money immediately and which can wait.[...] "We try to deal with emergency situations, but there are so many of them," she said.
Unemployment will continue for several years to come.
- Companies in high-wage countries also are outsourcing management, R&D, and service jobs to low-wage countries. For instance, an estimated 40 million American jobs may now be vulnerable to outsourcing.[...]
- Most economist believe it will take five years-that is, to 2015-just to replace the 8.4 million jobs lost to date in the post-2007 recession.
- Of the workers who lost middle class or better jobs during the 2001-2002 recession, an estimated two-thirds were forced to accept positions that paid much less well and often required a radical loss of lifestyle.
Cetron, M. J., & Owen D. (2010 May-June). Trends Shaping Tomorrow's World Economic and Social Trends and Their Impacts. The Futurisit, 44 (3), pp. 35-50. [posted 6/28/2010]
State budget shortfalls will continue into 2011.
In addition, initial indications are that states will face shortfalls as big as or bigger than they faced this year in the upcoming 2011 fiscal year. States will continue to struggle to find the revenue needed to support critical public services for a number of years.
- New gaps in 2010 budgets. An increasing number of states are struggling to keep their 2010 budgets in balance. Because revenues have fallen short of projections, mid-year shortfalls have opened up in 41 states - some of which have already addressed them - totaling $38 billion or 7 percent of these budgets.
- Additional large gaps for 2011. States' fiscal problems will continue into the next fiscal year and likely beyond. Fiscal year 2011 gaps - both those still open and those already addressed - total $103 billion or 17 percent of budgets for the 42 states that have estimated the size of these gaps. These totals are likely to grow as revenues continue to deteriorate, and may well exceed $180 billion.
McNichol, E. & Johnson, N. (2010, February 25). Recession Continues to Batter State Budgets; State Responses Could Slow Recovery. [Center on Budget and Policy Priorities]. http://www.cbpp.org/cms/index.cfm?fa=view&id=711 [posted 6/28/2010]
Government, healthcare and education will be areas of growth and opportunity in the new U.S. economy.
The point here may be a simple one: This will end. When it does, things will be different. It's possible the US economy will be transformed.
- Value as the new virtue: You can sum the situation up in two words: "value rules."
- The new big three: ...if nothing else, it [the recession] may help the rise of three sectors likely to be big job producers in the future: government, healthcare, and education.
- The movable résumé: ...Job insecurity has been rising for years, and that's a trend that may become more pronounced even as prosperity returns. "People will continue to have a very different relationship to the work force," says Mr. Shaiken [a labor expert at the University of California, Berkeley]. "It will be a far more fluid labor market."
- 'Green new deal': The environmental and renewable-energy sector could be the computer industry of the early 21st century: a powerful engine pulling much of the rest of the US economy behind it.
- Stodgy is chic: ...Stodgy is good. Using borrowed money to do stuff nobody really understood turned out to be very, very bad.
APRIL 10, 2009, 10 ways the new economy will look different: From the rise of the tightwad to the decline of the Sun Belt, American values and industries will be reinvented as the nation comes out of the worst recession since the 1930s, by Peter Grier, The Christian Science Monitor, http://www.csmonitor.com/2009/0412/p13s01-usec.html [posted 4/17/2009]
The unemployment and under-employment rates are increasing, as job losses grow.
The American labor market is losing jobs at a truly alarming rate. Payrolls contracted by over half a million jobs last month and unemployment rose to 6.7%, according to today's report [December 5, 2008] from the Bureau of Labor Statistics. The under-employment rate-the broadest measure of weakness in the job market-soared to 12.5%. The loss of 533,000 jobs is the largest monthly payroll loss since the 1970s, and the worst month for payrolls thus far in the recession, which began in December 2007.... Under-employment, a more comprehensive measure of the extent of weakness in the job market, rose to 12.5%, its highest level on record since the current series began in 1994, and more than four percentage points above its year-ago level.
States are struggling with slumping tax revenues, forcing cuts to many programs.
Staggered by turbulent financial markets and anxious about a rapidly slumping economy, many state governments are slashing their budgets, frantically trying to stay afloat. After two years free of major fiscal worries, state policymakers in 2008 were hit by a triple-whammy: a Wall Street meltdown that made it more difficult and costly to borrow; a record number of home foreclosures that took a big bite out of tax revenues; and soaring oil and gas prices that squeezed budgets of all but the energy-producing states. With calendar 2008 nearing an end, Stateline.org's annual state-by-state review of major accomplishments finds lawmakers girding for big spending cuts in 2009 and beyond. California and Massachusetts were so worried about paying their monthly bills in October they considered asking the federal government for loans.... The credit crunch made it harder for states to borrow while the stock market dive wiped out billions in state investments. Another round of deep cuts is currently under way in California, Connecticut, New York, Massachusetts, Maryland, Pennsylvania and Virginia, among others.
OCTOBER 24, 2008, Depressed Economy Wallops States, by Pamela M. Prah, Stateline.org Staff Writer, PewResearch Center Publications, http://pewresearch.org/pubs/1006/state-economies
For more information: http://www.stateline.org/live/ [posted 11/6/2008]
States are facing a great fiscal crisis. At least 39 states faced or are facing shortfalls in their budgets for this and/or next year. Over half the states had already cut spending, used reserves, or raised revenues in order to adopt a balanced budget for the current fiscal year -which started July 1 in most states. Now, their budgets have fallen out of balance again. New gaps have opened up in the budgets of at least 27 states plus the District of Columbia just three months after they struggled to close the largest budget shortfalls seen since the recession of 2001. And these problems are expected to continue into next year. Current estimates are that mid-year gaps total $12.3 billion - 4 percent of the budgets of the 25 states that have estimated the size of the gap - but they will almost certainly widen as the continuing economic turmoil causes revenues to come in below estimates in more states.... As a new fiscal year begins in most states, budget difficulties are leading some 25 states to reduce services to their residents, including some of their most vulnerable families and individuals. For example, at least 17 states have implemented or are considering cuts that will affect low-income children's or families' eligibility for health insurance or reduce their access to health care services. Programs for the elderly and disabled are also being cut. At least 15 states are cutting medical, rehabilitative, home care, or other services needed by low-income people who are elderly or have disabilities, or significantly increasing the cost of these services.
OCTOBER 24, 2008, State Budget Troubles Worsen, By Elizabeth McNichol and Iris J. Lav, Center on Budget and Policy Priorities, http://www.cbpp.org/ [posted 11/6/2008]
Nonprofits are feeling the growing demand for consumer counseling and mortgage negotiation services because of the mortgage crisis.
In the middle of his speech yesterday [December 3, 2007] on the administration's efforts to fix the mortgage crisis, Treasury Secretary Henry M. Paulson Jr. paused to carefully spell out a toll-free telephone number that troubled homeowners can call for help. The hotline is not staffed by government officials or mortgage lenders. Rather, the calls are answered by consumer counselors from nonprofit groups, which are taking an increasingly high-profile role in helping borrowers with mortgage problems. The groups are acting in some cases as a buffer between lenders and homeowners. Nonprofit organizations around the country are already seeing a soaring demand for their services. St. Ambrose Housing Aid Center in Baltimore, which usually sees about 700 families a year, says it has met with almost 2,000 so far this year. In a separate program, the Neighborhood Assistance Corporation of America acts as a go-between, working out deals with lenders on behalf of borrowers. Under its deal with Countrywide, the Neighborhood Assistance Corporation of America has restructured about 200 loans. Like many nonprofit groups, it has seen demand for its services climb in the past year and attributes most of the increase to homeowners with adjustable-rate mortgages. To keep up with demand, the organization is opening five offices around the country and is hiring about 30 employees a month. "This is just the beginning. It is going to get far worse," said Bruce Marks, the group's chief executive.
DECEMBER 4, 2007, Nonprofit Groups Take Center Stage, by Renae Merle, The Washington Post, http://www.washingtonpost.com. [posted 3/19/2008]
The mortgage crisis has wide impact: renters are losing their dwellings when landlords default, domestic abuse is rising from the financial stress and cities and states are bracing for a reduction in property taxes.
The national surge in mortgage defaults is claiming more victims than just the thousands of subprime borrowers facing the prospect of losing their homes. Social service agencies say homeless rates are on the rise not only as families lose their own homes to foreclosure but also as renters are evicted after their landlords default. Financial analysts warn that state and local governments will soon feel the pinch of sharply reduced property tax revenue. And counselors say divorces and reports of abuse are rising as families burdened by impending foreclosure take their stress out on one another. The ripple effect illustrates the wide-ranging impact the subprime mortgage crash has had not only on the U.S. economy but on society at large, said Robert Reich, who was labor secretary during the Clinton administration. RealtyTrac, a national real estate network that specializes in foreclosed properties, estimates that more than 20 percent of foreclosures involve investment properties; when landlords lose those properties, their tenants lose a roof over their heads with little warning. Atlanta City Council member Mary Norwood said property tax revenues would also take a hit because foreclosed homes drive down property values in a neighborhood, leading to lower assessments on people who do pay up. The Center for Responsible Lending put that price tag at more than $17 billion nationwide.
DECEMBER 13 2007, Mortgage Crisis Inflicts Collateral Damage: Marriages, Families, Tax Revenues Fall Victim To Wave of Foreclosures, by Alex Johnson, MSNBC online, http://www.msnbc.msn.com. [posted 3/19/2008]
The proposed record $3.1 trillion 2009 U.S. budget seeks to kill or cut back many programs.
Mr. Bush, who unveiled a $3.1-trillion budget for the 2009 fiscal year this month... Among the proposals that worry nonprofit groups are cuts to Medicare and Medicaid, block grants that help states and cities pay for antipoverty and economic-development projects, and a program to help poor families pay their energy bills. Democrats in Congress have criticized the president for turning in a budget that proposes cutting services while also making previous tax cuts permanent - and still including a deficit of more than $400-billion....the administration would cut projected spending on Medicare, the health-insurance program for older people, by about $183-billion over five years by slowing the annual growth rate from 7.2 percent to 5 percent... The proposal would also cut projected spending on Medicaid, which provides health care to poor people, by about $18-billion over five years. The president is seeking a modest increase in the budget for the U.S. Department of Housing and Urban Development, including an additional $50-million to fight homelessness. The president has also asked for $65-million to support nonprofit housing-counseling services designed to assist households facing foreclosure... Mr. Bush proposed a 22-percent reduction in federal spending on the Low-Income Home Energy Assistance Program, which makes grants to states (which are then often passed through to nonprofit groups) to help poor families pay their utility bills. Money for the program would drop from $2.57-billion to $2-billion. The budget would also reduce by $500-million the department's Social Service Block Grant program, which received $1.7-billion in 2008 to support groups providing a variety of services to low-income families and individuals, including day care, employment counseling, home meal delivery, and transitional housing.
FEBRURAY 21, 2008, A Budget Squeeze Hits Charities, by Brennen Jensen and Suzanne Perry, The Chronicle of Philanthropy, http://philanthropy.com. [posted 3/3/2008]
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