CT Progressive Democrat

News and Views from CT State Representative David McCluskey / Democrat - West Hartford

Sunday, March 23, 2008

Funding Non-Profits Smarter

There is no doubt that the Executive Branch and the Legislature have seriously underfunded the non-profits organizations which provide so many social and other services to CT residents.

The increases they have received in the last decade or more are below the inflation rate and far below the increases in health insurance and energy costs. They are in dire shape. But to really address this issue in a thoughtful, long-term way we need to do much more than just give them money. As a practical matter, given the state's spending cap and the other demands on state dollars, CT can not give the non-profits the kind of increases in funding they need to stabilize their operations. We need to fund them smarter. We need to assist them with their cost drivers such as health care and energy and incentivize them into working together/consolidating back-room operations/expenses whenever possible.

For example, the state subsidizes a big variation among the non-profits concerning health insurance. Some non-profit employees are on the state's HUSKY program because their non-profit can not provide affordable, comprehensive health insurance. Many are simply too small to get private health insurance at a reasonable cost. Other non-profits provide decent health insurance, but are hard-pressed. They must ask employees for higher co-pays and premiums or little to no wage increases in order to do so.

Instead, since many of these non-profits mostly/exclusively provide state services with state funding we should find a way to bring them into the state employee health care pool. Candidly, this is easier said then done because of the diversity of the non-profit community and the variation in health insurance they provide and how much it costs them. But if we can find a way to do so, we can provide them with decent health insurance at an affordable price. The state employee plan (actually, there are several plans provided by several private health insurance companies) is comprehensive and has not had the huge annual increases that non-profits have faced. If the non-profits which can not afford health insurance for their workers, this will allow them to attract and keep good employees. For those which already provide decent health insurance going into the state health insurance pool should allow them to do so at a lower cost and/or with lower annual increases.

The State should also use its purchasing power to assist non-profits with their energy costs. Again, since these non-profits are providing state services with state dollars, the State is already, albeit indirectly, paying for their energy costs - just very inefficiently.

However, before we assist them with the capital costs of weatherization, getting more efficient lighting and heating infrastructures, etc. we need to get more information on the non-profits. Are there too many stand-alone buildings? Are they in the right locations? Can multiple non-profits be co-located to save money and provide better services to the state resident they serve? We don't know the answers right now. The Departments of Developmental Services, Mental Health & Addiction Services & Social Services should assess all the non-profits they fund and share the information among them to figure out the best way to proceed.

Finally, we should incentivize non-profits to combine non-direct care services whenever possible.
Personnel, Legal, Custodial, Repair and even Executive Director services may be able to be shared among non-profits especially if we can get them to co-locate. We are subsidizing a lot of costly inefficiency.

Does that mean every non-profit can be co-located have all its back office operations shared with other non-profits? Of course NOT. For some services provided for some state residents this may be inappropriate, inefficient or unacceptable. But, we won't know until we ask the questions and challenge the non-profit community.

Just like we must incentivize municipalities and boards of education to share services between and among them to achieve economies of scale whenever possible and appropriate, we must do so with the non-profit community. We can not afford to do otherwise.