Social service organizations across Pennsylvania are bracing for a cash crunch as state payments meant for endangered youth, the care of the elderly and other vulnerable people dry up.
The source of the financial woe is a budget impasse between Democratic Gov.Tom Wolf and the Republican dominated legislature.
“The important thing is to get the message out how critical these dollars are, said Darlene Hewett, president and CEO of theVillage. “The legislature continues to get paid, but they aren’t funding services for Philadelphia’s children.”
The two sides failed to reach an agreement in June after Wolf, who is seeking big increases in education funding, vetoed the GOP budget.
At the time, the Wolf administration advised contractors — these include highway constructions crews and social service agencies that services under government contract — that they would continue to get paid as long as the expenses were authorized under the 2014 budget. His administration anticipated a one- or two-month lag time before payments began to dry up.
Hewett said she, along with many of her peers, anticipates drawing down from lines of credit.
She said about 40 percent of her $1 million per month budget expenses at theVillage are reimbursed by the state.
While she doesn’t want to cut services, she may slow down hiring.
“A lot of dollars we receive go to foster parents as stipends” Hewett said.”We feel it’s just critical to keep those dollars flowing. There isn’t much we can cut to curtail spending.”
In the past, the state has written big checks to reimburse nonprofits for the work they do during the budget stalemates. But they don’t pay for the interest the organizations incur from drawing down lines of credit. That means they have to go begging donors to pay those bills.
Many social service providers are still paying bills related to the last budget impasse — in 2009.
“Most donors don’t want to pay for interest,” said Anne Gingerich, executive director or the Pennsylvania Association of Nonprofit Organizations.