Jewish charities fear budget cuts are coming as New York State slows government aid
The YM and YWHA of Washington Heights and Inwood has distributed more than $230,000 in emergency cash assistance since the start of the pandemic. At its peak, the Y’s meal delivery program prepared and dropped off 300 hot meals each day. It opened a childcare center for first responders. It performed wellness checks for the elderly. It hosted a Ukulele Shabbat.
All the while, it was waiting to finalize a state contract for less than $1 million to fix a leaky roof. But in early May, the Y learned that the state’s Department of Budget had delayed the contract, due to uncertainty and financial strain caused by the coronavirus pandemic. The leaky roof could not wait, so the Y began to fix the roof earlier this month, without knowing if the state funding will ever come.
“Their hands are tied so we are now stuck,” said the Y’s Chief Operating Officer, Michael Fermaglich, in an email.
“During this time when we already have significant financial burdens, not being able to be reimbursed for our NY State-funded project has placed additional strain on our organization at the same time we are happily providing government programs,” he said.
Services like those provided by the Y are in danger, because government aid that supports them is running late — and might not come at all. The delays could become budget cuts, and budget cuts could mean fewer programs and services for people who need them.
In normal times, nonprofits, including Jewish ones, do their work by first paying out of pocket for their operations — from roof repair to Ukulele Shabbat — and then receiving reimbursement from the government. But New York state — home to a community of about 2 million Jews, America’s largest — is behind on those payments, said nonprofit experts, and staff at the charities themselves.
The coronavirus pandemic has taken on a toll on the state’s fiscal health. In the current fiscal year, New York took in $14 billion less in revenue from taxes and other streams than expected, and racked up billions in costs, most of them associated with fighting the pandemic, said Governor Andrew Cuomo.
New York is controlling the virus well relative to most other states, but nationally, the pandemic and its impact are still growing, which will likely mean even less money for programs like food pantries. From April to June, the United States economy — as measured by its gross domestic product — shrank more than it ever has in the 70 years the Commerce Department has tracked it — by almost 10%, the department reported.
Now, organizations whose mission is to help those in dire financial straits are cash-poor themselves, because of delayed aid from the state.
“This is essential work, which is why it’s vital we receive timely funds from the state so that we can continue making sure New Yorkers don’t go hungry,” said Met Council CEO David Greenfield in a statement.
Freeman Klopott, a spokesperson for the New York State Division of the Budget, said in an email that state staff “fully understand the financial pressures” faced by nonprofits. The federal government’s failure to pass a new coronavirus relief bill which would help states offset their losses is the problem, he wrote.
“Federal inaction has already forced the State to reduce spending by $4 billion by freezing hiring, pay raises and new contracts, and holding back a portion of payments which has impacted services, programs, and agency operations in addition to our nonprofit partners,” he said.
Louisa Chafee, Senior Vice President of External Relations and Public Policy at UJA-Federation of New York, said many of their Jewish nonprofit partners are seeing a slowdown in those state payments.
“Our nonprofits are figuring out the services they can do that continue, those that can pivot, those that need to shut down, and those that are reopening,” she said.
Indeed, a June 2020 report from the New York comptroller’s office said that New York paid about $5.7 billion less in local assistance grants than planned last month, and about $2 billion less than June of last year.
New York’s governor and legislature are required by law to submit a balanced budget, so as revenue declines, payments promised to organizations as a part of state contract agreements have slowed and in some cases, stopped all together, leaving nonprofits “stuck,” as Fermaglich said about the Y. What’s more, many organizations also experienced an uptick in clients, as pandemic-related furloughs, layoffs, mental health challenges and food insecurity also rose.
Cuomo suspended a law on July 7 that requires state agencies to make payments promptly and pay interest when contract payments are late, and the state recently announced that it would cut 20% of aid to localities, who also often contract with nonprofits.
The struggle at New York’s Jewish nonprofits is also tied to a feud in congress, said Chafee, as the Senate and House debate whether the next coronavirus relief bill will include aid to states and localities — a possible fix that would fill gaps for the state and allow agencies to send along their promised payments.
“We really look to the federal government for their state and local aid to make sure that nonprofits serve the most vulnerable in our state can continue to do that,” she said. “Nonprofits are more critical now than perhaps ever before and we recognize the role of the state in keeping them whole.”
The House of Representatives’ bill did include aid for states and localities, while the Senate’s did not. If a bill passes without that aid, New York State might have to decide to cancel the payments which are now delayed, putting nonprofits in a tough situation.
“Some of those cuts may be retroactive, which means organizations may not get paid for the work that they’ve done,” said Chai Jindasurat, the policy director at Nonprofit New York, an organization that represents 1,500 nonprofit organizations, mostly in New York City. “We’re bracing ourselves for some pretty bad scenarios.”
Not all nonprofits have been hit. The Mid-Island Y JCC on Long Island and Nechama – Jewish Response To Disaster, two Jewish organizations that contracted with the state, said they were receiving their payments on time.
Also, some are shielded by the fact that they don’t rely as heavily on government aid as others. UJA-Federation said 40 of its nonprofit partners get the majority of their funding from local, state and federal government.
Jindasurat and Chafee both said that some government agencies have been struggling more than others to make their payments — among them, the Office of Mental Health, the Office of Substance Abuse, the Department of Health, the Office of Children and Family Services and the Office of Temporary and Disability Assistance, possibly a result of different funding cycles and timelines.
Jewish Federations of North America, the umbrella organization that has been providing guidance to Jewish nonprofits on weathering the coronavirus pandemic, held a webinar this week to address some of these concerns.
JFNA CEO Eric Fingerhut warned that the states could have to make “deep cuts.”
“Those are likely to have an impact on social services in our community,” he said.
Correction, August 10, 9:08 a.m.: A previous version of this story misidentified Jewish Federations of North America as Jewish Federations of New York and misspelled Chai Jindasurat’s surname and his title.