Northern California Grantmakers

A version of the following post first appeared as an article in NCG’s quarterly Public Policy Digest – an e-newsletter containing resources for grantmakers about trending policy issues of concern to the sector. This publication is developed in partnership with the other California Regional Associations of Grantmakers (San Diego Grantmakers and Southern California Grantmakers). If you would like to receive the Digest, send an email to publicpolicy[at]ncg[dot]org.

The another more complete version of this post was recently shared during the peer learning meeting of the Emergency Loan Fund steering committee. The collaborative group meets monthly to review submitted loan requests for quick-turnaround, low-cost financial assistance to nonprofit organizations located in Alameda, Contra Costa, Marin, San Mateo, and San Francisco counties. For more information about the ELF or other collaborative opportunities at NCG, contact Jamie Schenker, Program Specialist in Peer Networks and Collaborative Philanthropy. 

About the Budget

The spending plan closes the state’s budget shortfall with $16.6 billion in “solutions,” providing an estimated $948 million reserve in 2012-13. The spending plan reflects:

• $8.1 billion in state spending reductions, including:
  • $1.2 billion to Medi-Cal
  • $528.6 million to state employee compensation
  • $469.1 million to CalWORKs welfare-to-work services
  • $52.2 million to the In-Home Supportive Services Program, which provides in-home care for seniors and people with disabilities.

Major Elements

• Reduces state welfare benefits for adults from four years to two years, unless they meet stricter federal work requirements.

• Reduces Cal Grant college aid for students at nonprofit private schools in 2013 and again in 2014. Eliminates Cal Grants for students at schools with low graduation rates and high rates of student debt default.

• Eliminates the Healthy Families program that provides health care for 880,000 low-income children and transfers them to the state’s Medi-Cal program.

• Freezes tuition at the University of California and California State University systems, contingent on voter approval of tax increases, UC not raising tuition and CSU rolling back an already approved increase.

• Shifts people who are dually eligible for Medi-Cal and Medicare into managed-care programs.

• Cuts state worker pay by about 5 percent by having employees take off eight unpaid hours per month.

Budget Concerns

• Governor signed 2012-13 budget bill on June 27th and included line-item reductions in addition to packaged legislation.

• Governor’s line-item reductions to include $50 million reduction to child care and preschool for low-income families (in addition to the $110 million already included in the budget package

• Final budget reduces spending on health and human services programs by $1.8 billion. Packaged reductions include: $1.2M reduction to Medi-Cal; $469.1M reduction to CalWORKS welfare-to-work (specifically job training and child care services); $52.2M reduction to In-Home supportive services program, which provides care for seniors and people with disabilities

• The budget agreement assumes that voters will approve the Governor’s November ballot measure that would raise an estimated $8.5 billion in 2011-12 and 2012-13 by temporarily increasing personal income tax rates for very-high income Californians and raising the state sales tax.

• These new tax rates would be in effect for seven years, from 2012 through 2018. The measure also would increase the state sales tax rate by one-quarter cent for four years, from January 1, 2013 through December 31, 2016.

•   LAO has expressed concerns over the budget’s revenue assumptions, which means additional cuts could be necessary if hairline margins aren’t met.

November Ballot Measure Concerns

“Schools and Safety Protection Act 2012″
Sponsors: Governor Jerry Brown, California Federation of Teachers, “Millionaire’s Tax” nonprofit and labor coalition, who in March dropped their rival tax increase proposal and merged with this measure.

Sponsor’s intent: “…. temporary revenue increases so we can prevent deep cuts to education and public safety, balance the budget and to pay down the state’s debts.”

What it does:

• Increases personal income tax on top tier filers for seven years.

• Increases sales and use tax by ¼ cent for four years.

• Makes new funds available to meet Proposition 98 school funding requirements, thereby freeing up revenues to spend for other purposes.

• Constitutionally guarantees funding for public safety services realigned in 2011 from state to local governments.

Depending on how freed-up revenues are allocated, the measure could bring moderate fiscal relief for some nonprofits impacted by decline in government services and in government funding.

It could also mean some social and economic improvements associated with the availability and quality of educational opportunities, which in turn may directly or indirectly advance the missions of nonprofits concerned with social equity and mobility, community development and the like.

There is little chance (unless additional revenue enhancements are adopted in succeeding years) that state government funding for nonprofit grants and contracts and for government programs that share and support nonprofit missions will keep pace with population growth, demographic change and inflation. Additionally, there are uncertain prospects for nonprofit funding after existing tax increases expire. Nonprofits will face a continual scramble to replace state dollars locked up by realignment funding guarantees.

If the measure fails, it will trigger $6 billion in automatic cuts to education, leaving nonprofits to pick up more of the slack to pay for and provide “non-essential” education programs like sports and arts.

“Our Children, Our Future: Local School and Early Education Investment and Bond Debt Reduction Act”
Sponsors: The Advancement Project’s Molly Munger, California State PTA
Sponsor’s intent: “Investing in our schools and early childhood programs to prepare children to succeed is the best thing we can do for our children and the future of our economy and our state”

What it does:

• Increases state personal income tax rates for most Californians for 12 years.

• Earmarks most of the projected $10 billion in new annual revenue for K-12 schools, 10 percent set aside for early childhood development programs.

• Dedicates 30 percent (projected $1.5 billion in the first year and $3 billion in the second year) to retire school debt, thus relieving pressure on the deficit-plagued general fund, “with savings tending to grow thereafter until the end of 2016-17″ according to official ballot analysis, and then dropping to “several hundred million dollars per year,” with changes in the funding formula.

What it means to nonprofits:

Depending on how freed-up revenues are allocated, the measure could bring moderate fiscal relief for some nonprofits impacted by decline in government services and in government funding.

Depending on how effectively education funding is spent, California could see some social and economic improvements associated with the availability and quality of educational opportunities, which in turn may directly or indirectly advance the missions of nonprofits concerned with social equity and mobility, community development and the like.
After the tax increase expires, there will be uncertain prospects for nonprofit funding. School districts will decide to allocate funds, possibly providing additional funding for nonprofit early childhood programs.

The lion’s share of nonprofit endorsements, including service providers, faith-based and labor, has been in favor of the Brown measure. However, both may fail to persuade a skeptical public, setting the stage for a major fiscal meltdown and a full-blown debate on the inequities and constraints-like supermajority vote requirements for new taxes, constitutional spending formulas and preferential tax breaks-leaving the state and its nonprofit partners without the resources to provide essential public services.

If Voters Reject In November

• Additional $6.0 billion in midyear spending cuts

• $4.8 billion from public schools, with schools authorized to reduce the school year from the current minimum of 175 days of instruction to 160 days of instruction in each of 2012-13 and 2013-14;

• $550.0 million from the California Community Colleges (CCC), with the CCC chancellor authorized to reduce college enrollment proportionately;

• $250.0 million from the University of California;

• $250.0 million from the California State University;

• $50.0 million from the Department of Developmental Services;

• $20.0 million in reduced funding for a new grant program for city police departments;

• $10.0 million from the Department of Forestry and Fire Protection;

• $6.6 million from flood control programs;

• $5.0 million in reduced grants to local law enforcement for water safety patrols;

• $3.5 million in reduced funding for Department of Fish and Game wardens and non-warden programs;

• $1.5 million in reduced funding for state park rangers and lifeguards at state beaches; and

• $1.0 million from the Department of Justice’s law enforcement programs.

Resources for Grantmakers

• NCG members, look for NCG’s Policy Digest in your email inbox. This quarterly newsletter will connect you with vital resources and updates.

• NCG, SCG and SDG have signed on to the Vote with Your Mission Campaign, CalNonprofits nonpartisan effort that seeks to increase the number of people voting with their ideals and values that they bring with them into the nonprofit sector.

• Sites We Like
  • California Budget Project
  • Public Policy Institute of California
  • Legislative Analyst’s Office
  • CalNonprofits

Tags: California Budget Project, CalNonprofits, Legislative Analyst's Office, Public Policy, public policy institute of california

This entry was posted on Monday, August 6th, 2012 at 5:46 pm and is filed under From the Field, Public Policy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.